Taxes Payable in Bulgaria

A lot of people who live in Bulgaria and who are legally obliged to pay tax there simply do not do so. A lot of people who do not live in Bulgaria but who are obliged to pay taxes to the Bulgarian government because they have, for example, let out their home in Bulgaria also do not pay tax to the government in Bulgaria. If they do not pay taxes in Bulgaria they usually also fail to pay the taxes they owe in Britain or wherever else they live.

They do not think of this as being wrong (although it is illegal). It is just that there has, in the past, been a culture of not paying taxes. This is particularly true of people working for themselves or who receive income from property rental.

So the first decision you will have to make, when dealing with Bulgaria, is to decide whether you are going to abide by the law or whether you are going to follow the old-fashioned local ‘customs’.

Bezbog Bansko

The author believes that the time has come when it is necessary to comply with your obligations. The changes that came about in Spain, Portugal and Greece after their accession to the European Union will inevitably occur in Bulgaria, and this will dramatically reduce the scope and possibility of tax evasion. It will also – over time – change people’s attitudes so that evading tax liabilities is much less acceptable than it is now-and more heavily punished.

This does not mean that if you don’t make a full tax declaration you will be in immediate danger of detection or punishment by the Bulgarian authorities -that will probably be a year or two away. But if you have not laid the foundations of payment of tax, then the time is likely to come when someone will ask you questions. If it is not the Bulgarian authorities it could well be the UK authorities. This is because one of the features of recent international relationships is the extensive exchange of information between countries, using the prevention of terrorism, drugs and money-laundering to justify an unprecedented disclosure of confidential information between governments.

mountain in bulgaria

Most people will sleep easier in their beds if they pay the taxes that are due to them. That does not mean that you have to pay a lot of money. New rules introduced after Bulgaria joined the EU mean that EU citizens are able to sell their properties without paying any tax (in certain circumstances). Since many foreigners buying property in Bulgaria do so via a company, their profit from selling their properties will be subject not to individual but to corporate tax, which in Bulgaria is the lowest in Europe and one of the lowest in the world.

Under Bulgarian law it is your responsibility as an individual to fill in a tax return each year when you have any taxable income. Please note that this applies only for individuals; all companies have an obligation to submit annual tax returns each year regardless of their activities (even if there is a null declaration). The tax offices in Bulgaria are not very helpful, so you should seek professional assistance or at least take a translator with you.

mountain lake in Bulgaria

Property Tax and Refuse Tax

Property tax is similar to the UK’s council tax and is paid annually to the local municipality on the basis of the tax evaluation of your property. This tax evaluation is calculated from information provided by the owner in a declaration that is submitted not later than two months after the purchase of the said property. The declaration form requires information about the size of the property, how many floors, when it was built and so forth. The actual tax charged is 1.5/1,000 (0.0015%) of the tax evaluation. Generally speaking, the property tax is very low.

waterfall in Bulgaria

In addition to the property tax, you are required to pay a refuse tax. This tax is often higher than the property tax. Both taxes come as one bill. You normally receive a letter at the start of the year (but not everyone seems to receive one).

The taxes are payable in four instalments, the first payable by the end of April and the fourth payable by the end of the calendar year. You can receive a 5 per cent discount if you pay the bill in full by the end of April. If you declare that the property is your main residence, you only have to pay 50 percent of the tax.

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