What is Personal Income Tax (Bulgaria)?

Bulgaria's flat 10% personal income tax is one of the most competitive in the EU — the same rate as Corporate Income Tax, and below every other EU member state for employment income. The dividend withholding rate is an even lower 5%, creating a very efficient combined rate for company founders.

**Sources of income and rates**

- Employment income: 10% (after social insurance deductions and a small personal allowance) - Self-employment and business income: 10% - Capital gains on securities: 10% (0% for gains on Bulgarian or EU regulated market shares) - Capital gains on real property: 10% (exempt if held 3+ years and this is your only property, or 5+ years for a second property) - Dividends from Bulgarian companies: 5% withholding (final tax) - Interest income: 10% (some exemptions for bank deposits) - Rental income: 10% after a 10% deductible allowance = effective 9%

**Tax-free allowance**

Bulgaria has a small income tax-free threshold for very low earners, but for most working professionals, all employment income is subject to the 10% rate. The 'personal deduction' (лично облекчение) is only BGN 7,920/year (approximately EUR 4,050) — meaning income above this level is fully taxed at 10%.

**Annual tax return (Form 50)**

Employees can but are not required to file an annual return if their income is solely from one Bulgarian employer and all withholding was done correctly. They must file Form 50 by 30 April if they have: - Multiple income sources - Freelance or business income - Foreign income - Capital gains - Want to claim deductions (mortgage interest, charitable donations, child relief)

**Combined founder tax burden**

For an EOOD owner distributing all profit: 10% CT on company profit, then 5% dividend withholding on the remaining 90% = effective total rate of approximately 14.5% (10 + 0.9×5 = 14.5%). This is significantly lower than equivalent structures in Western Europe (UK: ~53.4% effective for a higher-rate director; Ireland: ~52% combined marginal rate).