What Is the Corporate Tax Rate in Bulgaria in 2026?

Trying to make sense of business finances in a new country can feel like decoding an ancient scroll, especially when you're thinking about starting or running a company here in Bulgaria. Many of you are drawn by the promise of attractive tax rates, but the details can still be a maze. This comprehensive guide will cut through the confusion, clearly explaining Bulgaria's corporate tax rate for 2026 and what it means for your business, helping you avoid unexpected surprises and plan effectively.

The Core: Bulgaria's Corporate Tax Rate for 2026

Alright, let's get straight to the point because this is often the biggest magnet for foreign entrepreneurs looking at Bulgaria. When you run a business here, the amount of tax you'll pay on your company's profits is remarkably straightforward, and refreshingly low compared to many other European nations.

Understanding the Flat Rate Principle

Bulgaria operates on a flat tax system, which is a significant part of its appeal. For corporate profits, this means a consistent, easily predictable rate that applies across the board, regardless of how much profit your company makes. As of 2026, and it's been this way for quite some time, the corporate income tax rate in Bulgaria is a flat 10%. Yes, you read that right – just ten percent of your company's taxable profit. This isn't a tiered system where rates jump up as you earn more; it's a fixed percentage that makes financial planning much simpler.

Think about it: if your company earns a taxable profit of 100,000 BGN (Bulgarian Leva), you'll pay 10,000 BGN in corporate tax. There are no complex calculations based on brackets or progressive rates that can quickly become a headache to understand and apply. This simplicity is a breath of fresh air for many business owners, especially those accustomed to far more intricate and higher tax regimes back home. It’s one of the main reasons many expat entrepreneurs, including myself, have chosen to set up shop here.

Who This Rate Applies To

This 10% corporate tax rate generally applies to legal entities registered in Bulgaria. This primarily includes:

• Limited Liability Companies (OOD – Druzhestvo s Ogranichena Otgovornost): This is the most common legal form for small and medium-sized businesses, and often the default choice for expats setting up a company. It requires at least two shareholders.
• Single-Person Limited Liability Companies (EOOD – Ednolichno Druzhestvo s Ogranichena Otgovornost): Essentially the same as an OOD, but owned by a single individual. This is a very popular choice for solo entrepreneurs and freelancers who want the protection of a limited liability structure.
• Joint Stock Companies (AD – Aktsionerno Druzhestvo): Typically used for larger enterprises, this structure also falls under the 10% corporate tax umbrella.
• Branches and Permanent Establishments of Foreign Companies: If your foreign company has a registered branch or what's considered a permanent establishment in Bulgaria, the profits generated by that Bulgarian operation will also be subject to the 10% corporate tax rate.

It's crucial to understand your company's tax residency. Generally, if your company is incorporated in Bulgaria or has its place of effective management here, it will be considered a Bulgarian tax resident and subject to corporate income tax on its worldwide profits. For branches of foreign companies, it's typically only the profits attributable to the Bulgarian branch that are taxed here. If you're a self-employed individual, a sole trader (ET – Ednolichen Tŭrgovets), or a freelancer (Svobodna Profesiya) without a formal company structure, you'll be taxed under personal income tax rules, which also happen to be a flat 10% on your net income after deductions. So, while the mechanisms are different, the rate remains consistent.

What Constitutes Corporate Profit

This is where the rubber meets the road. "Profit" isn't just your total sales revenue. The 10% corporate tax is levied on your company's taxable profit. This means your total income (revenue) minus your tax-deductible expenses. Understanding what expenses are deductible is absolutely key to minimizing your tax burden legally and effectively.

Generally, all expenses incurred for the purpose of carrying out your company's economic activity are tax-deductible. This includes things like:

• Salaries and social security contributions for employees
• Rent for your office or business premises
• Utility bills (electricity, water, internet)
• Purchases of goods and materials for your business
• Marketing and advertising costs
• Professional services (accountants, lawyers, consultants)
• Depreciation of business assets (e.g., computers, vehicles, machinery)
• Travel and accommodation expenses related to business

However, there are specific rules and limitations. For instance, certain entertainment expenses might have limits, or luxury purchases might not be fully deductible. It's not uncommon for new expats to sometimes mistakenly declare personal expenses as business ones, which can lead to issues with the National Revenue Agency (NRA). Always keep meticulous records, ideally in Bulgarian, and make sure your expenses are directly related to generating your company's income. This is why having a good local accountant is indispensable; they'll ensure you're correctly classifying everything and taking advantage of all legitimate deductions.

Beyond the 10%: Other Key Business Taxes to Consider

While the 10% corporate profit tax is certainly a headline figure, it’s only one piece of the puzzle. When running a business in Bulgaria, you'll encounter other taxes that contribute to the overall financial landscape. It's crucial not to overlook these, as they significantly impact your cash flow and overall business costs.

Dividend Tax and Withholding Tax

So, you’ve made a profit, paid your 10% corporate tax, and now you want to take some of that money out of the company for yourself as a shareholder. This is where dividend tax comes in. In Bulgaria, when a company distributes profits to its shareholders as dividends, those dividends are subject to a 5% withholding tax.

Let's illustrate:
Imagine your EOOD (Single-Person Limited Liability Company) made a taxable profit of 10,000 BGN.

1. First, you pay 10% corporate tax: 10,000 BGN * 10% = 1,000 BGN.
2. Your remaining net profit is 9,000 BGN.
3. If you decide to distribute all 9,000 BGN as dividends to yourself, the company must withhold 5% of this amount: 9,000 BGN * 5% = 450 BGN.
4. You, the shareholder, will then receive 8,550 BGN. The 450 BGN is paid to the NRA by your company on your behalf.

This 5% dividend tax applies whether the shareholder is a Bulgarian resident individual, a foreign individual, or even a foreign company, unless a Double Taxation Agreement (DTA) between Bulgaria and the shareholder's country of residence specifies a lower rate or exemption. Bulgaria has an extensive network of DTAs, which can be a significant advantage for international business owners. It’s worth exploring these agreements if you're planning on regularly taking profits out of your Bulgarian company and transferring them internationally. This layering of taxes means that the effective tax rate on profits that are distributed can be 10% (corporate) + 5% (dividend) = 15%. This is still incredibly competitive, but it's vital to factor in both percentages when forecasting your personal income from the business.

Beyond dividends, there are other types of withholding taxes, though less common for typical expat businesses. These might include taxes on interest, royalties, or technical services paid to non-resident entities. Again, DTAs often provide relief or reduced rates in these scenarios.

Value Added Tax VAT

If you're running any sort of legitimate business, especially one dealing with goods or services, VAT (Value Added Tax) is going to be part of your life. Bulgaria's standard VAT rate is 20%. This is a consumption tax added to most goods and services at each stage of the supply chain.

However, not every business needs to register for VAT immediately. There’s a registration threshold. As of my last check, businesses are generally required to register for VAT if their taxable turnover for the past 12 consecutive months exceeds 100,000 BGN. If your turnover is below this, VAT registration is optional.

Why would you register for VAT if you don't have to?

• Claiming Input VAT: The main reason is that if your business is VAT-registered, you can reclaim the VAT you pay on your business purchases (input VAT). If you buy a laptop for 2,400 BGN (2,000 BGN + 400 BGN VAT), you can potentially claim back that 400 BGN if you're VAT registered. If you're not, that 400 BGN is an additional cost to your business.
• B2B Transactions: If you primarily deal with other businesses, especially those that are also VAT-registered, they will likely prefer to work with a VAT-registered supplier so they can claim back the VAT.
• International Transactions: For businesses involved in intra-EU trade or international services, VAT rules become more complex, and registration often becomes necessary to properly account for cross-border transactions, even if you are below the domestic threshold. For instance, if you provide services to VAT-registered clients in other EU countries, you typically "reverse charge" the VAT (meaning your client accounts for it in their country), but you still need to be VAT registered to do this correctly and report it via VIES declarations.

Managing VAT can be intricate, and it's where an accountant truly shines. They'll help you determine if and when you need to register, ensure you charge the correct VAT rates, and file your monthly or quarterly VAT returns and VIES declarations accurately. Trying to navigate this alone is a recipe for headaches and potential penalties.

Social and Health Contributions for Business Owners

If you're an owner of an EOOD or OOD, particularly if you are also the manager or actively involved in the company's operations, you will have obligations regarding social and health insurance contributions. This isn't a "tax on profit" per se, but it's a mandatory cost of doing business and something you absolutely need to budget for.

The rules can vary slightly depending on whether you're formally employed by your company, or if you're registered as a "manager and insurer" (управител и осигурител). Many expat owners of EOODs fall into the latter category. In this case, you're required to pay contributions based on a minimum and maximum insurable income threshold.

For 2026, while specific figures aren't set in stone yet, these thresholds are adjusted annually. For example, in recent years, the minimum insurable income has been around 780 BGN, and the maximum around 3,750 BGN. The percentage rates for social security (pension, general sickness and maternity, unemployment, etc.) and health insurance are set by law. These contributions can amount to roughly 25-30% of your chosen insurable income, within the set limits.

This means even if your company has no profit, or you choose not to take a salary (opting for dividends later), you will still likely have a minimum monthly social and health contribution payment. This is a non-negotiable fixed cost that must be factored into your business plan from day one. Failing to pay these contributions can lead to significant penalties, so it's vital to register correctly with the NRA and the Commercial Register and keep up with these payments. This is definitely one area where you'll want expert advice, perhaps even from a specialized firm like Taxes for Expats, to make sure you're compliant and optimized.

Here’s a simplified breakdown of the main tax rates for businesses in Bulgaria:

Tax Type	Rate (2026)	Applies To	Notes
Corporate Income Tax	10%	Taxable profit of Bulgarian companies	Flat rate, applies to EOOD, OOD, AD, etc.
Dividend Tax	5%	Distributed profits (dividends)	Withheld by the company. Effective tax on distributed profit is 15%.
Value Added Tax (VAT)	20%	Most goods and services	Registration mandatory if turnover > 100,000 BGN/12 months.
Social & Health Contributions	~25-30% (of insurable income)	Mandatory for owners/managers/employees	Based on minimum/maximum insurable income thresholds.

Navigating Corporate Tax Compliance as an Expat

Okay, so you understand the rates. Now, how do you actually do all this? The compliance aspect can feel overwhelming at first, but with a clear roadmap and the right help, it becomes manageable. Remember, the Bulgarian system values adherence to procedure, and doing things by the book will save you a lot of grief.

Registering Your Business and for Tax Purposes

Before you even think about paying taxes, you need to exist as a legal entity in Bulgaria. The process generally starts with the Commercial Register and Register of Non-Profit Legal Entities (Trgovski Registar i Registar na Yuridicheskite Litsa s Nestopanska Cel), often just called the Commercial Register.

1. Company Formation: This involves choosing your company type (most likely an EOOD or OOD), drafting the constitutional documents (e.g., Articles of Association, Memorandum of Association), deciding on a company name, and depositing initial capital. Even for an EOOD, the minimum capital is symbolically low, usually 2 BGN.
2. Registration with Commercial Register: Once your documents are ready, they are filed with the Commercial Register. This process can be quite quick if everything is in order, often within a few days. Once registered, your company receives a Unique Identification Code (UIC or BULSTAT number), which is essentially your company's national ID.
3. Registration with the NRA (National Revenue Agency): Although your company will automatically be registered for corporate income tax purposes when it gets its BULSTAT, there are other specific registrations. If you hire employees, you'll need to register them with the NRA and also for social security purposes. If your business turnover exceeds the threshold (100,000 BGN in a 12-month period), you'll need to apply for VAT registration separately with the NRA. This isn't automatic and requires a specific application.
4. Opening a Bank Account: You'll need a corporate bank account for your business operations. This is where all your revenue will come in and all your expenses will be paid from. Major banks like UniCredit Bulbank, DSK Bank, and Raiffeisenbank are popular choices, and they are generally accustomed to working with foreign business owners. Having a local bank account is crucial for managing your finances efficiently and making tax payments. You can read more about this in our guide on The Expat Guide to Opening a Bank Account in Bulgaria.

This initial setup phase is arguably the most bureaucratic. Many expats find it incredibly beneficial to hire a local lawyer or an accounting firm that specializes in company formation to handle these steps. They know the ins and outs, speak the language, and can navigate potential pitfalls.

Annual Tax Declaration and Payment Deadlines

Once your company is up and running, tax compliance becomes a cyclical process centered around annual declarations and timely payments.

• Corporate Income Tax Declaration: Every Bulgarian company must file an annual corporate income tax declaration. This report details your company's income, expenses, and ultimately its taxable profit for the previous calendar year. The deadline for filing this declaration is typically March 31st of the following year. For example, for the 2025 tax year, the declaration would be due by March 31st, 2026.
• Payment Deadline: The corporate income tax calculated in your declaration must generally be paid by the same deadline, March 31st.
• Monthly/Quarterly Payments: Larger companies might be required to make advance corporate tax payments on a monthly or quarterly basis, based on their previous year's profits. However, many smaller expat-owned businesses, especially in their first year or if their profit is below a certain threshold, might be exempt from these advance payments and only pay annually. Your accountant will determine if this applies to you.
• VAT Returns: If your company is VAT-registered, you'll be filing monthly VAT returns (Form 70), typically by the 14th of the month following the reporting period. Any VAT due must also be paid by this date. This is a very strict deadline, and late filing or payment will almost certainly result in penalties.
• Social & Health Contributions: Payments for social and health contributions for yourself as an owner/manager, and for any employees, are usually due by the 25th of the following month. For example, contributions for January would be due by February 25th.

It's a lot to keep track of, and deadlines in Bulgaria are not suggestions. The NRA uses a digital system for filings and payments, which can be convenient if you know what you're doing, but daunting if you don't. This brings me to my next crucial point.

Seeking Professional Guidance

I cannot stress this enough: do not try to do your Bulgarian corporate taxes yourself, especially not in the beginning. The nuances of local tax law, the Bulgarian language, and the specific procedures of the NRA are complex. Even if you're a tax wizard in your home country, the Bulgarian system is different enough to warrant professional local help.

• Local Accountant: A good local accountant is your best friend here. They will:
  • Ensure your bookkeeping is compliant with Bulgarian accounting standards.
  • Prepare and file your monthly/quarterly VAT returns.
  • Calculate and file your annual corporate income tax declaration.
  • Manage payroll and social security contributions for you and your employees.
  • Advise you on deductible expenses and legitimate tax optimizations.
  • Represent you in communication with the NRA.
  • Help you understand Understanding Income Tax and the Flat 10% Rate in Bulgaria (2026).
• Specialized Tax Advisory Firms: For more complex situations, especially if you have significant international income or assets, you might consider a specialized tax advisory firm. Some expats find Taxes for Expats useful for understanding their overall international tax obligations, particularly if they are balancing Bulgarian tax residency with obligations in their home country. However, for day-to-day Bulgarian company compliance, a local Bulgarian accountant is essential.

Invest in a good accountant from day one. It's an expense that pays for itself many times over in peace of mind and avoiding costly mistakes. Many firms offer packages for small businesses and expats, often including company formation, accounting, and payroll services.

Strategic Considerations for Expat Entrepreneurs in Bulgaria

Bulgaria’s tax environment, particularly its corporate tax rate, isn't just a compliance hurdle; it's a strategic advantage for many expat entrepreneurs. Understanding how to leverage this, alongside other financial aspects, can significantly impact your business's growth and your personal wealth.

The Allure of Bulgaria's Tax Environment

The flat 10% corporate income tax rate, coupled with the 5% dividend tax, creates a very attractive overall tax burden on distributed profits (an effective 15% combined rate). This is often one of the lowest in the European Union, making Bulgaria a compelling location for:

• Startups and SMEs: Lower tax obligations mean more capital can be reinvested into the business for growth, product development, or marketing. For a fledgling business, this can be the difference between thriving and merely surviving.
• Service-Based Businesses: Many expat entrepreneurs run online businesses, consulting firms, or creative agencies. These types of businesses often have lower overheads, meaning more of their revenue translates directly into profit, making the low corporate tax rate even more impactful.
• Holding Companies: Some larger international structures might consider using a Bulgarian entity as part of a holding structure due to the favorable tax regime, especially when considering the extensive network of Double Taxation Agreements that Bulgaria holds.

Beyond just the corporate tax, Bulgaria also offers a flat 10% personal income tax rate, which means that even your salary or other personal income is taxed at this low, predictable rate. This combination of low corporate and personal tax rates is a powerful incentive for individuals looking to maximize their earnings and retain more of their hard-earned money. It allows for better personal financial planning and contributes to the overall Why Bulgaria Has Affordable Healthcare: The Expat Guide (2027) and generally lower The Complete Guide to Cost of Living in Bulgaria for Expats (2026).

Managing Funds and International Transactions

Running a business, especially one with international clients or owners, means regularly moving money across borders. While your local Bulgarian bank account will handle your day-to-day operations, you'll inevitably encounter situations where you need to send or receive funds internationally.

• International Payments: If you're paying suppliers abroad, or if you're transferring distributed profits (dividends) to a personal account in your home country, traditional bank transfers can sometimes be slow and expensive, with unfavorable exchange rates and hidden fees.
• Dedicated Transfer Services: This is where services like Wise (formerly TransferWise) come in very handy. They specialize in international money transfers, often offering more competitive exchange rates and lower fees than traditional banks. For businesses, this can mean significant savings over time. Many expats use Wise for both personal and business transfers, as it simplifies the process and makes it more transparent. It’s also very useful for paying foreign employees or contractors, or for receiving payments from international clients in different currencies.

When dealing with large sums, or frequent transactions, even small differences in exchange rates and fees can add up. So, do your research and compare options when it comes to international money movements.

Double Taxation Agreements

Bulgaria has signed Double Taxation Agreements (DTAs) with over 70 countries worldwide. These agreements are crucial for expats because they aim to prevent you or your business from paying tax on the same income in two different countries.

For example, if your Bulgarian company generates income from a country that also has a DTA with Bulgaria, the agreement will specify which country has the right to tax that income, or how relief from double taxation should be granted (e.g., through an exemption or tax credit method). This is particularly relevant if:

• You have foreign income: Your Bulgarian company earns revenue from clients located in other countries.
• You are a tax resident elsewhere: You, as the owner, are considered a tax resident in another country while your company is in Bulgaria.
• You pay dividends to foreign shareholders: As mentioned earlier, the 5% dividend withholding tax might be reduced or exempted based on a DTA.

Understanding the specific DTA between Bulgaria and your home country, or the country where your clients/partners are based, can be complex. You'll likely need to consult with both your Bulgarian accountant and potentially a tax advisor in your home country to ensure full compliance and take advantage of any available relief. The purpose of these agreements is to make international trade and investment more straightforward, but navigating their intricacies requires expert knowledge. Your local accountant can certainly guide you on how these agreements apply to your Bulgarian company's income and how to properly declare it. They can also advise on obtaining a tax residency certificate from the NRA if needed for DTA purposes. You can learn more about this in our guide on Understanding Double Taxation Agreements and Foreign Income in Bulgaria.

Disclaimer

The information provided in this guide is intended for general informational purposes only and does not constitute legal, financial, or tax advice. Tax laws and regulations in Bulgaria, including rates and thresholds, can change and may be subject to specific interpretations by the National Revenue Agency. While we strive to keep our content accurate and up-to-date, it is essential to consult with a qualified Bulgarian accountant or tax professional for advice tailored to your specific situation and to ensure compliance with current laws. We are not liable for any actions taken based on the information presented herein.