Several European countries have attractive corporate tax regimes, but tend to neglect the aspect of personal income tax. Bulgaria outperforms other EU member states by offering excellent opportunities for both companies and individuals . Bulgaria’s flat tax framework is undoubtedly attractive, making it a sort of low-tax “Tax Haven” in Europe.

Bulgaria Extremely Favorable Tax Regime

Taxes at 10%

Bulgaria applies a worldwide taxation principle   and residents are taxed on their worldwide income.
Bulgarian companies are subject to a flat rate of 10% tax on profits.
Bulgaria also applies a flat tax of 10% on personal income .

• 5% withholding tax on dividends
• 5% tax rate on foreign-source dividends distributed to a tax resident individual with the possibility of fully deducting the amount withheld abroad as withholding tax
• The rules regarding Controlled Foreign Companies (CFCs) do not apply if the controlled company is not subject to tax or is exempt from tax in the country in which it is resident for tax purposes.
• The rules regarding Controlled Foreign Companies (CFC) do not apply to taxation of tax resident individuals and the tax rate of 5% applies.

Tax exemption, tax exemptions and special regimes

Subject to certain limitations and conditions (including EU State aid restrictions), in Bulgaria the corporate tax rate is reduced by up to 100 percent for taxable income arising from productive activity carried out in municipalities where the unemployment rate was 25 percent or higher than the national average .

There are special corporate tax regimes applicable to (1) commercial shipping companies, (2) gambling businesses, and (3) other entities such as government institutions.

Types of companies

Private limited company– Дружество с ограничена отговорност (OOD – ООД)

A limited liability company (OOD) is a business company formed by one or more natural or legal persons who are liable for the obligations of the company up to the amount of their contributions to the company’s share capital. An OOD must have at least one director and one shareholder and there are no restrictions regarding their nationality. The minimum share capital is EUR 1, which must be divided into shares with a nominal value of no less than EUR 0.50. An OOD that meets at least two of the following three criteria is required to have its financial statements audited:

• Fixed assets – EUR 750,000;
• Annual turnover – EUR 1,250,000;
• Average workforce size – 50 employees

Single-member Private limited company – Еднолично дружество с ограничена отговорност (EOOD -ЕООД)

An OOD whose capital is held by a single natural or legal person is called a single-member limited liability company (EOOD). The legal requirements for establishing an EOOD are similar to those for an EOOD.

Joint Stock Company –  Акционерно дружество (AD – АД) 

A joint stock company (AD) is a company whose capital is divided into shares and which is liable for its obligations and duties with its own assets. Bulgarian legislation requires insurance companies and banks to be registered as AD. A joint stock company must have at least three members on the board of directors, a chairman, a shareholder and there are no restrictions regarding their nationality. The minimum share capital requirement is EUR 25,560 and a joint stock company is obliged to have its financial statements audited.