Income Tax Filing in Bulgaria: A Practical Guide for Foreign Residents
Brief Introduction
Filing your personal annual tax return in Bulgaria is a crucial task for both residents and non-residents. Understanding the process, deadlines, and required information can ensure you meet your tax obligations accurately and efficiently. Additional information and support here, Paramount Accounting & Legal Services Bulgaria, office@paramounts.eu & Annual closing – Accounting Services in Bulgaria
Who Needs to File?
In Bulgaria, tax residents must file an annual tax return on their worldwide income. Non-residents are only required to file if they have earned income from Bulgarian sources.
Most employees with only employment income from a Bulgarian employer are not required to file if their employer conducts an annual reconciliation.
However, employees with additional income sources or income from foreign employers must file. All self-employed individuals, including freelancers and sole proprietors, are required to submit an annual tax return.
Types of Income to Declare
- Employment income (wages, salaries, bonuses).
- Rental income. Self-employment income.
- Capital gains (with some exemptions). If you’ve earned income from cryptocurrency transactions, these may also be subject to taxation.
- Investment income (interest, dividends, stock sales).
- Foreign bank interest income, which is subject to taxation for Bulgarian tax residents.
- Loans provided or received—if they exceed specific thresholds, they must be declared.
- Ownership of foreign stocks/shares as of December 31st of the tax year.
- Other income earned in Bulgaria or abroad (for residents).
How to File a Tax Return? Tax Return for Foreigners
Bulgaria offers convenient online filing through the National Revenue Agency (NRA) website, which requires an electronic signature. Paper filing is also possible but online filing is encouraged for efficiency and convenience. The deadline for filing your tax return is April 30th of the following year. However, if you file online by March 31st and pay your taxes, you are entitled to a 5% discount, with a maximum discount of BGN 500.
Foreigners in Bulgaria should understand the tax residency rules to determine their tax obligations. One of the key factors in determining tax residency is physical presence. If you spend more than 183 days in Bulgaria within a calendar year, you are generally considered a tax resident. Other factors, such as having a permanent address or your center of vital interests’ being in Bulgaria, can also contribute to determining your tax residency status.
Penalties for Non-Compliance
Violation in entrusting the preparation of financial statements (art. 70)
In the event that a person entrusts the preparation of financial statements to an unqualified person, in violation of Article 17, paragraph 1, he is subject to a fine of 250 to 1,500 EUR, and the enterprise – to a property penalty of 1,000 to 2,500 EUR. Art. 17, para. 1requires that the financial statements be drawn up by persons with appropriate qualifications and registration, possessing the necessary knowledge and experience.
Failure to prepare financial statements and annual reports (art. 72)
A person who is obliged to prepare financial statements and annual reports according to Chapter Seven, Sections I-IV, and does not do so, is subject to a fine of 250 to 1,500 EUR, and the enterprise to a property penalty 1,000 to 2,500 EUR. Chapter 7 includes the requirements for the preparation of an annual activity report and a sustainability report. If an enterprise does not include a sustainability report or a consolidated sustainability report in its activity report, the fine is from EUR 500 to EUR 1,500, and the financial penalty for the enterprise is between EUR 1,000 to EUR 7,500. In case of repeated violations, the penalties are doubled.
Failure to file declarations for payments to the government and corporate tax (art. 73)
Chapter Seven, Sections V and VI, obliges businesses to file returns for payments to the government and corporate tax information. If these documents are not submitted, a fine of EUR 500 to EUR 1,500 is imposed, and the property penalty for the enterprise is between EUR 1,000 to EUR 7,500. In case of repeated violations, the penalties are doubled.
Non-publication of financial statements and other documents (art. 74)
A person who fails to publish a financial statement, a sustainability report or an audit report within the time limits referred to in Article 38 shall be liable to a fine of EUR 100 to EUR 1,500. According to Art. 38, the publication of these documents must be carried out by June 30 of the year following the reporting period. If this obligation is not fulfilled, a penalty of 0.1% to 0.5% of the net sales revenue for the reporting period is imposed, but not less than EUR 100.
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