EOOD or sole trader (ET) in Bulgaria 2026: tax compared

In 2026, a Bulgarian EOOD (single-member limited company) is more tax-efficient than an ET (sole trader) once profit exceeds about €715 a month, under the assumptions in the example below. An ET pays 15% tax plus social security on its whole profit, up to the maximum insurable income of €2,300. An EOOD pays 10% corporate tax and 5% dividend tax, and the owner is insured on an income they choose, but not below €620.20. On a profit of €3,000 a month, the ET owner in our example keeps €2,006.51 and the EOOD owner €2,392.58. An ET owner, however, is liable with all their personal assets, while an ET costs less to register and has simpler bookkeeping.

How an ET is taxed in 2026

• Taxable income: the tax profit determined under the Corporate Income Tax Act (Art. 26(1) of the Personal Income Tax Act, ЗДДФЛ). There are no standard (normative) deductions like those for freelancers: those apply only to individuals who are not traders (Art. 29 ЗДДФЛ).
• Social security: the ET owner is self-insured (Art. 4(3)(2) of the Social Security Code, КСО). During the year they pay advance contributions on a monthly income they choose between the minimum and the maximum (Art. 6(8) КСО). After the year, the final insurable income is set from the taxable income in the annual return, within the minimum and maximum (Art. 6(9) КСО). From 1 August 2026 the minimum is €620.20 and the maximum €2,300 a month. The rate is 27.8% without sickness and maternity cover and 31.3% with it.
• Tax: the owner's own contributions are deducted from taxable income (Art. 28(1) ЗДДФЛ). The rest is taxed at 15% (Art. 48(2) ЗДДФЛ), with quarterly advance payments (Art. 43(8) ЗДДФЛ).
• Annual return: 1 March to 30 June of the following year (Art. 53(1) ЗДДФЛ).

How an EOOD is taxed in 2026

• Corporate tax: 10% of the tax profit (Art. 20 of the Corporate Income Tax Act, ЗКПО). The return and payment are due by 30 June of the following year (Art. 92(2) ЗКПО).
• Dividend tax: a 5% final tax (Art. 46(3) ЗДДФЛ). The company withholds it and pays it by the end of the month after the quarter in which the distribution was decided (Art. 65(2) ЗДДФЛ).
• Owner's insurance, option 1: an owner who works in the company is self-insured (Art. 4(3)(2) КСО) on a chosen income between €620.20 and €2,300 (Art. 6(8) КСО). The owner pays these contributions personally. You can check the amount in our owner insurance calculator.
• Owner's insurance, option 2: a management contract (договор за управление и контрол). Managers of commercial companies are compulsorily insured (Art. 4(1)(7) КСО). Contributions are due on the pay, but not less than the minimum insurable income for the activity, and are split between the company and the manager as for employees (Art. 6(3) КСО): 18.52% plus the work-accident contribution for the company, and 13.78% for the manager. The pay is taxed at 10% as employment income (§ 1, item 26(h) and Art. 48(1) ЗДДФЛ) and is an expense for the company. Check the minimum incomes by position in our minimum and maximum salary calculator.

Comparison at €1,500, €3,000 and €6,000 monthly profit

Assumptions: the owner was born after 1959, does not take sickness and maternity cover (27.8%), and has no other income or insurance. We use the values in force from 1 August 2026: minimum insurable income €620.20, maximum €2,300. "Profit" means profit before taxes and before the owner's own contributions. In the EOOD case the owner is self-insured on the minimum income and the whole profit is paid out as a dividend. All amounts are per month.

Most of the difference comes from contributions. An ET pays them on the whole profit up to the cap, while an EOOD owner pays only on the chosen income. There is a flip side: a lower insurable income means a lower base for the future pension and for benefits. If the EOOD owner chooses a higher income or a management contract, the gap narrows.

At very low profit an ET comes out ahead. On a profit of €620.20, the minimum insurable income, the ET owner keeps €380.61 and the EOOD owner €357.85. Under these assumptions the two forms break even at about €715 of monthly profit.

Liability, registration and reporting

Registering an EOOD through Fiscala costs €199 plus the €28.12 state fee for online filing. The notarisation of the manager's consent and specimen signature is paid separately. Details are on our company registration page.

When each one fits

• An ET suits a small, steady profit around or just above the minimum insurable income, a low risk of debts to third parties, and owners who want simple bookkeeping and no published statements. It also suits owners who want a higher insurable income for their future pension.
• An EOOD suits higher profit, owners who want limited liability, plans to bring in partners or investors, and owners who do not live in Bulgaria. Only a person with a permanent address in Bulgaria can register as an ET.
• If you expect turnover above €51,130 a year, either form must register for VAT (Art. 96(1) of the VAT Act, ЗДДС). See VAT registration.

Frequently asked questions

Can an ET use standard (normative) deductions?

No. An ET's taxable income is its tax profit under the Corporate Income Tax Act, i.e. actual documented expenses (Art. 26(1) ЗДДФЛ). The standard deductions in Art. 29 ЗДДФЛ apply only to individuals who are not traders.

Can an EOOD owner avoid being insured?

If they work in the company, they must be insured either as self-insured (Art. 4(3)(2) КСО) or as a manager under a management contract (Art. 4(1)(7) КСО). If they do not work in the company, there is no basis for insurance as an owner.

Is the dividend taxed again in my annual return?

No. The 5% tax is final and is withheld by the company (Art. 46(3) and Art. 65(2) ЗДДФЛ).

Can I switch from an ET to an EOOD later?

You can register an EOOD at any time. How the business is transferred depends on your case, so discuss it with your accountant in advance.

Sources

Personal Income Tax Act (ЗДДФЛ), Art. 26, 28, 29, 43, 46, 48, 53, 65, § 1 item 26; Corporate Income Tax Act (ЗКПО), Art. 20, 92; Social Security Code (КСО), Art. 4, 6; NOI: insurable income from 1 August 2026; NRA: self-insured persons; Commerce Act (ТЗ), Art. 1, 56, 113, 117; Obligations and Contracts Act (ЗЗД), Art. 133; Accountancy Act (ЗСч), Art. 3, 38; Registry Agency: state fees in euro; VAT Act (ЗДДС), Art. 96.

If you would like us to compare both options with your actual numbers or register your company, get in touch.