Foreign citizens can stay on the territory of Bulgaria on various grounds, but not all of them give the right to employment. Such restrictions do not apply to one's own business: any foreigner can open an OOD (EOOD) and conduct activities. Before starting a business, it is worth figuring out what taxes Bulgarian legal entities must pay. person. The subjects of taxation are both Bulgarian and foreign companies, including non-profit organizations. Tax (non-)residents: A legal entity in Bulgaria is recognized as a tax resident if it is registered in Bulgaria with an office at the place of registration and is entered in the national register of legal entities. A non-resident company is a legal entity that is located abroad, is established and registered outside Bulgaria in accordance with the requirements of the legislation of a foreign state, but whose activities extend to the territory of Bulgaria, including through representative offices and branches. The profits of resident companies are taxed on income earned in any country in the world. The profit of non-resident persons from activities in Bulgaria is subject to Bulgarian taxation, i.e. only income earned on the territory of Bulgaria. The main organizational and legal forms of legal entities in Bulgaria are: Limited liability companies (EOOD/OOD), joint-stock companies (AD), private entrepreneurs (ET), representative offices of foreign companies. Financial statements in Bulgaria, it is prepared by legal entities in accordance with the International Financial Reporting Standard (IFRS), but some companies may maintain documentation in accordance with the national standards previously in force.

Corporate income tax

Rate 10% This tax must be paid annually by the first of April of the year following the reporting period. Profit is taxed regardless of the type of activity. Corporate tax is 10% of the amount of profit, i.e. the difference between gross profit and costs. The law does not determine what specific expenses can be included in the costs, which gives entrepreneurs a certain freedom in calculating the tax, although it is better not to abuse it so as not to attract excessive attention of the inspection authorities.

Taxation of unprofitable activities

The amounts of losses of the current financial year can be taken into account for tax payments of subsequent periods for no more than 5 years. When determining the amount of taxable income for the current financial year, losses can be taken into account only if the previous owners of the company are retained during these reporting periods.  Thus, these losses can be turned to the profit of the previous year.

VAT

Value Added Tax (VAT) is 20% and is levied on the territory of Bulgaria on the total value of goods and services. It must be paid by companies registered for VAT. Exports are not taxed, but it will have to be paid for imported goods and services rendered in the country. VAT registration is mandatory if the annual turnover for the previous 12 consecutive months was more than BGN 50 thousand. In other cases, such registration can be voluntary at the request of the entrepreneur. Value added tax must be paid every month by the 10th day. VAT on exported goods is easy to refund.

Osigurovka, or social taxes

These are mandatory deductions that are paid by the employer for employees from their wages:

• Social and pension insurance (DO) – from 16 to 35.5%.
• Health insurance – 8%.

In total, the employer pays only 16.4% of the payroll. He shares the burden of insurance payments with employees: the rest of the funds are deducted from their salaries.

Accounting

Young companies can rarely afford to have an accountant on staff. Fortunately, outsourcing is developed in Bulgaria, and you can use the services of an accounting company that will calculate all taxes on a monthly basis. A competent specialist of the Window to Bulgaria Information Center can help you find a legal scheme to reduce the amount of payments.