Taxation of Individuals in Bulgaria
Taxation of individuals, personal income tax, social security
The taxation of individuals in Bulgaria is regulated by the following main acts: the Law on taxes on the income of natural persons (Bulgarian personal income tax act), the Labour Code, the Law on the State Budget, the State Social Security Budget Law, the Supplementary Voluntary Pension Insurance Act, the Health Insurance Act, and some more. It is not funny, is it? If this information is enough for you, you may take a rest, send your query to us, and leave this page for taxation of individuals. We will get back to you in our earliest and will provide you with the necessary information about taxation of individuals.
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Personal Income Tax
Taxation of individuals – personal income tax is payable on income from employment, self-employment, capital gains, rental income, and so forth. Where a person’s sole source of income are wages from local company operating in Bulgaria, they are not required to file annual tax return. The employer is obligated to deduct and pay the income tax and social security on a monthly basis.
A self-employed individual must file an annual tax return and make advance payments towards income tax liability. They must pay any outstanding tax due (the balance between the advance payments and the total due on the tax return) by the 30th of April of the year following the taxation period. Such individuals should register for tax purposes at the National Revenue Agency.
Taxation of individuals / personal income tax – the annual taxable base is the sum of all taxable incomes received during the calendar year. The total annual income for levying with personal income tax is subject to some adjustments and then taxed in accordance with the annual tax return.
|Flat income tax rate||10%|
|Annual income tax return||must be submitted before the 30th of April each year|
|Personal income tax||must be paid before the 30th of April each year|
Social Security, Health Insurance and Other Taxes
Social security and health insurance rates payable by the employer and the employee are about 31% of the employee’s gross salary. These taxes and fees include incapacity, sickness, maternity, unemployment, and pension insurance benefits. Pursuant to the Bulgarian law, social security contributions are mandatory. They are calculated on the gross income of each worker or employee.
Self-employed individuals must pay themselves contributions for incapacity, general sickness and pension.
|Tax||Payable by the employee||Payable by the employer||Total|
|Social security (Pension)||5.7 %||7.1 %||12.8 %|
|Additional obligatory social security||2.2 %||2.8 %||5 %|
|Sickness and maternity||1.4 %||2.1 %||3.5 %|
|Unemployment insurance||0.4 %||0.6 %||1 %|
|Professional and non-professional accident insurance||from 0.4 to 1.1 %||1.1 % max|
|Health insurance||3.2 %||4.8 %||8 %|
|Fund “Guaranteeing the receivables of workers and employees”||
Bulgarian Tax Exempt Income
If you want to check your health insurance or social security status in Bulgaria, you may go to page: “Useful links”.
Some forms of income in Bulgaria are tax-exempt. Such are:
- Income from the sale of a residential apartment and a car, subject to the terms specified in law;
- Subsidies for children paid by the State;
- Grants given to Bulgarian students for studies in Bulgaria and abroad;
- Prizes from lotteries and games of change;
- Prizes given by the State for cultural works;
- A profit from the sale of assets received as an inheritance or a gift;
- Working clothes and uniforms supplied free of charge to an employee;
Other limits and frames defined by the State.
|Minimum monthly wage||BGN 460|
|Cap for social security income||BGN 2 600|
Please note that in Bulgaria different professions have different minimum monthly insurance income whereon the respective taxes should be calculated. Moreover, the minimum monthly insurance income is different for different businesses and depends on the company’s principal activity/business. The comprehensive list of these limits, the so-called National Occupational Classification, is published on the website of the Bulgarian Ministry of Labor and Social Policy.
Maternity leave allowance in Bulgaria
To be entitled to maternity leave allowance it is necessary to have a minimum length of service at least 12 months prior to taking the maternity leave. The allowance is 90% of your average gross salary for the last 24 months before taking maternity leave. The period for maternity leave in Bulgaria is 410 days, of which 45 days can be taken before giving birth.
After completion of two years of the child, each parent, upon request, will be entitled to unpaid leave of 6 months for raising the child until the age of 8 years. Each parent can use up to 5 months of this leave with other parent’s consent. The leave may be taken all at once or in parts. When used in parts, its duration can not be less than 5 days. The maternity leave allowance is to be paid by the National Social Security Institute.
Tax Residence Qualification and Work Permits
If an individual resides in Bulgaria for more than 183 days in any calendar year, they are deemed to be resident for tax purposes. Someone whose main business or financial interests are based in Bulgaria will also be deemed to be a local tax resident.
EU citizens do not require Work Permit (including those who are self-employed). Non-EU citizens must apply for Work Permit through the nearest Embassy in their home country. An employer can arrange for Work Permit to be issued in Bulgaria.
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