Expatriate tax ebook - Bulgaria

What taxes?

Capital gains tax
Inheritance, estate and gift taxes
Investment income
Local taxes
Real estate taxes
Social security taxes
Stock options
Wealth taxes
Other specific taxes

Capital gains tax
The following income originating from a source in Bulgaria that is due/paid in favour of a foreign natural person, in case it has not been realised by a base, calculated in the state, shall be subject to a final tax:

1. compensation for loss of profit and indemnities of that nature;
2. scholarships awarded for training within the country and abroad;
3. interest, including the interest contained in lease instalments;
4. the income originating from rent or any other granting of the use of movable or immovable property, including the instalments under a lease contract which does not explicitly provide for the transfer of the ownership of property;
5. remuneration under franchising contracts and factoring contracts;
6. author’s and licence remuneration;
7. remuneration for technical services;
8. awards and remuneration for activity carried out inside the territory of the country by foreign natural persons – public figures, scientific workers, eminent figures in arts, culture and sport, including those cases in which the income has been due or paid through a third person, such as an impresario agency, producer’s firm or another intermediary;
9. income originating from management and supervision of establishments, and from the participation in management and supervisory bodies of establishments;
10. income originating from sale, exchange or any other transfer of immovable property for consideration;
11. instalments under a lease contract which explicitly provides for the transfer of ownership and real estate;
12. income originating from the sale or exchange or any other transfer for consideration of stocks, shares, compensatory instruments, investment bonds and other financial assets.

Inheritance, estate & gift taxes
Inheritance tax is levied at the rate of 0.4% to 6.6% depending on the relationship of the beneficiary, and the municipality of residence. A similar situation applies to gift tax, levied on the value of the donated property.

Real estate tax depends on the municipality in which the estate is situated and varies from 0.01% to 0.25%.

Investment income
The expatriate's Bulgarian tax residency and domicile status will determine whether investment income such as interest, dividends etc, will become liable to Bulgarian income tax.

Local taxes
There are local taxes applied to an individual in Bulgaria such as real estate tax and garbage tax, tax on vehicles, etc.

Real estate tax
Real estate property tax is levied on the owner of immovable property at an annual rate of 0.01% to 0.25% of the taxable value of the property.

Social security taxes

Where duties are performed in Bulgaria, generally a charge to Bulgarian Social Security (BSS) will arise. The expatiate will be treated as an employee and subject to BSS at 8.9%, there is also an additional liability to a Health Levy charge at 3.2% bringing the total cost of social security for the expatriate to 12.1%. The employer will also be required to contribute 17% of the relevant income and benefits to Bulgarian SS.BSS must be collected at source along with payroll taxes.

Stock options
Not applicable

Wealth tax
There is no wealth tax in Bulgaria.

Other specific taxes
Individuals performing activities in the fields of accommodation and restaurants, retail trade, different types of craftsmanship, etc., with an annual turnover for the previous year not exceeding BGN 50 thousand and who are not registered for VAT purposes, with the exception of registration for intra-Community acquisitions, are liable to a one-time annual patent tax. If during the year the turnover exceeds BGN 50 thousand the individual is liable to personal income tax and the patent tax paid is treated as tax credit.

The tax is different for the different types of activities and it is determined on the basis of certain criteria relevant for the corresponding types of business determined by the law. The payers of the patent tax should submit a declaration, stating all circumstances necessary for determining the applicable tax.

Information about Bulgaria:

• introduction
• facts and figures
• basis of taxation
• what taxes?
• tax planning opportunities