Subject of taxation

Income received under employment contracts, income from another economic activity, rental income from property or income from arrangements granting the right of use or making property available against consideration, income from the transfer of rights or property and income from other sources.

Taxable income by types of income, depending on the source:

- income received under employment contracts and all other payments in cash and/or in kind received from or for the account of the employer, except for the categories of non-taxable income expressly stipulated by law;

- income from another economic activity — the income received, decreased by deductible operating costs as follows:

• by 60 per cent for the income received by natural persons registered as farmers for the production of unprocessed agricultural products, except for income received from the production of ornamental plants;

• by 40 per cent for the income of natural persons for the production of processed or unprocessed agricultural, forestry, hunting and fisheries products; royalties; and income from crafts not subject to flat-rate tax under the Local Taxes and Fees Act;

• by 25 per cent for the income received from practising a freelance profession or for remuneration from sources other than employment contracts;

- rental income from property or income from arrangements granting the right of use or making property available against consideration, decreased by 10 per cent of deductible operating costs;

- income from the transfer or rights or property — specific methods are applied depending on the type of property/rights. For example, for income from the sale or transfer of real estate, including limited property rights therein, the taxable income is determined as the positive difference between the sale price and the price of acquisition of the property, decreased by 10 per cent of deductible costs;

- income from other sources — the gross amount of the income received.

Annual taxable amount

The annual taxable amount is calculated for each source of income separately. It represents the taxable income from the respective source decreased by the compulsory social security and health insurance contributions payable by law.

Total annual taxable amount

The total annual taxable amount is the sum of the annual taxable amounts for the income received under employment contracts, income from other economic activities, rental income from property or income from arrangements granting the right of use or making property available against consideration, income from the transfer of rights or property and income from other sources, decreased by the tax incentives provided by law.

Tax rate — the tax payable on the total annual taxable amount is calculated by multiplying the total annual taxable amount by 10 per cent.

Tax payment deadlines

For tax paid in advance:

Monthly — by the 25th day of the month following the month in which the tax was withheld or during which the partial payments were made: for income received under employment contracts for which the employer has an obligation to withhold and pay the tax;

Quarterly — by the end of the month following the quarter in respect of which the tax was withheld by the payer, when an enterprise or a self-employed person, and by the end of the month following the quarter in which the income was received by the natural person when the payer does not have an obligation to withhold and pay the tax.

In respect of income other than the income received under employment contracts in the fourth quarter of the tax year and in respect of income from other sources, no advance tax is payable, unless the person receiving the income has expressly stated that he/she wishes the tax to be withheld.

When tax is paid annually:

By 25 February of the year following the year in which the income was received — for tax withheld by the employer under the principal employment contract for the purpose of annual tax adjustment;

By 30 April of the year following the year in which the income was received — for all other cases when tax is payable on the total annual taxable amount.

Tax Reliefs

- Tax Relief for Persons with Reduced Working Capacity;

- Tax Relief for Personal Voluntary Social and Commercial Insurance Contributions;

- Tax Relief for Personal Contributions for Contributory Service upon Retirement;

- Tax Relief for Donations;

- Tax Relief for Young Married Couples;

- Tax Relief for Children;

- Tax Relief for Children with Disabilities;

- Tax Relief for Non-Cash Payments Effected;

- Tax Relief for improvements or renovation of an immovable property.

Subject of taxation

The income from economic activity as sole proprietor, the income from economic activity of natural persons who are traders within the meaning of the Commerce Act but are not registered as sole proprietors, and the income from economic activity of natural persons registered as farmers. The natural persons registered as farmers may choose, at the time of filing a tax return based on a model, to have their income from economic activity taxed on the annual taxable amount for their income from economic activity as sole proprietors.

Taxable income

The taxable income is the taxable profit determined in accordance with the Corporate Income Tax Act, including the financial result from the transfer of the sole proprietor’s undertaking without striking it off the Commercial Register. This does not include the financial result for accounting purposes derived from activities subject to alternative taxation under the Corporate Income Tax Act and activities subject to flat-rate tax and tax on passenger carriage by taxi in accordance with the Local Taxes and Fees Act.

Annual taxable amount for income from economic activity as a sole proprietor (ET)

The annual taxable amount is calculated by deducting, from the taxable income for the tax year, the contributions self-employed persons are required to make for the year for their own account in accordance with the Social Insurance Code and the Health Insurance Act, and the compulsory social security and health insurance contributions for the account of the natural person paid abroad. The taxable amount is decreased by the deductible tax incentives provided by law.

Applicable tax rate — 15 per cent.

Tax payment deadlines

- In advance — in accordance with the rules and procedure stipulated in the Corporate Income Tax Act for the payment of corporate tax.

- Annually — by 30 April of the year following the year in which the income was received. For 2019, the deadline is 30 June 2020.

Tax incentives for the purpose of assessing the tax on the annual taxable amount for income from economic activity as sole proprietor (ET) exist for:

- persons with reduced work capacity by 50 per cent or more;

- personal contributions for voluntary social security and health and commercial insurance;

- personal contributions for length of contributory service upon retirement;

- children;

- persons with disabilities.

In accordance with the procedure for applying the tax incentives envisaged in the Income Tax on Natural Persons Act, the incentives are first deducted from the annual taxable amounts (for the purpose of calculating the tax payable on the total annual taxable amount) and then from the annual taxable amount for income from economic activity as sole proprietor.

Subject of taxation and tax rate

- certain categories of income received by non-resident nationals from a source in Bulgaria when no specific tax base applies, such as income from the use or disposal of movable and real property, royalties, remuneration received for the provision of technical services, interest, etc. — the applicable tax rate is 10 per cent;

- income received by resident and non-resident persons from supplementary voluntary social security, voluntary health insurance and life insurance — 10 per cent or 7 per cent;

- income from dividends and liquidation shares received by resident and non-resident natural persons — 5 per cent;

- income from interest earned from bank deposits — 8 per cent;

- the gross amount of the taxable material and cash winnings from games, athletic and other competitions, which have not been paid or awarded by an employer or contractor — the applicable tax rate is 10 per cent;

- the gross amount of the taxable income received by natural persons not registered as farmers in the form of State aid, subsidies or other assistance from the European Agricultural Guarantee Fund, the European Agricultural Fund for Rural Development and the State budget — the applicable tax rate is 10 per cent.

Taxable amount
The taxable amount on the basis of which the final tax is calculated differs depending on the source of income. As a rule, the tax is calculated on the basis of the gross amount of the income received. Non-resident natural persons who are residents for tax purposes in another EU/EEA Member State have the option to recalculate the final tax for certain categories of income by filing the tax return referred to in Article 50 of the Income Tax on Natural Persons Act.

Tax payment deadlines

- Monthly — by the end of the month following the month in which the income was received: for commercial banks and branches of foreign banks in Bulgaria which have an obligation to withhold and pay the final tax on the income of natural persons who are tax residents in Bulgaria earned from interest on bank deposits.

- Quarterly — by the end of the month following the quarter in which the income was received/charged: for all other taxes on income subject to final tax.

In the annual tax return natural persons assess the tax payable for the income subject to declaration, which they received in the previous year.

An annual tax return must be filed by:

All resident natural persons who, in the previous year:

- received income taxable on the basis of the total annual taxable amount or on the basis of the annual taxable for income received from economic activity as a sole trader;

- were entitled to and wish to use available tax incentives;

- were subject to the payment of flat-rate tax under the Local Taxes and Fees Act;

- have earned non-taxable income from passenger carriage by taxi performed in the capacity as natural persons (drivers) on behalf of a registered transport operator;

- have received loans from other citizens or companies in a total amount of more than BGN 10 000 or have outstanding loans or receivables of more than BGN 40 000 under loans received or given during the year or in the previous five years;

- hold shares and units in companies and own real property abroad;

- have received income from sources abroad subject to a final tax levy.

All non-resident natural persons who, in the previous year, received income subject to taxation on the total annual taxable amount for income from a source in Bulgaria.

Resident natural persons may, if they wish to do so, declare in their annual tax return the non-taxable income referred to in Article 13(1) of the Income Tax on Natural Persons Act received during the year, any inherited property and property acquired under a legacy or as a donation and any property restituted in accordance with the procedure laid down by law.

An annual tax return is not to be filed:

- for income subject to a final tax levy, such as income from interest earned from bank deposits in Bulgaria (by way of exception, a tax return must be filed for certain categories of income received from sources abroad when these are subject to a final tax levy);

- when the natural person receives his/her entire income under an employment contract and the annual tax is equal to the tax payable in advance;

- in respect of non-taxable income, except for the non-taxable income earned from passenger carriage by taxi in the capacity as a natural person (driver) on behalf of a registered transport operator.

The tax return is filed in between 10 January and 30 April of the year following the year in which the income was received.

The annual tax return for the income from economic activity as sole proprietor, the income from economic activity of natural persons who are traders within the meaning of the Commerce Act but are not registered as sole proprietors, and the income from economic activity of natural persons registered as farmers for 2020 may be filed until 30 June 2021.

The annual tax returns shall be submitted:

1. Electronically on the portal of the National Revenue Agency with a Personal Identification Code (PIC), and its receipt is free of charge from any office of the National Revenue Agency, or with a qualified electronic signature.

Self-insured persons within the meaning of the Social Security Code submit their annual tax return only electronically.

- personally in the respective office of the NRA as per the permanent address of the individual and the sole proprietor; or

- by postal order with a return receipt (see the addresses and the postal codes of NRA’s offices), or

- on-site at one of the 352 post offices, where they will be given a reference number by Bulgarian Post’s official; or

Annual tax return under Art. 50 of the Personal Income Tax Act for 2020 with BARCODE

Annual tax return under Art. 50 of the Personal Income Tax Act for 2020 for the incomes of individuals with annexes

Annual tax return for the incomes of the natural persons under art. 50 of the Personal Income Tax Act for 2020 - Model 2001

The persons who file their annual tax return electronically are entitled to a 5 per cent tax rebate from the outstanding amount of the tax payable under the annual tax return but not more than BGN 500, if they cumulatively satisfy the following conditions:

- they have filed their tax return electronically not later than 31 March of the following year;

- as at the date of filing the tax return they do not have any enforceable public debts; and

- the outstanding amount of the tax to be paid under the tax return is paid by 31 March of the following year.

The income of resident natural persons from sources abroad is subject to taxation in Bulgaria.

Where an existing tax treaty or another international treaty to which the Republic of Bulgaria is a party contains provisions that differ from those laid down in national law, the relevant tax/international treaty applies. Where, for a given category of income, the natural person has paid tax in another country, double taxation is avoided by applying the methods envisaged in the relevant treaty on the avoidance of double taxation.
In all other cases, for the purpose of assessing the tax payable by natural persons who are tax residents in Bulgaria, tax credit for identical or substantially similar foreign taxes levied by the respective competent bodies may be used.