Bulgaria is a relatively inexpensive country, which is why freelancers from all over the world are happy to come here. Living in Bulgaria, they can save on taxes.
Many freelancers choose Bulgaria as a place to live while working on orders for employers in other, wealthier countries.
Those living in Bulgaria for more than 183 days a year are Bulgarian tax residents and must pay taxes here. Individuals are subject to income tax at a flat rate of 10%. For residents, it does not matter in which country the income was earned. Non-residents, however, pay 10% only if they earn income in Bulgaria.
If it is a matter of one-off earnings, it is enough to conclude service contracts and then file a declaration with the National Revenue Agency (NAP) by 30 April of the year following the reporting year and pay 10% tax. Documents confirming the income received are attached to the tax return. If, however, the work is carried out on an ongoing basis, it makes sense to set up a company (EOOD, single-member LLC), become self-employed (самоосигуряваще се лице) or register as a sole trader. The last option is available only after obtaining a permanent residence permit or EU long-term resident status.
Self-employed persons must pay social contributions (осигуровки) every month. After obtaining a permanent residence permit or EU long-term resident status, «здравни осигуровки» are added to these, i.e. contributions to the compulsory health insurance system. Holders of a long-term residence permit do not pay «здравни осигуровки», as they are not entitled to use Bulgaria’s compulsory health insurance system. In addition, an individual income declaration must be filed once a year and 10% tax paid.
A sole trader (ЕТ, едноличен търговец) must also pay social contributions, as well as patent tax or 15% tax (depending on the type of activity).
A company with a single founder (EOOD) must pay 10% corporate tax on profit every year. If there is no profit, the tax does not have to be paid.
Self-employed persons in Bulgaria can obtain a residence permit on the basis of their activity. To do so, they will need to confirm their knowledge, skills and experience, obtain the relevant licence and pass a language exam. Although the «Freelance practice» ground is not among the most popular and widespread, obtaining a residence permit in Bulgaria this way is entirely realistic.
Still have questions? Contact «Bulgarian Expert» and we will help you deal with Bulgarian taxation and reporting.
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