Tax Benefits For Real Estate Investors In Bulgaria

Published on October 1, 2025 and written by Cyril Jarnias

Bulgaria, a European Union member state since 2007, has established itself as a prime destination for real estate investors seeking tax-advantaged opportunities. With its attractive tax regime and growing real estate market, this Balkan country offers an ideal environment for portfolio diversification and generating appealing rental income. Let’s explore together the tax advantages that make Bulgaria a compelling option for savvy investors.

One of Europe’s Most Competitive Local Tax Systems

Bulgaria stands out for its particularly investor-friendly tax policy, whether for local or foreign investors. The country has implemented a simple and advantageous taxation system, making it one of the most competitive in the European Union.

A Single and Attractive Tax Rate

One of Bulgaria’s main advantages lies in its single tax rate, also known as “flat tax.” Set at just 10%, this rate applies to both personal income and corporate profits. This tax simplicity is a strong argument for real estate investors, who can easily anticipate their tax liabilities.

For rental income, this 10% rate applies to the gross amount of rent received. Property owners also have the option to deduct certain expenses, such as maintenance costs or loan interest, which can further reduce the taxable base.

Capped Social Security Contributions

Complementing this advantageous tax rate, Bulgaria has implemented a capped social security contribution system. For 2025, the monthly cap is set at approximately €2,000, which significantly limits contributions for high incomes. This measure is particularly interesting for investors receiving substantial rental income.

Attractive Taxation for Real Estate Companies

Investors who choose to establish a Bulgarian legal entity to manage their real estate assets also benefit from notable tax advantages. Corporate tax is set at 10% of taxable profits, one of the lowest rates in the European Union. Additionally, dividends paid to shareholders are taxed at only 5%, allowing for optimized profit distribution.

International Agreements: Protection Against Double Taxation

Bulgaria has concluded numerous double taxation avoidance agreements with other countries, including France. These tax conventions are essential for foreign investors, as they prevent being taxed twice on the same income.

The Tax Credit Mechanism

Thanks to these agreements, French investors receiving rental income in Bulgaria can benefit from a tax credit in France. Specifically, the tax paid in Bulgaria (10% on rental income) can be deducted from the tax due in France on the same income. This mechanism largely neutralizes double taxation and preserves the Bulgarian tax advantage.

Reduced Taxation on Capital Gains

When selling a property in Bulgaria, realized capital gains are subject to the 10% Bulgarian tax. Again, the Franco-Bulgarian tax convention prevents double taxation. French investors can thus benefit from an overall tax system more advantageous than if they had invested in France.

Tax Optimization for International Investors

These international agreements open the door to interesting tax optimization strategies. For example, an investor can choose to establish a holding company in a third country with favorable tax treaties with Bulgaria to structure investments optimally.

Local Taxes: Reduced Tax Burden for Property Owners

In addition to advantageous general taxation, Bulgaria stands out for particularly light local taxes for real estate owners. This policy helps reduce property holding costs and improve investment profitability.

A Moderate Property Tax

Property tax in Bulgaria is calculated based on the fiscal value of the property, which is generally lower than its market value. The rate varies by municipality but typically ranges between 0.01% and 0.45% of the fiscal value. For comparison, this rate is significantly lower than that applied in many European countries, including France.

No Residence Tax

Unlike many countries, Bulgaria does not apply a residence tax. This absence represents significant savings for property owners, whether they occupy their property or rent it out. This measure helps reduce recurring costs associated with property ownership.

Reduced Notary and Registration Fees

When acquiring property in Bulgaria, notary and registration fees are relatively low compared to other European countries. They typically represent between 2% and 3% of the purchase price, facilitating market entry for investors.

• Notary fees: approximately 1% of purchase price
• Registration fees: 0.1% to 0.8% depending on property value
• Municipal tax: approximately 0.1% to 0.2% of purchase price

International Comparison: Bulgaria, a Smart Choice for Investors

To better appreciate Bulgaria’s tax attractiveness, it’s interesting to compare its regime with other European countries popular among real estate investors.

Bulgaria vs France: A Considerable Tax Gap

The difference in tax pressure between Bulgaria and France is striking. While Bulgaria applies a single 10% rate on rental income, France taxes this income according to the progressive income tax scale, which can reach 45% for the highest brackets, plus 17.2% social security contributions. Additionally, property tax in France is generally higher, ranging between 1.5% and 3% of the cadastral rental value.

Bulgaria vs Spain: Simpler and More Advantageous Taxation

Although Spain is a popular destination for real estate investors, Bulgaria offers more advantageous taxation. In Spain, rental income for non-residents is taxed at a fixed rate of 24%, compared to only 10% in Bulgaria. Additionally, Spanish property tax (IBI) can reach up to 1.1% of the cadastral value, which is higher than Bulgarian rates.

Bulgaria vs Portugal: A More Stable Tax Regime

Portugal has long been attractive thanks to its non-habitual resident regime (NHR), offering tax exemption on certain foreign income. However, this regime has been modified and is now less advantageous. Bulgaria, with its fixed 10% rate and tax stability, offers an interesting and more sustainable alternative for investors.

Comparative Table of Tax Regimes

Country	Tax Rate on Rental Income	Property Tax	Corporate Tax
Bulgaria	10%	0.01% – 0.45%	10%
France	Up to 45% + 17.2% SC	1.5% – 3%	25%
Spain	24% (non-residents)	Up to 1.1%	25%
Portugal	28% (non-residents)	0.3% – 0.45%	21%

Investment Opportunities: A Booming Real Estate Market

Beyond its tax advantages, Bulgaria offers a dynamic and promising real estate market for investors. The country enjoys stable economic growth and development in its tourism sector, creating interesting opportunities in real estate.

An Accessible and Growing Market

The Bulgarian real estate market is characterized by prices that remain attractive compared to other European destinations. In the capital Sofia, the average price per square meter for a quality apartment is around €2,000, which is significantly lower than prices in other European capitals. This accessibility, combined with steady price growth, offers interesting medium- and long-term capital gains potential.

Attractive Rental Yields

Investors can benefit from attractive rental yields, particularly in large cities and tourist areas. In Sofia, gross yields can reach 5% to 7% for well-located properties. In popular seaside resorts like Sunny Beach, yields can be even higher during the tourist season.

Promising Sectors to Explore

• Residential real estate in large cities: Demand for modern housing in urban centers remains strong, offering opportunities for long-term rentals.
• Tourism real estate: Black Sea resorts and ski resorts like Bansko attract many tourists, creating a dynamic market for seasonal rentals.
• Commercial real estate: With the development of the service sector, particularly in IT, demand for modern offices is increasing in large cities.

Conclusion: Bulgaria, a Prime Destination for Real Estate Investment

Bulgaria stands out as a premier destination for real estate investors seeking tax optimization and attractive returns. Its advantageous tax regime, combined with a dynamic and accessible real estate market, makes it a compelling option for diversifying international real estate portfolios.

The major advantages of real estate investment in Bulgaria are numerous:

• Highly competitive taxation with a single 10% rate on income and profits
• Double taxation avoidance agreements protecting foreign investors
• Moderate local taxes, reducing property holding costs
• A real estate market offering good capital gains potential and interesting rental yields
• Economic and political stability within the European Union

However, as with any foreign investment, it’s crucial to research local market specifics, acquisition procedures, and potential regulatory changes. Support from professionals experienced in international real estate can be valuable for optimizing investments and navigating the Bulgarian context confidently.

Bulgaria represents a unique opportunity for real estate investors looking to diversify their portfolios while benefiting from advantageous taxation. With its tax advantages and developing market, the Balkan country asserts itself as a prime destination for those seeking to combine returns and tax optimization in their international real estate investment strategy.