Corporate Income Tax

CORPORATE INCOME TAX in Bulgaria

Corporate income tax rate is 10% on the profit.Bulgarian Corporate Income Tax Cadiaos 2

Taxable entities

  • Companies and partnerships established under Bulgarian law
  • Permanent establishments of non-resident entities in Bulgaria

Taxable Profit
Financial result adjusted for tax purposes

Accounting Rules
IFRS or local Bulgarian GAAP (for small and medium-sized enterprises).

Tax Adjustments
E.g., non-business related or not duly documented expenses; interest restricted under the thin capitalization rules; expenses for impairment of assets; dividends received from local or EU based companies.

Tax Depreciation Rules
Maximum annual tax depreciation rates between 4% and 50%, depending on the type of asset.
Thin capitalization if the debt to equity ratio of the company exceeds 3:1 (some of) the interest expenses may not be tax deductible in the current year. However, they may become tax deductible in the following five consecutive years under certain conditions.

Tax Loss can be Carried Forward
Tax losses can be carried forward over the next five consecutive years.

Tax Returns and Payment
The annual corporate tax return has to be submitted by 31st March of the following year.
The tax year is the calendar year.
The corporate tax has to be paid also by 31st March. Quarterly or monthly advance installments are due during the year.

Distribution of Dividends
Subject to 5% withholding tax when distributed to individuals, resident non-profit entities and non-residents (except for EU/EEA entities). Dividends distributed to resident companies are not included in their taxable income except for dividends distributed by:

  • Special purpose investment companies;
  • Non-EU/EEA foreign entities.