Can I Claim Client Entertainment & Representation as a Business Expense in Bulgaria?
Partially. Representation expenses are not added back for corporate income tax, but they carry a separate 10% expenses tax. The tax on expenses is a final tax, so you pay 10% extra on the expense itself.
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What National Revenue Agency (NRA / НАП) says
The NRA treats the tax on expenses as a final tax. It applies to documented representation expenses related to the business, to in-kind social expenses for employees such as meal vouchers and voluntary insurance contributions, and to in-kind use of company assets for personal purposes. The rate is 10% on representation and in-kind social expenses and 3% on personal use of assets. It is declared in the annual return filed between 1 March and 30 June of the following year, and paid by 30 June.
When you can claim
- Client meals and hospitality related to the business, with the 10% expenses tax paid on the amount
- Business gifts to clients, recorded as representation
- Hospitality at trade events
- Conference dinners with business associates
- Meal vouchers for staff, which are in-kind social expenses and exempt up to €102.26 per employee per month when the conditions are met
When you cannot claim
- Pure personal entertainment with no business association
- Gifts with no documented business reason
- Lavish spending that cannot be justified
- Input VAT on entertainment, which is blocked
- Spending with no invoice or attendee record
Good to know
Pro tip: Keep the invoice, the guest list and the business reason for every meal or gift. Meal vouchers for staff are an in-kind social expense, taxed at 10% unless they fall within the exemption of €102.26 per employee per month, so separate them from client spending. Personal use of company assets is taxed at 3%.
Important: Track entertainment in a separate ledger account so the tax-on-expenses calculation is clean when the annual return is prepared. Input VAT on entertainment is blocked, so book the full invoice amount as the cost.
Related expenses
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