Company Taxation in Bulgaria: What You Really Pay

Company taxation in Bulgaria is usually presented with two numbers: 10% on profits and 5% on dividends. Both are correct. They just don't tell the whole story.

What determines how much you keep at the end of the year comes down to three things: when you pay the tax, what's withheld when you take the money out, and how much it costs to maintain the structure that allows you to pay that 10%. Let's break it down.

1. 10% Corporate Tax with Quarterly Prepayments

Bulgarian corporate tax is a flat 10% on taxable profits. There's no progressive scale, and no reduced rate for small companies.

What surprises new owners is that the tax isn't paid just once at the end of the year. Companies exceeding the previous year's turnover threshold make prepayments during the fiscal year, on a quarterly basis, based on projected profits. In practice:

• You estimate the year's profit and pay tax on that estimate.
• If you significantly underestimate the profit, interest is charged on the difference.
• The final settlement occurs with the annual declaration, and any remaining balance is paid at that time.

This means a fast-growing company provides liquidity to the state before it collects from its customers. Exact thresholds and dates change, so always confirm the current regime with your accountant or the National Revenue Agency.

2. 5% Dividend Tax

The profit remaining after corporate tax isn't yours yet. To withdraw it as a dividend, 5% is withheld upon distribution to individuals.

The overall picture for a 100,000 euro profit:

Stage	Amount
Profit before tax	100,000 €
Corporate tax 10%	-10,000 €
Available for distribution	90,000 €
Dividend tax 5%	-4,500 €
Net to owner	85,500 €

So, the actual burden isn't 10% but approximately 14.5% by the time the money reaches your pocket. And be aware: if you are a tax resident of Greece, the dividend is also declared in Greece, with the double taxation treaty determining how the already withheld tax is offset.

3. Fixed Costs Not Called a Rate

This is where it gets critical for small companies. 10% on a 30,000 euro profit is 3,000 euros in tax. Fixed costs can be the same or more.

Mandatory Double-Entry Bookkeeping

Every EOOD or OOD maintains a double-entry accounting system. There is no simplified regime. An accountant is a monthly expense, typically 80 to 250 euros per month depending on VAT, documents, and payroll.

Manager's Social Security Contributions

A manager working for the company is mandatorily insured based on a minimum insurable income, regardless of whether the company made a profit. This is a fixed monthly cost, usually 1,800 to 2,400 euros per year at the minimum thresholds.

Annual Statements and Publication

You prepare a balance sheet and publish it in the Commercial Register within a deadline, otherwise penalties are imposed. This usually costs an additional 150 to 400 euros.

VAT 20%

The standard VAT rate is 20%. Registration is mandatory above the turnover threshold and optional earlier. VAT registration brings monthly declarations, VIES for intra-community transactions, and Intrastat where applicable.

Potential Audit

An independent audit is triggered when size thresholds are exceeded (assets, net revenue, average number of employees). Small companies are exempt, but once you hit it, we're talking thousands of euros annually.

The Real Total Burden

Let's take a realistic service company with 60,000 euros profit before fixed costs:

Item	Amount
Accounting	-1,800 €
Manager contributions	-2,100 €
Balance sheet, registered office, banking	-700 €
Taxable profit	55,400 €
Corporate tax 10%	-5,540 €
Dividend tax 5%	-2,493 €
Net	47,367 €

Actual loss is about 21% of the initial profit, not 10%. The smaller the profit, the worse the ratio, because fixed costs don't decrease. We have a full breakdown of expenses in the cost of a company in Bulgaria, while differences by legal form are analyzed in the company types EOOD, OOD, EAD, and AD.

4. What Changes with the Euro

Bulgaria adopted the euro, which eliminates exchange rate costs for transactions with Greece and makes invoices clearer. However, it changes nothing regarding rates, prepayments, or fixed costs. The transition primarily brought practical obligations: re-pricing contracts, adjusting accounting systems, and dual price display during the transitional period.

Who It Still Makes Sense For

The Bulgarian structure remains logical when there is real substance in the country: relocation and tax residency there, staff, warehouse, physical products requiring an intra-community VAT ID. In such cases, the 10% works in your favor because fixed costs are spread over greater activity.

Conversely, for an entrepreneur providing remote services with profits below approximately 50,000 euros, fixed costs eat into the advantage of the low tax rate. The cost isn't 10%; it's the ticket to having the right to pay it.

How it Compares to a Wyoming LLC

The US structure has a completely different cost logic. Wyoming does not impose a state income tax, does not require double-entry bookkeeping or the publication of financial statements, and owning the company does not generate social security contributions. A single-member LLC with a non-US resident owner and no income connected to US-based activity typically does not pay federal tax, but it does file the required declarations, primarily Form 5472.

In our package, the annual maintenance is 1,200 euros and includes everything: state fees and annual report, registered agent, business license, tax filings, and accounting support. A fixed number, without a monthly accountant and without contributions. See how to form a company in Wyoming and what it includes.

For a detailed comparison of the two structures with numbers, see Bulgaria vs. Wyoming LLC. If you're considering other European options, the Cyprus company taxation and the guide to Estonia via e-Residency can help.

The Mistake That Costs More Than Any Tax

Many people open a Bulgarian company while living, working, and making decisions from Greece. When the place of effective management is Greece, the company may be considered a tax resident of Greece and taxed at Greek rates, with surcharges for the years it was not declared. The 10% does not protect you from this. Before choosing a jurisdiction, clarify your own tax residency and where decisions are actually made. More in the guide to forming a company abroad.

Frequently Asked Questions

What is the corporate tax in Bulgaria? A flat 10% on taxable profits, with no scale and no reduced rate for small companies.

Do I pay tax before the year ends? Yes, if the company exceeds the prescribed turnover limit. Advance payments are quarterly and calculated on estimated profit, with interest if the estimate deviates significantly.

How much is the tax on dividends? 5% withholding on distributions to individuals. Together with corporate tax, the total burden reaches approximately 14.5%.

Do I pay contributions if the company doesn't make a profit? Yes. The manager working for the company is compulsorily insured based on a minimum insurable income, regardless of the results.

Is VAT registration mandatory? It becomes mandatory above the turnover threshold. You can also register voluntarily earlier, usually when dealing with businesses within the EU.

Am I also taxed in Greece for the dividend? If you are a tax resident of Greece, the income is also declared here, with the double taxation avoidance agreement regulating the offset. Seek personalized advice from your accountant.

Conclusion

Bulgaria's 10% is real, but it's just the beginning of the bill. Add quarterly advance payments, 5% on dividends, and fixed costs of 3,500 to 6,000 euros per year, and the picture changes, especially for companies with profits below 50,000 euros.

If your activity is services, online, or international, and you don't plan to settle in Bulgaria, it's worth considering a structure with a single annual cost instead of three levels of obligations. Start with the packages and delivery times in the formation form.

If you are considering other options outside of Greece, see our guide on forming a company abroad and our page on forming a company in Dubai.