I. Tax Residency Is Not Immigration Residency
A residence permit determines whether you may live in Bulgaria. Tax residency determines where you pay tax on your income. The two often coincide, but not always: a person may hold a Bulgarian residence card and remain tax resident elsewhere, or become tax resident in Bulgaria while still registered in another country. Each question must be analysed on its own terms.
II. The Residency Tests
Under Article 4 of the Personal Income Taxes Act, an individual is a Bulgarian tax resident, irrespective of nationality, in particular where they:
- have a permanent address in Bulgaria;
- are present in Bulgaria for more than 183 days in any period of twelve consecutive months;
- have the centre of their vital interests in Bulgaria — assessed by reference to family, property, place of work and similar personal and economic ties; or
- are sent abroad by the Bulgarian state or its institutions.
Days of presence are counted in any rolling twelve-month period, not by calendar year. The tests are applied with the relevant double tax treaty in mind: where a person is resident in two states under their domestic laws, the treaty's tie-breaker rules — permanent home, centre of vital interests, habitual abode, nationality — decide which state has the primary right to tax.
III. What Residents Pay
Bulgarian tax residents are taxed on their worldwide income. Most categories — employment income, income from freelance activity, rental income and capital gains — are taxed at a flat rate of 10%. For certain categories the law allows a statutory deduction for expenses before the tax is calculated, which lowers the effective rate. Dividends are subject to a final tax of 5%.
Social security and health insurance contributions are separate from income tax and are payable on employment and self-employment income up to a maximum monthly insurable income. Specific exemptions apply, among others, to certain disposals of real estate that has been held for a minimum period.
IV. What Non-Residents Pay
Non-residents are taxed in Bulgaria only on Bulgarian-source income — for example, rent from a Bulgarian property, income for work performed in Bulgaria, or dividends from a Bulgarian company. Much of this income is taxed by withholding at source, commonly at 10%, and 5% for dividends, subject to reduction or exemption under a double tax treaty or EU law.
V. Double Tax Treaties
Bulgaria has an extensive network of double tax treaties. They allocate taxing rights between the two states and provide relief where the same income would otherwise be taxed twice. To claim treaty benefits in another country, a Bulgarian resident generally needs a certificate of tax residence issued by the National Revenue Agency; a non-resident claiming treaty benefits in Bulgaria needs the equivalent certificate from their state of residence.
VI. Registration and the Annual Return
Tax residents with income that is not fully taxed at source must file an annual tax return with the National Revenue Agency by 30 April of the following year and pay any balance due by the same date. Returns can be filed electronically. A foreign national needs a Bulgarian identification number — a personal number or a foreigner's personal number — to register with the tax authority.
When moving to Bulgaria, it is equally important to check the rules of the country you are leaving. Some states continue to treat former residents as taxable for a period, or apply exit rules, and the timing of the move can affect in which country a given year's income is taxed. Planning the transition in advance, with advice in both countries, avoids unexpected double taxation.