Corporate Tax in Bulgaria: The 10% Flat Rate Guide for 2026

Bulgaria has the joint-lowest headline Corporate Tax rate in the EU at 10% (tied with Hungary at 9% in some metrics). Combined with 10% personal income tax and 5% dividend withholding, it's one of the most tax-efficient EU jurisdictions for founders. But there are quirks — including a tax-on-expenses for entertainment and quarterly advance payments — that catch new entrants.

This guide covers everything a Bulgarian founder needs to know about Corporate Income Tax in 2026.

The flat 10% rate

Bulgarian Corporate Income Tax is 10% applied uniformly to all Bulgarian-resident companies regardless of size, sector or profit level. There is no separate state, local or surtax — the 10% is the all-in headline number.

This rate has been flat 10% since 2007 (when Bulgaria joined the EU). Hungary cut to 9% in 2017; Cyprus is 12.5%; Ireland is 12.5% trading / 25% passive. Bulgaria's combination of 10% CT + 10% PIT + 5% dividend withholding is unusual in its uniformity.

Worked example for a typical Bulgarian OOD:

Compared to UK (25% CT + 8.75–39.35% dividend tax) or Ireland (12.5% CT + 40% dividend rate via PAYE), Bulgaria's combined rate is dramatically lower for founders intending to distribute profits.

What gets taxed

The 10% applies to:

• Trading income (services, software, consulting, e-commerce)
• Capital gains on company assets
• Foreign-source income (with treaty relief or unilateral credit)
• Investment income retained in the company

Specifically excluded:

• Dividends from EU subsidiaries (participation exemption)
• Capital gains on shares of EU listed companies (under conditions)

Tax-on-expenses — Bulgaria's quirk

Article 204 of the Corporate Income Tax Act imposes a separate 10% tax on certain expenses in addition to the regular 10% on profits. This catches:

• Representation expenses (entertainment, gifts, hospitality) — 10% tax on the expense itself
• Voluntary social benefits beyond statutory requirements — 10% tax
• Company car expenses for private use — 10% tax
• In-kind benefits to employees not subject to PIT — 10% tax

The expense remains deductible against profit, but the company also pays this separate 10% tax. Effectively a "double deduction with a tax tag."

For most founder-led businesses, this is small (a few thousand BGN at most). Track entertainment in a separate ledger account so the year-end calculation is clean.

Quarterly advance payments

Bulgarian companies pay Corporate Tax in quarterly advance instalments based on prior-year profit:

Each instalment is ¼ of prior-year CT liability (so a company with BGN 40,000 prior CT pays BGN 10,000 per quarter). The annual return reconciles to actual profit.

You can elect to use a current-year estimate instead of prior-year — useful if you expect significantly lower profit this year. Get the estimate wrong by more than 20% and you face interest at approximately 13–14% per annum on the shortfall.

New companies in their first year of trading are exempt from advance payments (no prior year to base them on).

Filing the annual CT return

The Form 1010A annual return is due by 31 March of the year following the financial year-end. Bulgaria does NOT permit non-calendar accounting periods for CT — every Bulgarian company files on a 1 January – 31 December basis.

Filed via the NRA portal using qualified electronic signature, with:

• Profit and loss reconciliation (book profit → taxable income)
• Tax depreciation differences (Bulgarian CITA prescribes max rates by category)
• Tax-on-expenses calculation (Article 204)
• Loss carry-forward (5-year limit)
• Related-party transaction disclosures

Loss carry-forward

Tax losses can be carried forward for 5 years against future profits of the same company. Losses cannot be carried back. Group relief between Bulgarian companies is NOT available (despite EU group relief regime being available, Bulgaria has not opted in for domestic groups).

Personal income tax — also flat 10%

A founder-employee taking salary from their Bulgarian company faces:

A salary of BGN 5,000/month attracts approximately BGN 1,150 employee deductions (PIT + SI) and BGN 875 employer SI, with the cap reducing actual SI at higher incomes.

Dividend withholding — 5%

Distributions of after-tax profit to individuals attract a 5% Bulgarian dividend withholding tax. Distributions to EU/EEA companies meeting the participation exemption (10% holding for 1 year) are 0%.

For a founder-shareholder, a typical structure looks like:

1. Pay yourself a moderate salary (PIT 10% + SI ~33% above the cap)
2. Retain profits taxed at 10% CT
3. Distribute as dividends taxed at 5% withholding

The combined effective rate on retained-then-distributed profit is 14.5% (10% CT + 5% on remaining 90%).

Common mistakes

• Missing quarterly advance payments — interest at approximately 13–14% per annum compounds quickly
• Confusing the NRA CT return (31 March) with the BRRA financial statements (30 September) — they're different filings with different deadlines
• Missing the tax-on-expenses (Article 204) for representation/entertainment
• Trying to elect a non-calendar tax year — Bulgaria doesn't permit it for CT
• Not tracking tax depreciation differences — book and tax depreciation diverge in BG

How AccountsOS handles Bulgarian CT

AccountsOS is live in Bulgaria (with Bulgarian-language source citations from the NRA / mof.bg). Finn:

• Tracks taxable profit at 10% CT in real time
• Maintains separate ledger for representation expenses (Article 204 tax-on-expenses)
• Computes quarterly advance CT amounts from prior year or current estimate
• Reminds you of all four quarterly deadlines
• Tracks the 31 March CT return deadline and 30 September BRRA filing
• Handles VAT (20% standard, 9% reduced) and Form 1/Form 6 monthly payroll

Try AccountsOS free or read about AccountsOS in Bulgaria.

Related reading

• VAT in Bulgaria: 20% standard rate guide
• Setting up an OOD in Bulgaria: the founder's guide