Everything you need to know about taxation in Bulgaria, connected with purchasing, owning and selling real estate in Bulgaria – property tax, municipal waste tax, size of taxes in some cities, patent tax, VAT, income tax (including income from renting or selling your property in Bulgaria).
Property tax
Taxed are all types of real estate except for forests and cultivated farmland. The owners of the property must declare it with the tax authorities within two months from the date of purchase (or completion of construction). The declaration provides a detailed description of the property: the year of construction, building materials, design features, area, number of floors, purchase price, etc.
The taxable base for companies is the book value of the real estate, while for individuals - the price of the real estate, defined by the territorial tax service. The tax rate is the same for individuals and businesses and is 0.15%.
For example, for a property with a tax value of 30,000 BGN, the tax rate is: 30,000:100x0.15 = 45 BGN. The tax on primary residence of individuals is reduced by 50%. The primary residence is the place, where the owner and his family live most of the year.
This tax is paid in four equal installments: by 31 March, 30 June, 30 September and 30 November. Companies and individuals who pay taxes once before 31 March receive a discount of 5% of the tax.
Municipal waste tax
The tax is set by the local authorities. The tax on residential buildings is determined in proportion to the book value or based on the quantity of waste. The tax on non-residential buildings depends on the type and the number of containers for waste collection. In the case, where in every single building it is not possible to determine the type and number of containers, the rate is proportional to the book value of the building. It is paid simultaneously with the tax on real estate. The tax is the same for individuals and businesses. A place of residence is taxed based on its value established for property tax.
Every year by the end of January each property owner receives a notification of the amount of real estate tax and municipal waste tax by the tax authority. It contains calculations that allow the taxpayer to check the accuracy of the data and the correct amount. In total, the property tax and the tax on municipal waste, on average, are about 80 - 120 BGN per year (for 1-2 bedroom apartment with a total area of about 70 square meters).
Size of the taxes in some cities:
Varna - 0.20%
Plovdiv - 0.21%
Burgas - 0.17%
Sofia - 0.245% +5 BGN
Patent tax
Taxed are companies, engaged in certain legal activities that have a revenue of less than 50,000 BGN in the last 12 months. The tax covers about 50 types of activities: hotels (1 and 2-star hotels with less than 20 rooms), restaurants (1 and 3-star restaurants with up to 100 seats), shops (with retail space up to 100 square meters), production of food, computer games, internet services , transportation, etc. It is not necessary to obtain a patent.
The tax can be paid once before 31 January (with a discount of 5%), or in four equal installments - by 31 January, 30 April, 31 July, and 31 October. The tax paid on a scale, determined by law. The amount of tax depends on the city/village, the type and parameters of activity (hotel category and the number of seats in it, the retail area in the store, the number of seats in the restaurant, etc.). The amount of profit of the company does not affect the size of the tax. Firms, taxable with patent tax also pay property tax, municipal waste tax, vehicle tax, road tax, income tax on wages and social security and pension contributions. With VAT are charged companies with an annual turnover of more than 50,000 BGN.
VAT (Value Added Tax).
The VAT in Bulgaria is 20%, for tour operators and hotels - 7%. VAT is paid by companies with a turnover of not less than 50,000 BGN in the last 12 months. These firms are required to register for VAT in the tax office.
Income tax
Taxed are the profits of firms that do not fall under the patent tax. The tax is paid to the republican budget. The tax rate is 19.5%. The tax is paid by down payment each month until the 15th day at the rate of 1/12 of the profit for the previous year. There is a correction on the total value of actual profit for the year.
For new firms and firms that had losses in the past year, monthly contributions are made on the basis of actual profits for the previous month. This is to some extent rounded, so in the yearly results is often made a correction - 1/12 of the profit is adjusted for inflation.
Taxes on personal income (for people who decide to rent/sell their properties in Bulgaria):
• All real estate owners who rent their properties must pay a tax on personal income at the amount of 10%.
• When selling a property in Bulgaria, you must also pay tax on personal income at the amount of 10%.
What is not taxed as personal income:
1. Income earned within one year from the sale of a residential property in Bulgaria, regardless of the date of purchase.
2. Income, derived from the sale of two properties in Bulgaria, if between the date of purchase and the date of sale there were more than five years.
