This article explains in brief the benefits of registration as a freelancer in Bulgaria for citizens of the EU as well as the prerequisites to make use of the Bulgarian personal income tax. Below you can read some useful information on the following topics:
- What is the personal income tax for freelancers in Bulgaria
- Is your income derived from Bulgaria subject to taxation in your own country?
- Do you need to pay social security contributions?
- How to register as a freelancer?
Personal income tax for freelancers in Bulgaria
Being a freelancer in Bulgaria means registering yourself as a self-employed person that practices a specific profession. In Bulgaria, as a self-employed person you pay taxes on your income. This means that you can’t deduct your expenses for the purpose of taxation. However, you are granted a fixed amount of the so-called recognized expenses by law which is always 25% of your income.
So you are only taxed on 75% of your income. The tax rate is 10%. This means that effectively you pay 7.5% in terms of taxes over your total income. The Bulgarian income tax is fixed, meaning that it does not progress with a higher income. There is also no minimum income for tax purposes.
There are some small tax benefits that you make use of in Bulgaria, that can further lower your your taxes, like:
- Benefits for early payment;
- Benefits for only using online payments;
- Deducting costs for repairing your home.
Is your income as a freelancer in Bulgaria taxed in your own country?
A precise answer is not possible in a simple article. That’s because international taxation between countries in the EU is most often subject to international bilateral tax treaties. You must check the relevant tax treaty between Bulgaria and your country of citizenship to evaluate where your income from professional services is taxed.
In the majority of tax treaties that Bulgaria has signed the parties have agreed that income from professional services shall be taxed only at the country of which the respective person is a “local” of. Whether you are a local person of Bulgaria also depends on the tax treaty but it is safe to assume that as long as you live and work in Bulgaria, your income as a freelancer will only be taxed here.
Social security contributions
When you live in Bulgaria and work here as a freelancer, you should pay social security contributions. Their amount is based on your income and is ~25% of it. However, in Bulgaria there is a maximum monthly income on which you pay social security contributions and it is currently fixed at EUR 1500.
This means that anything you earn above EUR 1500 is only subject to personal income tax and not to social security contributions. We will illustrate it with an example.
If you earn an annual income of EUR 50 000, your overall taxes and social security contributions for the whole year will be ~ EUR 9 000. The bigger the income, the less you pay as a proportion of it. For an income of EUR 100 000, your taxes and security contributions will amount to a total of ~ EUR 12 000.
How to register as a freelancer in Bulgaria
Registering as a freelancer in Bulgaria is fairly easy. You need to go through the following steps:
- Travelling to Bulgaria (as an EU citizen you don’t need a visa);
- Renting a property to live in;
- Registering with the BULSTAT register (takes no more than 2 business days);
- Applying for a residence permit (you are entitled to a 5-year residence permit straight aways and the procedure takes 1 week);
- Registering with the national revenue agency.
- A VAT registration with the NRA (takes ~ 1 week)
The procedure is fairly straight-forward but you will for sure need someone to translate for you at the respective institutions.
Once you get everything going and receive your Bulgarian ID, you will easily be able to open a bank account with a local bank.
You will also need an accountant to help you with filing your taxes. This is done on a monthly basis for the VAT decorations and the social security contributions. Personal income tax is paid on a quarterly basis and you must file your taxes returns once per year.
You got questions?
We got answers. Feel free to contact our team at email@example.com on any matters regarding a freelancer registration in Bulgaria and we will answer promptly.