Bulgaria corporate tax - guide for international expansion

Expanding your business into Bulgaria? Understanding the country's corporate tax landscape is essential for making informed decisions about your European operations. Bulgaria offers one of the most competitive corporate tax environments in the European Union, making it an attractive destination for international businesses.

Whether you're considering establishing a subsidiary, acquiring a Bulgarian company, or simply need to understand your tax obligations, this guide covers everything you need to know. And if you're looking for efficient ways to manage international payments and banking, Wise Business can help streamline your cross-border financial operations in Bulgaria and beyond.

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This publication is provided for general information purposes and does not constitute legal, tax, or other professional advice from Wise Payments Limited, its subsidiaries or affiliates, and it is not intended as a substitute for obtaining business advice from a tax advisor or any other professional.

Bulgaria Corporate Tax Rate in 2025

Bulgaria maintains a flat corporate income tax rate of 10% for 2025, which is one of the lowest rates in the European Union. However, due to the implementation of the OECD's Pillar Two global minimum tax rules, large multinational corporations with annual revenues exceeding €750 million may face an effective rate of 15% through the Qualified Domestic Minimum Top-up Tax (QDMTT).¹

This 10% rate applies to the taxable profits of Bulgarian resident companies and permanent establishments of non-resident companies operating in Bulgaria. The rate has remained stable for several years, providing businesses with predictable tax planning opportunities.²

Bulgaria's corporate tax rate is significantly lower than the EU average of 21.27% and the OECD average of 23.85%, making it highly competitive for businesses looking to establish operations in Southeast Europe.¹ The country's membership in the EU since 2007 provides additional benefits, including access to the single market and various EU directives that prevent double taxation.³

Read more about Corporate Tax Planning best practices

How to Pay Corporate Tax in Bulgaria

Bulgarian companies must register for corporate income tax with the National Revenue Agency (NRA) and pay the tax in Bulgarian lev (BGN). The tax year corresponds to the calendar year, from January 1 to December 31, unless the company has been approved for a different accounting period.⁴

The final tax return and payment are due by June 30th of the year following the tax year. Companies that file their return and pay the tax electronically by March 31st may be eligible for a 1% tax relief.⁵

Companies are required to make advance payments during the year, with the specific schedule determined by their net sales revenue. Companies with revenue above BGN 3 million make monthly advance payments, while those with revenue between BGN 300,000 and BGN 3 million make quarterly advance payments. The final tax settlement is made upon filing the annual tax return, deducting all advance payments made throughout the year.⁴

Overdue amounts are subject to late payment interest, which is calculated daily based on the Bulgarian National Bank's base interest rate plus 10 percentage points. Penalties for corporate tax non-compliance are in addition to daily interest on overdue amounts. Fines range from BGN 100 to BGN 6,000 for various violations, including failure to submit a tax return on time, providing incorrect data in tax returns or appendices, and accounting policy violations. Repeated offenses can lead to higher penalties.⁵

Let's assume your Bulgarian company has an annual turnover of €1.5 million with a profit margin of 10%, resulting in taxable profits of €150,000 (approximately 293,000 BGN at current exchange rates).

At Bulgaria's corporate tax rate of 10%, the annual tax liability would be:

293,000 BGN × 10% = 29,300 BGN (approximately €15,000)

When expanding your business to Bulgaria, the right financial tools will make the process smoother. Using a platform like Wise Business makes it easy to manage international finances. A multi-currency account allows businesses to pay for incorporation costs, registration fees, and government taxes in local currency without paying high exchange rate fees.

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Tax Compliance in Bulgaria

Some key points to help your company stay compliant with Bulgarian tax regulations:

• Corporate Tax Filing: Companies in Bulgaria must submit annual tax reports digitally through the National Revenue Agency’s portal. Filing requires a Qualified Electronic Signature (QES) issued by a certified provider. The filing window runs from 1 March to 30 June following the end of the tax year. Submissions must include annual financial statements, corporate income tax return forms, statistical reports, and declarations of advance payments. Businesses with no activity may be exempt if they notify the National Statistical Institute.⁶
• Penalties for Non-Compliance: Late filing attracts fines ranging from BGN 500 to BGN 3,000, while late payments are subject to interest charges.⁶ Severe cases may lead to enforced tax audits or even criminal liability. Effective corporate tax planning and management help reduce the risk of penalties and ensure corporate tax strategies remain on track.
• Prepare for Audits: Tax audits are typically performed every four to five years, aligned with Bulgaria’s statute of limitations. Authorities can collect tax liabilities for up to five years, extendable to a maximum of ten years in exceptional cases.⁴ Maintaining accurate records and submitting timely returns is critical to avoiding compliance issues.
• Tax Registration: Companies must register early for tax obligations, including CIT, VAT, WHT, and payroll taxes. Early registration ensures smoother operations and minimises risks when handling different types of corporate tax liabilities.

International Expansion to Bulgaria

Knowing all the details of corporate taxes in Bulgaria can help companies make informed decisions before setting foot in this country.

It is a member of the EU, NATO, and WTO, indicating that the government provides political stability and direct access to major global markets. Bulgaria also benefits from a strong logistics position at the heart of the Balkans, with five Pan-European transport corridors, four international airports, two major seaports, and multiple Danube River ports connecting businesses to Europe, Turkey, and Central Asia.⁷

One of Bulgaria’s strongest advantages is its competitive tax regime. The Bulgarian corporate tax rate stands at 10%. This is the lowest in the EU. Personal income tax is also a flat 10%, while industries operating in high-unemployment regions may qualify for a 0% rate. Dividends and liquidation quotas are subject to a 5% withholding tax, which is reduced to 0% for EU tax residents.⁷ Businesses must also consider obligations around corporate tax filing and corporate tax returns. Knowing when corporate tax is due and working with a corporate tax assistant can help ensure compliance and simplify reporting. In addition, Bulgaria applies a favourable corporate capital gains tax system, further strengthening its investment appeal.

The country is also preparing to join the Eurozone. From January 2026, Bulgaria will officially adopt the euro, eliminating currency exchange risks, enhancing financial transparency, and improving investor confidence.⁸ This transition is expected to provide greater currency stability and more predictable returns for foreign businesses.

On top of it, Bulgaria’s workforce is another benefit for international investors. Around 62% of the population is working age, and approximately 60,000 students graduate yearly from 51 universities. Foreign language skills are widespread, with English and German being the most common. This educated talent pool makes it easier for international companies to build strong local teams.⁷

You can start a business in Bulgaria by following the steps below:⁹

1. Conduct market research to understand opportunities.
2. Draft a clear business plan and assess financing needs.
3. Choose a location and select the type of business entity.
4. Register your company with the Bulgarian Commercial Register.
5. Register for taxes with the National Revenue Agency.
6. Open a corporate bank account for operations.

When you begin a business in Bulgaria, you should do your research. Knowledge about the fundamentals, like how to buy a property in Bulgaria and how to open a bank account, can help you design a foolproof business establishment strategy for this country.

Discover the top 5 best Corporate Tax softwares

Incorporation of Business in Bulgaria

To incorporate a business in Bulgaria, foreign and local investors must follow these steps to comply with Bulgarian tax and corporate law:¹⁰

• Reserve a company name to ensure uniqueness.
• Hold a constituent assembly and sign the Articles of Association or Incorporation, which specify company details, governance, partner rights, and obligations.
• Deposit the company capital into a special escrow bank account. The minimum share capital for a Private Limited Liability Company (OOD) is BGN 2. Meanwhile, a Joint Stock Company (AD) minimum is BGN 50,000, which must be fully subscribed at incorporation.
• Obtain a permit or license if the business activity requires one.
• Register the company in the Bulgarian Commercial Register by filing Form A4 and submitting the necessary documents, including incorporation papers, notarised specimen signatures, bank certificates, declarations under the Commerce Act, proof of fee payment, and official extracts for foreign legal entity partners.

Business Entity Types in Bulgaria

According to the Bulgarian Commercial Law, investors can choose among several structures:¹¹

• Private Limited Liability Company (OOD): Best suited for small and medium enterprises. Liability is limited to capital contributions, with a minimum capital of BGN 2.
• Joint Stock Company (AD): Designed for larger businesses, requiring a minimum capital of BGN 50,000. Shares can be listed on the Bulgarian Stock Exchange.
• Partnerships (general, limited, and partnership limited by shares): These require no minimum capital, but general partners remain personally liable for business debts.
• Sole Proprietorship: The simplest form, established by a single individual with unlimited liability.

Incorporating in Bulgaria provides access to a business-friendly environment, but compliance with corporate tax submission rules and choosing the right corporate tax structure are essential. Businesses are usually recommended to seek help from a corporate tax lawyer or advisory services in Bulgaria.

International Corporate Tax Best Practices

Managing corporate tax obligations across multiple jurisdictions requires strategic planning and adherence to international standards. Here are key best practices for businesses operating internationally:

Maintain Compliance with Local and International Standards:

Ensure your business is properly registered in every jurisdiction where you operate. File all required tax returns on time and stay current with local tax law changes. Understanding OECD frameworks like Base Erosion and Profit Shifting (BEPS) and the Pillar Two Global Minimum Tax helps ensure transparency and avoid legal risks.

Leverage Double Taxation Treaties:

Bulgaria has signed double taxation agreements with over 70 countries, helping businesses avoid being taxed twice on the same income. These treaties typically provide reduced withholding tax rates on dividends, interest, and royalties, and include provisions for resolving disputes between tax authorities.

Maintain Comprehensive Financial Records:

Keep detailed, up-to-date financial records in accordance with both local Bulgarian requirements and international accounting standards. This not only ensures accurate tax reporting but also simplifies the audit process and supports transfer pricing documentation requirements for multinational operations.

Take the complexity out of international expansion with Wise Business

Researching corporate tax is a crucial step when expanding your business into a new country. The next step is setting up the financial infrastructure to handle the complexities of operating across borders, from managing multi-currency cash flow to mitigating FX risk.

The Wise Business account provides the financial tools to make your international expansion to Bulgaria efficient and simple. It's the one account for managing your money globally.

With a Wise Business account, you can:

• Pay suppliers and initial fees: Pay suppliers, global payroll, and one-off incorporation costs in the local currency.

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• Streamline your accounting: Integrate with tools like Xero or QuickBooks to simplify tracking your company's international finances.

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FAQs - Corporate Tax in Bulgaria

Who is liable for corporate tax in Bulgaria?

Bulgarian resident companies are liable for corporate income tax on their worldwide income. A company is considered resident if it is incorporated in Bulgaria or has its place of effective management in Bulgaria. Non-resident companies are only taxed on Bulgarian-source income, typically through permanent establishments or specific types of income subject to withholding tax.

Are there any tax incentives for businesses in Bulgaria?

Yes, Bulgaria offers several tax incentives. Companies with production activities in municipalities with high unemployment rates may be eligible for a 100% corporate tax exemption. For research and development (R&D), tax incentives are primarily offered through accelerated tax depreciation and a full tax exemption for intangible assets resulting from R&D activities, rather than a direct expense deduction. Additionally, companies operating in special economic zones can benefit from various tax exemptions and reduced administrative requirements.

What is the tax treatment of dividends in Bulgaria?

Dividends paid by a Bulgarian company to a resident individual are subject to a 5% withholding tax. For dividends paid to a company resident in another EU or EEA country, a 0% withholding tax applies, provided the recipient company holds at least 10% of the Bulgarian subsidiary for a continuous period of at least 12 months under the EU Parent-Subsidiary Directive. Dividends received by a Bulgarian company from its foreign subsidiaries are generally exempt from corporate income tax as long as certain conditions are met.

What is the process for registering for corporate tax in Bulgaria?

Companies must register with the National Revenue Agency within 7 days of incorporation or commencing business activities. Registration can be completed online through the NRA portal or at local tax offices. Required documents include the company's articles of incorporation, proof of registered address, and identification of company representatives.

What are the common pitfalls to avoid regarding corporate tax in Bulgaria?

Common mistakes include failing to make monthly advance payments, incorrect transfer pricing documentation for related-party transactions, and inadequate record-keeping for VAT and corporate tax purposes. Many businesses also overlook the requirement to file annual financial statements with the Commercial Register, which can result in penalties and complications with tax filings.

Sources used in this article:

1. Tax Foundation: Corporate Tax Rates by Country 2024
2. PwC Tax Summaries: Bulgaria Corporate Income Taxes
3. European Union: About Bulgaria
4. PwC Tax Summaries: Bulgaria Tax Administration
5. National Revenue Agency: Online Services
6. Commenda: Bulgaria Corporate Tax Rates
7. Bulgaria Embassy: Why Invest in Bulgaria
8. Council of the EU: Bulgaria Ready to Use the Euro
9. Sofia Offices: How to Open a Company in Bulgaria
10. Ministry of Innovation: Choice of Legal Form for SMEs
11. Lawyers-Bulgaria: Types of Companies in Bulgaria

Sources last checked 25/09/2025