Why Bulgaria Has Become a Strategic EU Tax Jurisdiction for Business Owners
When business owners and entrepreneurs look for effective and compliant tax optimisation within the EU, Bulgaria consistently stands out. With its straightforward tax laws, ultra-competitive corporate environment, and stable legal framework, Bulgaria offers what few other EU countries can: a combination of simplicity, cost-efficiency, and transparency.
In this article, we break down exactly why Bulgaria continues to attract international attention from businesses looking to expand or restructure — and how the law supports this strategy.
A 10% Corporate Tax Rate – With Legal Clarity
At the core of Bulgaria’s appeal is its flat 10% corporate income tax, applicable to all companies on their net profits. The system is simple: declare your revenues, deduct your professional business expenses, and pay tax on the remaining amount. That’s it — no minimum thresholds, no complex multi-tiered rates.
Importantly, this 10% rate has been in place since 2007, and Bulgarian law makes it difficult to change: any amendment requires a two-thirds majority in Parliament. This legislative safeguard underscores the country’s long-term commitment to being a stable fiscal environment within the EU.
Fully Deductible Business Expenses
Just like in most European jurisdictions, Bulgarian companies are entitled to deduct legitimate professional expenses. These may include:
- Office equipment and rent
- Software and IT infrastructure
- Fuel and transport for business travel
- Consulting and legal services
- Business development and operational costs
Non-business-related expenses (e.g. personal clothing, restaurant bills without invoices) remain non-deductible — as expected under standard accounting and tax rules.
No Advance Tax Payments (in Most Cases)
Unless your annual turnover exceeds BGN 300,000 (approx. €150,000), you are not required to make advance tax payments. Instead, corporate taxes are calculated and paid by April 30th of the following fiscal year.
For companies over that threshold, 80% of the anticipated tax is prepaid by December, with final adjustments made by the April deadline.
Company Formation: Accessible and Efficient
Foreign individuals — whether EU or non-EU citizens — can set up a Single-Member Limited Company (EOOD) or Multi-Member LTD (OOD) with ease. Notably:
- There is no requirement for local residency
- Minimum capital is 1 BGN (~€0.50)
- A notary is involved in company incorporation
- Bilingual documents (Bulgarian-English) are accepted
- VAT registration is fast and often simultaneous
- Remote registration is possible with a notarised power of attorney
This setup allows entrepreneurs to manage their business fully within the law, while enjoying a low-cost and transparent structure.
Banking & Compliance: Practical Requirements
While banks in Bulgaria are generally cooperative, KYC (Know Your Client) procedures apply. Most banks will require a face-to-face meeting and may ask for a clear explanation of your business model. Once verified, companies typically receive accounts in BGN and EUR, and optionally in USD.
Tax Administration: Focused but Fair
Yes, there are tax inspections in Bulgaria — as in any jurisdiction — but they are not overly aggressive or unpredictable. If your company maintains proper accounting, submits filings on time, and complies with local laws, the likelihood of audit is low.
That said, VAT refunds, especially for large amounts, may trigger more scrutiny — a standard procedure seen across many EU states.
0% Corporate Tax? Possible — Under Strict Legal Conditions
Under certain legal circumstances, companies may qualify for 0% corporate tax. To do so, a company must:
- Operate in a region with 25% higher-than-average unemployment
- Be engaged in production or manufacturing (not consulting or services)
- Employ at least 10 people from that region, half of whom work in production
- Maintain local management (30%+ based in the area)
- Reinvest saved tax in the same region within four years
- Keep the company operating for at least five years after receiving the 0% status
While the criteria are demanding, the opportunity is real and fully legislated.
Final Thoughts
Bulgaria is not a loophole jurisdiction — it is an EU member state with a legally solid and efficient tax structure. For companies looking to streamline operations, reduce costs, and remain fully compliant with European law, Bulgaria is a strategic choice.
At Taskova Legal Services, we provide trusted legal guidance on:
- Incorporation and VAT registration
- Tax planning and structuring
- Residency and business immigration
- Ongoing legal compliance
Contact us today to explore a compliant, cost-effective future for your business in Bulgaria.
