Renting out an apartment in Bulgaria: Taxes, NAP and declarations

Renting out an apartment on a long-term basis (for 1–3 months, six months or years) is an excellent source of steady passive income in Bulgaria. However, foreigners, including people with temporary protection status, a long-term residence permit or EU long-term resident status, should remember: having a special legal status does not exempt you from paying tax on income earned from property located in Bulgaria. All tax obligations, reporting deadlines and rules are governed by the Personal Income Tax Act (ЗДДФЛ).

How much to pay: Tax rate and statutory expenses

Bulgaria applies a proportional (flat) taxation system, but for landlords who are individuals the law provides a significant relief — statutorily recognised expenses:

• Tax rate: 10% (flat rate).
• Statutory expenses (deduction): 10% of the income received. The state automatically recognises that 10% of the rent goes towards maintaining the property. You do not need to collect receipts or invoices for repairs or furniture purchases.
• Taxable base: 90% of the rent actually received.

Calculation example:
You rent out an apartment for 1 000 leva a month.
1. Statutory deduction (10%): 1 000 × 10% = 100 leva.
2. Taxable income: 1 000 − 100 = 900 leva.
3. Tax payable (10%): 900 × 10% = 90 leva per month.

Who you rent to: The key difference between an individual and a company

The procedure for calculating and paying tax depends fundamentally on who is named as the tenant in the contract:

Schedule and procedure for advance payments (when renting to individuals)

If the property is rented to private individuals, the owner must keep records, declare and pay the advance tax quarterly on their own:

• For Q1 (January — March): filing the declaration and paying the tax — by 30 April.
• For Q2 (April — June): filing the declaration and paying the tax — by 31 July.
• For Q3 (July — September): filing the declaration and paying the tax — by 31 October.
• For Q4 (October — December): NO ADVANCE TAX IS CHARGED OR PAID. Income for the 4th quarter is carried directly into the final annual declaration.

Step-by-step quarterly reporting process:

• Filling in the declaration: The declaration under Art. 55, para. 1 of the ЗДДФЛ (Form 5001) is used. It states the amount of income for the 3 months (income type code — 501), deducts 10% of statutory expenses and calculates the 10% tax.
• Paying the tax: The amount is transferred to the designated National Revenue Agency (NAP) account at your place of registration or paid online by card through your personal account with no fee.

Ways to file documents with NAP: PIK vs electronic signature (KEP)

Interaction with the National Revenue Agency (NAP) is fully digitalised. The owner can choose the most convenient method of electronic filing of reports:

1. Method 1: PIK — personal identification code (Персонален идентификационен код):

A free personal code issued by the NAP tax authority. To obtain it, it is enough to come with your passport/LNCh to any NAP office in Bulgaria and submit an application. The PIK gives access to the NAP electronic system for filing all personal declarations and checking outstanding liabilities.

2. Method 2: Qualified electronic signature — KEP (Квалифициран електронен подпис):

A paid official digital certificate purchased from accredited trust service providers in Bulgaria (for example, Stampit, InfoNotary, B-Trust, Evrotrust and others).
Advantage of the KEP: The KEP has the full legal force of a handwritten signature and can be used not only with NAP, but also to obtain any government services, to work with banks and registers (including the Registry Agency / BULSTAT) and to sign any contracts remotely. The KEP can be either on a USB token or cloud-based (on a smartphone).

• 3. Alternative methods: A personal visit to the territorial NAP office or sending the documents by registered mail with a list of enclosures and acknowledgement of receipt (обратна разписка).

Final annual declaration and the 5% discount

Every year, between 10 January and 30 April the property owner is required to file the annual tax declaration under Art. 50 of the ЗДДФЛ (with Appendix No. 4 completed).

• Offsetting advance payments: The annual declaration states the entire income for 12 months and lists the advance payments already made for Q1, Q2 and Q3. The system automatically deducts the advance payments, and only the tax for Q4 remains to be paid.
• Bonus for promptness (5% discount): If you file the annual declaration online (using a PIK or KEP) and pay the remaining part of the tax by 31 March, the state grants a 5% discount on the amount of tax still due (provided there are no other old liabilities to the budget).

Practical points for landlords

• BULSTAT register: Foreign nationals buying housing in Bulgaria receive an EIK under BULSTAT (BULSTAT card). This number, together with the LNCh/EGN, serves as a personal tax identifier when filing reports.
• Jointly owned property: If the apartment is registered, for example, to a husband and wife in equal shares (50/50), the income is divided strictly in half. Each spouse files their own declarations (Art. 55 and Art. 50) for their share.
• Utility payments: If the tenant separately reimburses you for electricity, water and heating costs according to meter readings, these amounts are not included in your taxable income. The main thing is to state this point clearly in the lease agreement.
• Local taxes (municipality): Rental income tax is an income tax paid into the state budget. It does not replace the annual local property tax (Данък върху недвижимите имоти) or the waste collection fee (Такса битови отпадъци), which are paid separately to the municipality (Община) where the property is located.