Renting out your Bulgarian apartment in accordance with the law involves paying taxes. Let us look at exactly what, when, how and how much the landlord has to pay.
Renting out an apartment through online platforms such as Airbnb or Booking is a popular way to earn money. Many apartment owners try to use it to cover the maintenance fee and other costs of their Bulgarian property. However, this way of earning is not as simple as it may seem at first. Let us look at which taxes in Bulgaria a landlord (an individual or a company) has to pay when using online platforms.
Renting through online platforms is usually done for a short period (a few days). The tenants may be either Bulgarian citizens or foreigners. The landlord’s income is the difference between the amount paid by the client and the commission of the intermediary website. The money is paid to a bank account.
An individual renting out an apartment (a property in Bulgaria) uses the services of intermediaries located outside the country. Since online platforms are not registered in Bulgaria, the tax is charged to the recipient of their services, i.e. to the landlord who used the intermediary website.
In such a situation the landlord must register under Art. 97a, para. 1 of the ЗДДС, and the application must be filed no later than 7 days before the date on which the obligation to pay tax on the supply arises.
Under registration pursuant to Art. 97a, only the services received are subject to value added tax (VAT), at a rate of 20%. The landlord does not acquire the right to a tax deduction, and the revenue from renting out the apartment is taxable.
By law, every apartment rented out on a daily basis must be assigned a category. The relevant document is issued by a special commission that determines the star rating of tourist facilities. If an apartment has a category, renting it out is a tourism activity. Payment of the tourist tax is governed by the Local Taxes and Fees Act (ЗМДТ), whereas in other cases (long-term renting under a contract by an individual) tax must be paid in accordance with the Personal Income Taxes Act (ЗДДФЛ).
A common situation: the owner entrusts the renting out to a company specialising in such activity. If the company pays for the rental, the owner pays tax in accordance with the ЗДДФЛ, and the general provisions of the VAT law apply. If a person is not registered under this law, the rental income is included in the calculation of the taxable turnover for the year. If there is a VAT registration, the tax rate is 20% and the VAT charged is paid monthly.
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