Taxation in Bulgaria: Income Tax and Property Tax

Published on May 5, 2026 and written by Cyril Jarnias

Bulgaria, with its attractive cost of living and pleasant lifestyle, is drawing more and more expatriates. However, before packing your bags, it is crucial to understand the Bulgarian tax system. This guide will shed light on the main aspects of taxation in Bulgaria, allowing you to plan your expatriation with peace of mind.

The Bulgarian Tax System: An Attractive Regime for Expatriates

Bulgaria stands out with a particularly advantageous tax system, especially for expatriates. The country applies a flat tax rate of 10% on personal income, one of the lowest in the European Union. This flat tax applies to most income, including salaries, rental income, and capital gains.

For businesses, the corporate income tax rate is also set at 10%, making Bulgaria a sought-after destination for entrepreneurs and foreign investors. Additionally, dividends are taxed at a rate of 5%, offering very competitive taxation for shareholders.

The standard VAT in Bulgaria is 20%, with reduced rates for certain goods and services. For example, the hospitality sector benefits from a reduced rate of 9%, which contributes to the country’s tourist appeal.

Tax Returns: Simplified but Not to Be Overlooked

In Bulgaria, the tax period corresponds to the calendar year. Tax residents must declare their worldwide income, while non-residents are only taxed on their Bulgarian-source income. The annual income tax return must be filed by April 30 of the year following the year the income was received.

To be considered a tax resident in Bulgaria, you must stay there for more than 183 days per year or have your center of vital interests in the country. It is important to note that tax residency status can have significant implications for your overall tax situation.

Salaried expatriates generally benefit from a withholding tax system, with their employer deducting the tax directly from their salary. However, if you have other sources of income, you will need to declare them yourself.

Bulgaria has implemented an online filing system that greatly simplifies the process. Nevertheless, for expatriates unfamiliar with the Bulgarian tax system or the language, it may be wise to hire a local accountant to ensure your returns are compliant.

Income Tax: A Favorable Flat Tax

One of the main advantages of the Bulgarian tax system is its flat income tax rate of 10%. This rate applies to most income, including:

• Salaries
• Self-employment income
• Rental income
• Capital gains from securities and real estate
• Bank interest

This flat tax significantly simplifies tax calculation and provides valuable visibility for expatriates. It is important to note that this rate applies from the first lev earned, with no allowance or tax bracket.

For employees, the tax is generally withheld at source by the employer. Self-employed individuals, on the other hand, must make quarterly advance payments based on their estimated income.

Expatriates should pay particular attention to the tax treaties between Bulgaria and their home country to avoid double taxation. Bulgaria has signed treaties with many countries, including France, generally allowing the tax paid in Bulgaria to be credited against the tax due in the home country.

Property Tax: A Moderate Cost for Homeowners

For expatriates considering investing in real estate in Bulgaria, property tax is a factor to consider. This tax is relatively moderate compared to other European countries, typically ranging between 0.01% and 0.45% of the property’s tax value.

The exact rate depends on several factors, including:

• The property’s location (larger cities tend to apply higher rates)
• The type of property (residential, commercial, etc.)
• The use of the property (primary residence, secondary home, or rental)

The tax value of the property is generally lower than its market value, which helps keep the property tax at a reasonable level. This value is periodically reassessed by local authorities.

In addition to property tax, owners must pay a waste collection tax, the amount of which varies by municipality. It is important to note that there is no residence tax in Bulgaria, which represents a significant saving for residents.

For real estate investors, it is crucial to factor these recurring costs into the calculation of their investment’s profitability. Although moderate, these fees can impact the overall return of a rental property.

VAT and Other Taxes: What Expatriates Need to Know

Although VAT does not directly concern individuals, it impacts the cost of living and can be relevant for expatriate entrepreneurs. The standard VAT rate in Bulgaria is 20%, with reduced rates for certain sectors:

• 9% for hospitality
• 0% for certain medical and educational services

Businesses with a turnover exceeding 50,000 BGN (approximately €25,000) over 12 consecutive months are required to register for VAT.

For expatriate entrepreneurs, it is important to note that Bulgaria offers a favorable tax regime for micro-enterprises. Businesses with an annual turnover not exceeding 300,000 BGN (approximately €150,000) can opt for a simplified regime with a 15% tax rate on turnover, instead of the standard corporate income tax.

Regarding social security contributions, rates are relatively low in Bulgaria. For employees, the employer’s share amounts to approximately 18.9% of gross salary, while the employee’s share is about 13.8%. These rates may vary slightly depending on the sector of activity.

Practical Tips for Optimizing Your Taxes as an Expatriate

To make the most of the Bulgarian tax system as an expatriate, here are some practical tips:

1. Plan your tax residency: If you plan to spend more than 183 days per year in Bulgaria, you will be considered a tax resident. This can be advantageous given the low tax rate, but make sure you understand the implications for your tax obligations in your home country.

2. Leverage tax treaties: Bulgaria has signed tax treaties with many countries to avoid double taxation. Familiarize yourself with the treaty applicable to your situation to optimize your overall tax situation.

3. Consider real estate investment: With low property taxes and no residence tax, real estate investment in Bulgaria can be tax-advantageous, whether for your personal residence or as a rental investment.

4. Explore entrepreneurial opportunities: The favorable tax regime for businesses and micro-entrepreneurs can offer interesting opportunities for expatriates looking to start their own business.

5. Stay informed about changes: Tax legislation can evolve. Stay up to date on any changes that could impact your situation.

6. Consult local experts: Despite the relative simplicity of the Bulgarian tax system, it may be wise to consult a local accountant or tax attorney, especially in your first years of expatriation.

Conclusion: Is Bulgaria a Tax Haven for Expatriates?

With its flat tax rate of 10% on income and corporate profits, moderate property taxes, and the absence of a residence tax, Bulgaria undeniably offers an attractive tax framework for expatriates. This advantageous tax regime, combined with a relatively low cost of living, makes Bulgaria a destination of choice for those looking to optimize their financial situation.

However, it is important not to base your expatriation decision solely on tax considerations. Quality of life, professional opportunities, healthcare, and education systems are all factors to take into account. Additionally, expatriates must remain vigilant about their tax obligations in their home country and ensure they comply with all applicable regulations.

Ultimately, while Bulgaria is not a tax haven in the strict sense of the term, it offers a particularly favorable tax environment that, combined with its other assets, makes it an increasingly popular expatriation destination.