What are advance corporate tax instalments in Bulgaria?
Bulgarian companies whose prior-year corporate income tax exceeded BGN 30,000 must pay advance instalments quarterly. Companies with prior-year CIT above BGN 300,000 pay monthly. The 20% safe harbour rule means if advances reach 80% of the actual liability, no underpayment interest is charged.
Detailed Explanation
Bulgaria requires companies that are profitable above certain thresholds to make advance corporate income tax payments during the year, rather than waiting until the March 31 final deadline. This ensures the state receives tax revenue throughout the year in line with when profits are earned.
Who must pay advance instalments?
The obligation depends on the company's corporate income tax liability in the prior fiscal year:
- Prior-year CIT between BGN 30,000 and BGN 300,000: quarterly advance instalments
- Prior-year CIT above BGN 300,000: monthly advance instalments
- Prior-year CIT below BGN 30,000 (or no prior-year liability): no advance instalments required
New companies have no instalment obligation in their first year of operation.
Quarterly instalments: thresholds and due dates
For quarterly payers, the annual instalment amount equals the prior year's CIT. This is divided into four equal quarterly payments:
- Q1: due by 15 April
- Q2: due by 15 July
- Q3: due by 15 October
- Q4: due by 15 December
Example: a company with BGN 80,000 CIT in 2024 must pay BGN 20,000 per quarter in 2025, due on 15 April, 15 July, 15 October, and 15 December 2025.
Monthly instalments: large companies
For companies with prior-year CIT above BGN 300,000, advance payments are monthly. The monthly amount equals the prior year's CIT divided by 12. Payments are due by the 15th of each month from March to November (9 payments), plus December instalment due by 15 December.
Example: a company with BGN 600,000 CIT in 2024 pays BGN 50,000 per month in 2025, due by the 15th of each month.
The 20% safe harbour
The safe harbour is a key protection against underpayment interest. If a company's total advance instalments paid during the year are at least 80% of the actual current-year CIT liability, no underpayment interest is charged on the shortfall.
Example: a company pays BGN 80,000 in quarterly advances. The actual 2025 CIT turns out to be BGN 90,000. The advance payments represent 88.9% of the actual liability, which is above the 80% threshold. The BGN 10,000 balance is paid by 31 March 2026, interest-free.
If the same company's actual CIT had been BGN 110,000, the advances of BGN 80,000 would represent only 72.7% of actual liability (below 80%). Interest at 0.05% per day would apply to the BGN 8,000 shortfall below the 80% threshold (80% of BGN 110,000 is BGN 88,000; advances were BGN 80,000; interest applies on the BGN 8,000 gap) from each missed instalment date.
Can I increase advance payments voluntarily?
Yes. If you expect current-year profit to significantly exceed last year's, you can voluntarily declare and pay higher advance instalments. This avoids a large balance payment in March and minimises underpayment interest risk. There is no penalty for overpaying; any excess is credited against the final liability.
Adjusting instalments mid-year
If your profit expectations change significantly during the year (e.g., you land a major contract or suffer an unexpected loss), you can file a revised advance declaration with the NRA to adjust the instalment amounts going forward. This is done via an application (Zayavlenie) to the territorial NRA office.
Underpayment interest rate
Interest on underpaid advance instalments runs at 0.05% per day (approximately 18% per year) on the underpaid amount from each missed instalment date to the final payment date. This is the Bulgarian legal interest rate (base rate plus a margin) and is not deductible for CIT purposes.
Source: nra.bg
Real-World Examples
Quarterly payer hitting the safe harbour exactly
A Bulgarian OOD had BGN 50,000 CIT in 2024. In 2025, it pays four quarterly advances of BGN 12,500 each (total BGN 50,000). Actual 2025 CIT turns out to be BGN 62,000. The advances cover 80.6% of actual liability: just above the 80% safe harbour. The BGN 12,000 balance is paid by 31 March 2026 with no underpayment interest.
Monthly payer with rapidly growing profits
A medium-sized OOD had BGN 500,000 CIT in 2024 and pays monthly advances of BGN 41,667. In 2025, profits surge and actual CIT is BGN 750,000. Monthly advances total BGN 500,000, covering only 66.7% of actual liability (below 80%). Interest on the BGN 100,000 gap (80% of BGN 750,000 minus BGN 500,000 paid = BGN 100,000 shortfall) accrues at 0.05%/day from each missed instalment date. The company should have filed a revised advance declaration when profits started exceeding forecasts.
New company in first year, no instalment obligation
A startup EOOD incorporated in March 2025 earns BGN 200,000 profit in 2025 with no prior-year CIT liability. No advance instalments are due during 2025. The company pays its full 2025 CIT of BGN 20,000 by 31 March 2026. From 2026 onwards, since 2025 CIT was below BGN 30,000, no quarterly instalments are required for 2026 either.
Common Mistakes to Avoid
- Assuming the advance instalment obligation does not apply because the company is in a low-profit year: the obligation is based on the PRIOR year's CIT, not the current year. If last year's CIT was above BGN 30,000, instalments are mandatory this year regardless of current-year performance.
- Missing individual quarterly due dates (15 April, 15 July, 15 October, 15 December): each missed payment accrues interest from that due date, not just from March.
- Not filing a revised advance declaration when current-year profits are tracking materially below last year: continuing to pay instalments based on a higher prior-year liability is not harmful, but not adjusting when profits drop means unnecessary cash outflows.
- Confusing the BGN 30,000 quarterly threshold with the BGN 300,000 monthly threshold: a company crossing from quarterly to monthly obligations faces 12 payments instead of 4, with significant cash flow implications.
Frequently Asked Questions
What happens if I miss a quarterly advance CIT instalment payment?
Interest accrues from the missed due date at 0.05% per day on the unpaid amount. The NRA will identify the underpayment when you file Form 1 in March. You will owe the overdue instalments plus the accrued interest. There is no formal late-payment penalty beyond the interest, but repeated non-compliance can trigger NRA audit attention.
Can I get a refund if I overpay advance instalments?
Yes. If your total advance payments exceed your actual annual CIT liability, the overpayment is credited against other tax liabilities or refunded by the NRA within a specified period. You must file Form 1 and claim the refund. The NRA typically processes refunds within 30 days of the confirmed return.
Do advance instalments apply to VAT as well as CIT?
No. Advance instalment obligations apply only to corporate income tax. VAT is paid monthly via the Vat14 return, based on actual VAT collected and paid that month. There is no advance VAT system; you pay exactly what is owed based on the monthly return.
How are advance instalments calculated for a company that had a tax loss last year?
If the company had a tax loss in the prior year (and therefore no CIT liability), there is no instalment obligation for the current year. The first year of profitable trading therefore involves no advance instalments, and the company pays its full CIT in a single payment by 31 March of the following year.
What is the underpayment interest rate on advance CIT in Bulgaria?
The Bulgarian legal interest rate for overdue taxes is 0.05% per day, equivalent to approximately 18.25% per year. This applies from each missed instalment due date until the final payment is made. It is not deductible for CIT purposes.
Practical Tips
- At the start of each year, review your prior-year Form 1 to confirm whether your CIT liability crossed the BGN 30,000 or BGN 300,000 thresholds, and set calendar reminders for the relevant quarterly or monthly due dates.
- Build advance instalment payments into your monthly cash flow forecast from January: missing the April first-quarter payment because of poor planning is one of the most common Bulgarian CIT compliance errors.
- If current-year profits are tracking materially above last year, consider voluntarily increasing advances to avoid a large interest-bearing shortfall in March: the NRA's online portal allows voluntary additional payments.
- Keep records of every advance payment with its date and amount: you will need these to reconcile against your Form 1 liability in March and to verify the 80% safe harbour calculation.
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