Bulgaria tax advice

Hi there,

You're right - it is not just the 10 % corporate tax. Actually there's additional 5 % divident tax, payable when you distribute dividents between the shareholders.

As for the social contributions - they are paid on the basis of the salary of the employee, and have two separate elements - one paid by the company and the other by the employee. Total amount of "social contributions" is about 35 %, of the salary.

Of course there are ways to optimize all this.

About point 2 I am not aware of any hidden conditions. It is best to consult a lawyer and an accountant bout this.

I think Bulgaria has a lot to commend it as your base in the EU with a low flat tax rate.

I can recommend an excellent lawyer with very good English, and detailed knowledge of Bulgarian companies and taxes. And he has an accountant too. Please message me directly if you want his contact info. I think @KRISTIANN (who also replied) is a bit of a business expert too, so I imagine you could also drop him a private note.

1. 10% is the headline income tax rate which applies to all. "Independent entrepreneurs" often means self employed. If so, I think most would counsel you to have a BG limited company instead, and be an employee of it. Yes, the effective tax rate will be higher than the headline income tax rate, but that's true almost everywhere. Yes, there are pension and social security contributions to consider, but that's also true almost everywhere. With a limited company you have a bit more flexibility to play with these numbers.

2. I have brokerage accounts with Saxo Bank and eToro. I am not aware of any caveats. Save, I suppose, that, officially, you should include your net realized gains in your income declaration.

Separately, I would say that the Bulgarian health system is ok, especially if you're willing to pay the extra to get upgraded treatment privately. So paying your social security contributions is a good deal by European standards.

The Bulgarian state pension is pretty low, so I doubt this is sufficient, and you'd need to investigate funding a more generous pension scheme (or get rich with crypto, I suppose). As you're a Brit you could take advantage of the "overseas NICs" if you tell them that you're self employed in Bulgaria, and hence, hopefully add a full UK state pension to the mix (I have a separate posting specifically on this topic). This is a great deal!

Thanks to both of you for responding so quickly and helpfully. You mentioned exactly what I'm wondering about actually- For example, if I am never employed with a traditional job (nor create a company and employ people) and only earn a bit of income from daytrading stocks and/or crypto, are the same pension/social security/healthcare taxes still due?  I was hoping I'd be excluded from some of this

Thanks!

To pay social security, you have to elect to be employed, or self-employed, or unemployed. There is no "crypto trader" option. :-)

So I don't think there's any issue if you decide to be unemployed in Bulgaria, and just pay the minimum social security contributions to be in the health care system.

That means you don't contribute to a pension, you just pay social security. Unemployed is 26 leva per month. Yes, I know, it's absolutely outrageous. :-) For this, you can get a Bulgarian EHIC card (for cover in Europe) and free (or nearly free) medical treatment in Bulgaria (if you should need it, but I think you'll find you prefer to go private and pay a bit extra).

Bulgaria, like other countries, cares if you make a lot of money from invoicing (performing services), because there's a VAT threshold, and they expect you to register and pay VAT.

Bulgaria, like other countries, cares if you receive a pension, or you make huge amounts of money from your trading activity. These are both forms of income, and so they expect you to declare it and pay tax (the 10% income tax) on it.

It's perfectly OK to have gotten rich before you come to Bulgaria, whether it was dot-com, crypto, or London real estate. Savings are not income, and there is no wealth tax here. If you invest your savings in Bulgarian property to live in, no income tax here either (but small property taxes). If you buy Bulgarian property to rent out, then you will generate some rental income to add to your tax return. If you put it in interest-bearing deposit accounts or dividend-paying stocks, then that's additional income for your tax return.

I don't see any issue with you being officially unemployed, and dabbling in stocks. But then I'd wonder (and, I guess, the Bulgarian taxman too, potentially): what are you living on? So there's an income coming from somewhere, and you should declare it. (Unless, lucky you, you got rich already from Bitcoin, so you're using your savings to live on. In which case, obviously that's cool, no income tax to pay.)

If you're actually working (let's say remotely, via that interweb thinggie) then I think you'll have a harder time not registering as self-employed, or forming a Bulgarian company and making yourself an employee.

Actually it is much better idea to work officially than to work incognito. There are a number of options to decrease your taxes and social security contributions. The alternative of hiding your income and / or trying to avoid any taxes is risky in the entire EU.