Bulgaria’s corporate tax regime is one of the main reasons foreign companies incorporate here rather than in neighbouring jurisdictions. The headline rate is flat — there are no progressive bands — and the compliance calendar is predictable. What catches newcomers out is rarely the rate itself; it is the advance-payment regime, the withholding obligations on money leaving the country, and the documentation expected if you transact with related parties.

Who is liable

A company incorporated in Bulgaria is taxed on its worldwide profit. A foreign company is taxed only on profit attributable to a permanent establishment here. That distinction matters more than it sounds: a foreign business can trigger a permanent establishment through a fixed place of business, a dependent agent concluding contracts, or a construction site that runs beyond a set duration — often without ever having registered a Bulgarian company.

If you are operating in Bulgaria through people on the ground rather than a registered entity, the first question to settle is whether you have already created a taxable presence.

The rate and the tax year

Corporate income tax is charged at a flat rate of REVIEW: current headline rate — the firm’s own materials have cited 10% on taxable profit. The tax year is the calendar year, with no option to elect a different accounting period.

Taxable profit starts from the accounting result and is then adjusted for permanent and temporary differences — non-deductible expenses, thin capitalisation restrictions, depreciation differences between accounting and tax rules, and provisions. In practice this reconciliation, not the rate, is where disputes with the revenue authority arise.

Filing and payment

The annual return is filed and the balance of tax paid within a defined window after year end REVIEW: current filing and payment deadline. Filing is electronic through the National Revenue Agency.

Most companies also make advance instalments during the year, monthly or quarterly depending on the previous year’s turnover REVIEW: current turnover thresholds and instalment frequency. Underpaying advances can attract interest even when the annual return is correct and paid on time, which is a common and avoidable cost for companies in their second year of trading.

Money leaving Bulgaria

Payments to non-residents are frequently subject to withholding tax at source — dividends, interest, royalties, and certain service fees REVIEW: current withholding rates by payment type.

Two reliefs commonly apply:

  • EU directives, which can reduce withholding to nil between qualifying associated companies.
  • Double tax treaties, including Bulgaria’s treaty with Greece.

Treaty relief is not automatic. It normally requires an advance clearance procedure with the revenue authority, supported by a certificate of residence and evidence of beneficial ownership. Companies that pay first and apply later often recover the difference slowly, if at all.

If you trade with companies under common control — a Greek parent invoicing its Bulgarian subsidiary, for example — transfer pricing documentation may be mandatory above certain thresholds REVIEW: current documentation thresholds and local file requirements. Intra-group management fees, financing and licence arrangements are the areas most often challenged.

Where we usually add value

Most of the corporate tax problems we are asked to fix would have cost very little to prevent:

  • confirming whether an existing Bulgarian presence is already a permanent establishment before the revenue authority does;
  • structuring dividend and financing flows so treaty and directive relief is actually available;
  • putting transfer pricing documentation in place before it is requested rather than after;
  • reviewing the advance instalment position mid-year, when it can still be corrected.

We advise on the tax treatment alongside the underlying corporate work, so the structure and its tax consequences are decided together rather than in sequence.