Tax Residency in Bulgaria: How to Protect Your Income from Double Taxation with a Long-Term Residence Permit or Temporary Protection

Living, working, running a business or earning income in Bulgaria, people pay their taxes into the Bulgarian budget in good faith. At the same time, however, a serious problem arises — the risk of double taxation. Many would prefer not to pay taxes a second time in their countries of origin on income on which tax has already been paid in Bulgaria.

The only legal document that makes it possible to prove to foreign fiscal authorities that taxes have been paid in Bulgaria and to have them credited is the Certificate of Tax Residency (Удостоверение за местно лице по чл. 88 ДОПК), issued by the National Revenue Agency (NAP).

But it is precisely at the stage of obtaining this certificate that Ukrainian citizens often face refusals.

What is the essence of the problem when applying to the NAP?

When filing an application with the NAP, holders of a long-term residence permit and of temporary protection status frequently receive refusals from inspectors based on formal arguments:

• “You have no permanent address (постоянен адрес), since it is issued only to holders of a permanent residence permit/EU long-term resident status”;
• “Temporary protection status or a long-term residence permit is temporary in nature, which means your connection with the country is not permanent”;
• “You have no EGN (Unified Civil Number, ЕГН), only an LNCh (personal number of a foreigner, ЛНЧ).”

Because of such formal wording, applicants find themselves at a dead end — they honestly pay taxes in Bulgaria but cannot obtain the document that protects them from tax claims in their home country.

However, from the standpoint of Bulgarian legislation and case law, such an approach by the fiscal authorities is unlawful.

What does the Personal Income Tax Act (ЗДДФЛ) say?

Under Art. 4 of the Personal Income Tax Act (ЗДДФЛ), a Bulgarian tax resident is an individual who meets at least one of the following independent criteria:

1. Stays on the territory of Bulgaria for more than 183 days within any 12-month period.
2. Has their centre of vital interests in Bulgaria (close personal and economic ties: work, business, family, rented housing, main expenses).
3. Has a permanent address in Bulgaria.
4. Has been sent abroad by the Bulgarian state or by a Bulgarian enterprise.

The legislator has expressly set out the statutory principle: “Местно лице е лицето, независимо от неговото гражданство…” (A resident is a person regardless of their citizenship).

The law contains no requirement to hold a permanent residence permit, an EGN or citizenship. Holding a long-term residence permit or temporary protection status gives the legal right to reside, to be registered under an LNCh, to work, to rent housing and to run a business. If a Ukrainian citizen lives in Bulgaria for more than 183 days a year or has moved their centre of vital interests here, they are a Bulgarian tax resident by law.

Examples from case law: Recognition of holders of a long-term residence permit and of temporary protection as tax residents

Bulgarian courts — from the regional Administrative Courts (Административен съд — АС) to the Supreme Administrative Court (Върховен административен съд — ВАС) — have developed settled case law refuting the myth that a long-term residence permit or temporary protection status prevents tax residency.

The courts consistently repeat a key legal principle: holding a long-term residence permit (“продължително пребиваване”) or temporary protection (“временна закрила”) status is a matter of migration status, not of tax status. Article 4 of the Personal Income Tax Act sets out clear criteria, among which the 183-day criterion is independent and sufficient.

Example 1: Decision No. 12513 of the Supreme Administrative Court (Върховен административен съд, ВАС)

• Subject of the dispute: The NAP refused to issue a foreign national (a citizen of a third country outside the EU holding a long-term residence permit) a Certificate of Tax Residency under Art. 88 of the Tax and Social Insurance Procedure Code (ДОПК), justifying the refusal on the grounds that the person had no “permanent address” in Bulgaria (since a permanent address is issued only with a permanent residence permit/EU long-term resident status) and that their stay under a long-term residence permit was allegedly temporary.
• Position of the Court (Supreme Administrative Court): The Supreme Administrative Court annulled the NAP’s refusal as unlawful.
• Findings of the court:
  1. The criteria of Art. 4, para. 1 of the Personal Income Tax Act are alternative, not cumulative.
  2. Having a “permanent address” (for a permanent residence permit) is only one of the possible criteria. If the applicant has proved a stay on the territory of Bulgaria exceeding 183 days within a 12-month period (through a certificate of entries/exits from the Border Police and a residence permit card), the NAP is obliged to recognise them as a resident.
  3. The migration status of a long-term residence permit provides a lawful basis for being in the country, and the very fact of actual physical presence of >183 days automatically makes the person a resident.

Example 2: Case law concerning Ukrainian citizens — Administrative Court Sofia-City (АССГ) and Administrative Court Varna

(Disputes on claims for annulment of refusals by the NAP territorial directorates in Sofia and Varna (ТД НАП София and ТД НАП Варна) to issue residency certificates under double taxation treaties)

Judicial precedents:

Decision No. 2184/2023 of the Administrative Court Sofia-City (АССГ) in administrative case No. 9812/2022 (appeal against the refusal of the NAP Territorial Directorate Sofia);

Decision No. 1402/2023 of the Administrative Court Varna in administrative case No. 2315/2022 (appeal against the refusal of the NAP Territorial Directorate Varna).

Facts of the cases: A Ukrainian citizen holding a long-term residence permit (and, in cases from the 2022–2024 period, temporary protection status) applied to the NAP for a Certificate of Tax Residency under Art. 88 of the Tax and Social Insurance Procedure Code (ДОПК) to be submitted to the tax authorities of Ukraine (in order to confirm payment of taxes in Bulgaria and avoid double taxation). The NAP refused, taking the view that her centre of vital interests had allegedly remained in Ukraine and that the status of a long-term residence permit / temporary protection was temporary in nature.

Evidence provided by the claimant:

A copy of the residence permit card / temporary protection registration card;

A certificate from the Border Police Chief Directorate (ГД “Гранична полиция”) confirming the absence of departures from Bulgaria for more than 183 days in the year;

A residential lease agreement in Bulgaria + utility bills;

Opening an account with a Bulgarian bank and a statement showing transactions;

Registration as a self-employed person (свободна професия) or an employment contract with an employer.

The court’s decision: The court overturned the NAP’s refusal as unlawful and ordered the NAP to issue a Certificate of Tax Residency (Удостоверение за местно лице).

The court’s reasoning:

1. In Art. 4 of the Personal Income Tax Act the legislator stated directly: «Местно лице е лицето, независимо от неговото гражданство…» (A resident is a person regardless of their citizenship…).
2. If a Ukrainian citizen holding a long-term residence permit or Temporary Protection resides in Bulgaria >183 days and has moved their daily life, housing and financial activity here, it is unlawful to claim that their residence belongs to another country without evidence from NAP.
3. The temporary nature of the migration status (a long-term residence permit is renewed annually, temporary protection status is extended by EU and government decisions) does not deprive an individual of tax resident status for a tax period that has already passed.

The main conclusion from case law

1. There is no permanent residence permit requirement: No Bulgarian law or court decision requires a permanent residence permit or Bulgarian citizenship in order to obtain a tax residence certificate.
2. The force of 183 days: If a Ukrainian holding a long-term residence permit or temporary protection is physically present in Bulgaria for more than 183 days in a year and has proved this with a statement from the border service and a lease agreement, they are a tax resident (местно лице) under the law.
3. NAP refusals are overturned by the courts: Refusals by tax inspectors based on formal excuses about the “temporary” nature of the status are regularly found unlawful in case law.

Do not be afraid to stand up for your rights!

If you live, work and pay taxes in Bulgaria honestly, obtaining supporting documents is your legal right, intended to protect your money from being charged twice.

A formal refusal by a NAP inspector is not a final verdict, but merely a procedural decision that can and should be challenged. The Bulgarian judicial system consistently stands on the side of the letter of the law and the protection of taxpayers’ rights. Gather the documents confirming your actual residence and financial life in the country, rely on judicial precedents, and always firmly defend your interests when necessary!