Can I Claim Office Rent as a Business Expense in Bulgaria?
Yes, office rent and utilities are fully deductible against Bulgarian Corporate Income Tax. VAT (20%) recoverable on input invoices from Bulgarian VAT-registered landlords; reverse charge applies for cross-border services.
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What National Revenue Agency (NRA / НАП) says
The Corporate Income Tax Act (CITA) taxes profit at a flat 10% under Article 20, and the base is taxable profit under Article 19. Office rent is an ordinary cost of earning that profit and is recorded in the accounting result. A landlord that is VAT-registered charges 20% VAT on the rent, and the tenant can normally recover that input VAT through the monthly VAT return. Rent paid to a related party should be at market value, because the tax authority can challenge a price that is out of line.
When you can claim
- Monthly office rent paid to a Bulgarian landlord, with 20% input VAT recovered where the landlord is VAT-registered
- Co-working memberships invoiced to the company
- Service charges, electricity and internet for the office
- Cleaning services for the office
- Rent for a storage unit or meeting room used only for the business
When you cannot claim
- Personal residence costs without a registered home-office allocation
- Excessive rent paid to related parties, which carries transfer pricing risk
- Capital improvements to the premises, which are capitalised and written off over time
- Input VAT where the landlord is not VAT-registered, because no VAT was charged
- Rent paid without an invoice or a signed lease
Good to know
Pro tip: Keep the lease, the landlord's invoice and the bank payment together for every month. The VAT return needs the invoice to be in the purchase ledger for the period, and the ledger is filed with the return by the 14th of the following month. Quarterly or annual prepayments should be allocated to the period they cover.
Important: If the landlord is not VAT-registered, there is no VAT to recover and the full invoice amount is the cost. Check the landlord's VAT status before you sign the lease, because a 20% difference changes the real cost of the premises.
Related expenses
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