Bulgaria’s tax system is business-friendly, with a flat income tax rate and well-defined employer responsibilities including withholding and paying income tax on behalf of their employees, calculating and submitting mandatory social security and health insurance contributions, and issuing annual earnings statements.
A person is considered a Bulgarian tax resident if they have a permanent address there, spend more than 183 days in Bulgaria within any 12 months, are sent abroad by a Bulgarian entity, or have their primary life ties centred in Bulgaria.
Personal income tax: Bulgaria has a flat personal income tax rate of 10% on all personal income.
Withholding and contributions: In Bulgaria, the standard withholding rates are:
- Dividends: 5%
- Interest: Interest earned on deposits with banks established in the EU/EEA is not subject to tax. Other interest income is subject to tax at a flat rate of 8% (updated from 10% as of 2026)
- Capital gains: 10%
Tax allowances and non-taxable benefits:
- Meal reimbursement – Non-taxable allowance covering employee meal costs during work hours.
- Solidarity assistance – Non-taxable support for serious illness, rehabilitation, or disability of an employee or immediate family member, requiring reasonable documentation under a welfare policy.
- Natural disaster damage assistance – Non-taxable reimbursement for property damage caused by natural disasters, limited to actual damage costs.
- Health and life insurance – Non-taxable benefit for additional health/life insurance coverage provided to employees, including compulsory complementary insurance.
- Business trip allowances – Non-taxable daily per diems for domestic trips (with or without overnight stay) and international business trips, aligned with legally prescribed amounts.
- Holiday and family occasion gifts – Non-taxable gifts or allowances for children during Easter, Christmas, or New Year, plus allowances for civil marriage, newborn/adoption, and funeral expenses.
- Tax relief for children – General tax relief for minor children residing in the EU/EEA, including a separate relief category for children with 50% or more permanent disability.
Deductions and tax reliefs:
- Tax breaks for reduced capacity and health – If your working capacity is reduced by 50% or more, you can lower taxable income by EUR 4,049; additionally, voluntary pension, health, and life insurance contributions are deductible up to 10% of taxable income.
- Tax break for pension contributions – Contributions to a pension fund to buy pension years reduce taxable income by the exact amount contributed.
- Tax break for donations – Donations reduce taxable income by up to 65%, with 5% for health/education/charities, 15% for cultural institutions, and 50% for the National Health Insurance Fund (children's treatment).
- Tax break for young families – If under 35 with a mortgage for your first home, you can deduct loan interest up to EUR 51,130 from taxable income.
- Tax breaks for children – Fixed deductions of EUR 3,068 for one child, EUR 6,135 for two children, and EUR 9,203 for three or more children (under 18, not in state care); an additional EUR 6,135 applies for children with 50% or more disability.
