Personal Income tax. Taxes for individuals in Bulgaria 2024

Learn how to calculate and pay tax on total income in Bulgaria, including from foreigners. Learn what a tax base is, how rent tax is determined, employment relationship, business activity, and more.
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Personal Income tax. Taxes for individuals in Bulgaria 2024
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In the world of tax and finance, legality and transparency are fundamental pillars for the success of any organization and individual. In Bulgaria, personal income tax is a key component of the tax system regulated by Personal Income Taxes Act (ZDDFL). In this light, Elan Consultingpositions itself as your reliable partner and expert in tax, licensing and accounting issues.

We are proud to say that our team of professionals is fully prepared to guide you in all aspects of taxation of individuals in Bulgaria for 2024. Understanding tax laws can be complicated, but with our help, you will be informed and prepared for effective and lawful tax planning.

In this material, we will consider several key topics that are essential for any natural person subject to taxation in Bulgaria:

  • Basics of taxation with income tax: Understanding how the tax base is formed and which income is taxable.
  • Tax deductions and advance payments: How to maximize your tax deductions and what you need to know about advance contributions.
  • Declaration and payment of taxes: Key deadlines and procedures for the declaration of income and payment of taxes.
  • Changes in the GDPR for 2024: How recent legal amendments may affect your taxation.
  • How to calculate the tax on total income - The tax on total income is calculated on the annual tax base of individuals, taking into account all their income for the tax year, reduced by the eligible tax deductions and non-taxable income determined in ZDDFL 2024.
  • What percentage is total income tax- For 2024, the standard rate of tax on total income for individuals in Bulgaria remains 10% for most types of income, which is one of the lowest rates in the European Union. This rate applies equally to different types of income, with exceptions provided for by law.
  • Personal Income Tax Calculator - For the convenience of taxpayers, Elan Consultingoffers an online calculator for personal income tax. This tool allows you to calculate your tax liabilities based on your annual income and eligible deductions.
  • How much is non-taxable income -Non-taxable income for 2024 is set at an amount that ensures that income up to a certain minimum limit is not taxable. This limit is regularly updated to reflect the economic environment and inflationary processes in the country.
  • Types of Taxes in Bulgaria-There are different types of taxes in Bulgaria, including personal income tax, corporate tax, VAT, customs duties and excise duties. The main focus of our article is on personal income tax.
  • What is DOD (Total Income Tax)- DOD represents the tax that each individual in Bulgaria owes on their total income for the tax year. It is a direct tax that is calculated on the person's annual tax base, after subtracting the non-taxable income and applying the eligible deductions.
  • Tax Total Income Calculator - Elan Consulting also offers a specialized calculator for calculating the tax on total income. This tool has been developed to help taxpayers easily and quickly understand their tax obligations, taking into account all current tax rates and reliefs.

We in Elan ConsultingWe are committed to providing up-to-date, accurate and useful information to help you navigate Bulgaria's complex tax environment. Whether you are self-employed, an employee, or simply want to find out more about your tax obligations, we are here to provide our expert support and advice.

Remember, properly understanding and managing your tax obligations is not only a legal requirement, but also a key to your financial stability and success. Turning to Elan Consulting, you choose a partner who values your time, finances and trust.

What percentage is total income tax in Bulgaria?

In Bulgaria, the tax system is structured in such a way as to ensure fair and balanced taxation of personal income. According to Personal Income Taxes Act (ZDDFL), the amount of tax on total income is determined by careful calculation, which takes into account the different types of income and the provided statutory benefits.

Advance withholding of tax on income from employment relationships

The advance tax on income from employment relationships is set by the employer and is withheld monthly. The basis for its calculation is the monthly tax base of the individual, from which the compulsory insurance contributions withheld by the employer are deducted. This includes social and health insurance contributions as well as compulsory insurance abroad, where applicable.

Tax on income from employment relations/under an employment contract

The amount of tax payableis calculated by multiplying the monthly tax base by tax rate of 10%. For income earned by a seafarer, a tax rate of 1%. This approach ensures clarity and predictability of tax obligations for all individuals working in Bulgaria.

Important! Sea face” is a natural person holding an employment position as a member of the crew of a seagoing ship, inentered in the ship register of a Member State of the European Union, whether on shore or on board the ship, possessing a certificate of legal capacity and a certificate for additional and/or special training acquired under the procedure of the ordinance under Art. 87, para. 1 of the Commercial Shipping Code, pursuant to §1, item 54 of the Supplementary Provisions of the Personal Income Taxes Act! About seafarers, we have prepared a more detailed article here!

Business income tax

For persons acquiring income from economic activity, the tax is due in advance and is calculated on the difference between taxable income and compulsory insurance contributions. It also applies here tax rate of 10%, which is consistent with the general principle of taxation of labour income.

Rental income tax

Income from rent or other consideration for the enjoyment of rights or property is subject to advance tax, the amount of the tax being determined by multiplying the taxable income by tax rate of 10%. This rate ensures transparency and equal treatment of all types of income.

Tax on income from other sources

In the Bulgarian tax legislation, income from other sourceswhich do not fall under the direct definition of income from employment, business or rent, are taxed according to the specific approach set out in Art. 44a and Art. 35 of the Personal Income Taxes Act (ZDDFL). This approach ensures that all forms of income are appropriately taxed and that the taxpayer is protected within the law.

Taxable income includes a wide range of income that is acquired during the tax year. This includes compensation for lost profits, penalties, interest (including those on leasing transactions), production dividends from cooperatives, income from the exercise of intellectual property rights by inheritance, as well as all other sources not subject to final taxes under other provisions of the ZDDFL or the Corporate Law. income taxation.

With regard to income from other sources, the advance tax is applied when the payer of income is an enterprise or a self-insured person. The amount of tax is determined by multiplying the taxable income at a tax rate of 10%. This rate provides a simple and effective way to calculate and withhold the tax that must be paid by persons receiving such income.

For persons with 50 and more than 50 percent reduced working capacity, the tax is due only if the taxable income from all sources exceeds a certain limit, which for 2024 is established at BGN 7920. It is important to note that these persons must present a valid expert decision to TELC/NELC on the date of payment of the income in order to benefit from this relief.

The tax thus determined, is submitted within the time limits and in accordance with the procedure laid down in Articles 65 and 66 of the GDPR, which ensures that all import procedures are clear and easy to follow.

How is total income tax calculated in Bulgaria?

In many cases, it is not an exaggeration to say that the calculation of tax on total income should be carried out by an expert.The calculation of the final tax for individuals in Bulgaria follows a clearly defined procedure based on the determination of the taxable income, the tax base and the application of the tax rate. This system is designed to ensure fairness and accuracy in the taxation of income acquired during the tax year.

Determination of tax base, annual tax base and tax amount

The tax year in Bulgaria coincides with the calendar year beginning on January 1 and ending on December 31. Taxable income is determined separately for each source of income, in accordance with the provisions of the Personal Income Taxes Act (ZDDFL). When determining taxable income, income that is subject to final taxes under the ZDDFL, the Corporate Income Tax Act (Corporate Income Tax Act), as well as income subject to patent tax and/or tax on passenger taxi transport are excluded.

The tax base is determined for each source of income separately, taking into account the specific provisions for the annual tax bases specified in the ZDDFL. This includes income from employment, business, rent and other consideration for the use of rights or property, income from the transfer of rights or property, as well as income from other sources.

The annual tax base for any type of income is formed from taxable income, reduced by compulsory insurance contributions and applicable tax deductions. The total annual tax base is the sum of all annual tax bases, which includes income from different sources of income and is reduced by the different types of benefits provided by law.

Example of determining the tax

In the example with income from employment relationships and rent, the total annual tax base is defined as the amount of the annual tax bases for these types of income, reduced by the contributions made under the order of Art. 9a of the Social Security Code. Then, this amount is multiplied by the tax rate of 10% to determine the amount of tax on the total annual tax base.

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Which income is taxed separately?

The Bulgarian tax legislation provides for the imposition of a definitive tax on certain types of income that are not included in the annual taxable income under the rules for taxation of the so-called general income tax - that is, they are not income from employment relationships, rent or business activities and are taxed separately. This distinction is important because it allows a specific approach to different types of income and provides clarity in the taxation process.

Income subject to final tax

  1. Income of foreignersfrom a source in Bulgaria that are not realized through a specific base in the country, such as income from the use or disposal of movable and immovable property, royalties and royalties, remuneration for technical services, interest and others, are subject to a final tax of 10%.
  2. Income from supplementary voluntary insurance, voluntary health insurance and life insurance, as well as some other income specified in Art. 38 of the Law, are taxed at a tax rate of 10 or 7%.
  3. Income from dividends and liquidation sharesin favor of domestic and foreign individuals, are subject to a final tax of 5%.
  4. Interest income on bank accountsresidents are taxed at a tax rate of 8%.
  5. Taxable cash and object prizesfrom games, competitions and competitions not provided by an employer or contracting entity, are subject to a final tax of 10%.
  6. Taxable income of individuals not registered as farmers, as well as income in the form of state aid, subsidies and other support from European funds or the state budget, are subject to a final tax from 10%.

How is the final tax determined for this income, which is taxed separately?

The final tax is determined on the gross amount of income, the method of calculation varies depending on the type of income:

  • For Dividendsand liquidation shares, the tax is determined on the gross amount or the positive difference between the value of the share and the acquisition price.
  • For income from the exchange of shares and shares, the tax is calculated on the positive difference between the market price of the shares/units acquired and the acquisition price of the shares/units in the company being converted.
  • For sale, exchange and other transfer of immovable property for considerationand shares, the tax is calculated on the positive difference between the sale price and the documentary proven acquisition price, less costs.

The determination of the final tax provides a specialized approach to different types of income, thereby ensuring that taxation is fair and takes into account the specifics of each individual income.

When are foreigners obliged to pay tax in Bulgaria?

In Bulgaria, the taxation of individuals is determined on the basis of their tax status - whether they are local or foreign persons for tax purposes. Local natural personmeans any person who meets at least one of the following conditions: there is permanent addressin Bulgaria, resides in the country more than 183 daysDuring the tax year, sent abroad by the Bulgarian stateor there is center of vital interestsin Bulgaria. This status entails a tax liability for income received both domestically and abroad.

On the other hand, foreign natural personis defined as a person who does not fall under the criteria of a resident. This includes persons with a permanent address in Bulgaria, whose center of vital interests is not located in the country. For them, tax liability applies only to income, the source of which is in Bulgaria.

The decision on whether a person is considered local or foreign is made by the National Revenue Agency (NRA) after complex assessmentof all circumstances related to the life and activities of the person in Bulgaria. Thus Bulgaria ensures fair and comprehensive taxation in accordance with international standards and practices.

What types of income, including income received from foreigners, are subject to taxation?

In Bulgaria, a variety of income, including those received by foreigners, are subject to taxation under the Personal Income Taxes Act (ZDDFL). Taxation covers a wide range of income generated on the territory of the country, regardless of the place of their payment.

Income from business activitiesare taxed when carried out through a specific base in Bulgaria or from a disposition of the property of such a base. This includes the income of registered sole traders, income from trade, farming activities, royalties and licensing fees, income from trades and the liberal professions.

The definition of a certain baseincludes places such as architectural studios, dental offices, law firms and others where foreign persons perform independent personal services or exercise a freelance profession.

Also subject to taxation income from labor and servicescarried out on the territory of the Republic of Bulgaria, income from dividends and liquidation sharesfrom domestic legal entities, income from the transfer of an enterprise, income from awards and remunerationsfor activities carried out on the territory of the country by foreign persons, and income from financial assets.

In addition, income from agriculture, forestry, hunting and fishing, as well as income from the use, sale, exchange or other transfer of immovable property on the territory of Bulgaria, are also subject to taxation. Income from penalties and compensation accrued by domestic or foreign legal entities through a place of business or a specific base in Bulgaria are also included.

Jurisdictions with preferential tax regimeare those who do not share tax information with Bulgaria or tax income at significantly lower tax rates. This definition helps in the fight against tax fraud and tax avoidance.

Legislation clearly distinguishes types of remuneration, which are taxable, including details of royalties and royalties, royalties for technical services, franchises, factoring, as well as insurance and insurance income. The details surrounding these incomes specify the scope of taxation and ensure transparency in the tax process.

How are taxes declared and paid by local and foreign individuals in Bulgaria?

The declaration and payment of taxes in Bulgaria by local and foreign individuals is strictly regulated by the legislation, and the processes vary depending on the type of income and the tax status of the individual.

Declaration of income by local individuals

Local individuals are obliged to declare all their taxable income received both from Bulgaria and abroad, through Submission of annual tax return.

For income received from countries with which Bulgaria has concluded Double Taxation Avoidance Agreement (SIDDO)), residents can take advantage of methods to avoid double taxation, such as tax credit or exemption with progression, by completing the relevant annexes to the tax return.

Declaration of income by foreign individuals

Foreign individuals submit annual tax returnfor the income acquired during the year, subject to taxation in Bulgaria. This includes income from employment relationships, business activities as sole proprietors, income subject to patent tax and/or passenger taxi tax and other specific categories of income. For income subject to final tax, foreign persons file declaration of taxes duewhen the payer of income is not obliged to withhold and remit the tax.

Automatic exchange of information about the EU by foreigners

Foreign natural persons who are residents of another EU Member State and have rental income or other consideration for the use of real estate in Bulgaria, where the payer of the income is not an enterprise or a self-employed person, are obliged to submit information about such income once a yearfor the purpose of automatic exchange between EU Member States. This is done by filing a declaration for the fourth quarter by January 31 of the year following the year of receipt of the income.

These rules ensure that all individuals, regardless of their tax status and income origin, can be adequately taxed under Bulgarian law, while respecting international agreements and arrangements for the avoidance of double taxation and automatic exchange of information.

Verification of personal data and payment of taxes due - a guide for Bulgarian citizens and foreigners

In today's world, where digitalization is covering more and more aspects of our daily lives, including the management of our finances, Elan Consulting provides you with key information for checking taxes due. Stay informed and avoid unpleasant surprises associated with unpaid taxes and fees.

Main links for checking taxes and fees:

  • Sofia - Sofia Municipality: Check local taxes and fees in the capital here.
  • Plovdiv: For checking local taxes and fees in Plovdiv click here.
  • Burgas: Checking local taxes and fees in Burgas can be done here.
  • Varna: Current information about taxes in Varna find here.

And for other cities such as Veliko Tarnovo, Pleven, Ruse, Stara Zagora, Gabrovo, Pazardzhik, Sliven, Blagoevgrad, Cherven Bryag and many others, visit the official websites of the respective municipalities.

I'm a foreigner. How can I pay my taxes even if I am not in Bulgaria?

If you are a foreigner and want to pay your taxes in Bulgaria online, even when you are not in the country, you can use several convenient and easy-to-use platforms and services. Here's how you can do this step by step:

1. Check your tax obligations:

  • First, you need to know exactly what taxes you owe. You can check this through the official websites of the local tax offices or the National Revenue Agency (NRA) in Bulgaria. In most cases it is necessary to have a personal identification number (for citizens of Bulgaria), LNCH (Personal number for a foreigner - a unique civil number that is provided to foreigners with residence permit in Bulgaria or foreigners who have received international humanitarian/refugee protection) or another identification number that you received upon your registration as a taxpayer in Bulgaria (the so-called Official Number from the National Revenue Agency).

2. Use the electronic payment platform:

  • E-Pay: This is one of the most popular online payment platforms in Bulgaria, which allows the payment of local taxes and fees, as well as obligations to the NRA. Visit E-payand follow the instructions to create an account and make payments.
  • Bank transfer: If you have a bank account in a Bulgarian or international bank, you can make a transfer directly to the relevant institution responsible for tax collection. It is important to specify the correct identification number and the period to which the payment relates.

3. Platforms of local municipalities:

  • Many Bulgarian municipalities offer the possibility of online verification and payment of local taxes and fees through their official websites. This option is especially convenient for paying local taxes such as building tax, vehicle tax and others.

4. Make sure you have the necessary documents:

  • To pay your taxes online, you may need to provide certain documents or information, such as ID number, vehicle registration number (if you pay vehicle tax), etc.

5. Seek help from an accountant or tax consultant:

  • If you encounter difficulties or have specific questions about your tax obligations in Bulgaria, it is advisable to seek help from a professional accountant or tax consultant. They can provide you with individual advice and assist you with the checkout process.

By following these steps, you as a foreigner will be able to successfully manage and pay your tax obligations in Bulgaria online, even when you are not in the country.

Important:Remember that timely verification and payment of your tax obligations can save you potential fines and penalties. Always make sure that the information you receive is up to date and consult a specialist if necessary.

Elan Consulting is at your disposal for advice and assistance in the filing of your tax returns and annual financial statements. We offer you full support in the process of checking and regulating your tax obligations.

Contact us:For more information and assistance, please visit our website or contact our offices directly.

Remember that an informed choice is the key to successful and calm management of your finances.

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