Understanding Municipality Taxes in Bulgaria: Accounting for Local Levies
Municipality Taxes in Bulgaria. Brief Introduction.
As a business owner or resident in Bulgaria, understanding municipality taxes is crucial. These local taxes directly impact your financial obligations and the local services you benefit from. At Aidos Accounting, we’re committed to helping you navigate the complexities of the Bulgarian tax system, ensuring compliance and optimising your tax strategy.
What are Municipality Taxes?
Municipality taxes are local taxes levied by each municipality in Bulgaria to fund various public services and infrastructure projects. These taxes are essential for maintaining roads, parks, and other public spaces, providing waste collection and public transportation, and supporting overall local development.
Types of Municipality Taxes
Property Tax:
This is an annual tax on real estate, including land, buildings, and other structures. The tax rate is based on a percentage of the property’s tax value, which is determined by the municipality based on various factors like location, size, and type of property.
Example: For instance, if you own an apartment in Sofia with a tax value of 100,000 BGN, and the local property tax rate is 0.15%, your annual property tax would be 150 BGN.
Vehicle Tax:
This annual tax is imposed on motor vehicles registered within the municipality. The tax amount depends on factors like the type of vehicle, engine size, and age.
Tax on Acquisition of Property: This tax applies when property ownership is transferred through sale, gift, or inheritance. The rate is typically a percentage of the property’s market value.
Patent Tax (License Tax): Businesses operating within the municipality are subject to this tax, with the rate varying depending on the type and size of the business. It’s essentially a license to operate in that municipality.
Tourist Tax: Some municipalities implement a tourist tax on overnight stays in hotels and other accommodations. This tax is typically a fixed amount per person per night.
How are local taxes and fees paid?
The local taxes and fees collected by the respective municipality may be paid on site at the Local Revenue Department of the respective municipality, as well as via bank transfer to the account of the respective municipality. It is important to know that in case of payment via bank transfer the payment document should include the code of the respective type of payment. Information regarding the bank accounts and the payment methods for local taxes may be found on the website of the respective municipality. Information on bank accounts for payment of local taxes and fees is also available on the NRA website.
The deadline for the payment of the local taxes and fees depends on the respective local tax or fee.
What is the deadline for the payment and method of calculation of the local taxes?
| Tax | Payment deadline | Method to determine the amount of the tax/fee |
| Annual real estate tax | Real estate tax is paid in two equal instalments within the following deadlines:First instalment (1 March until 30 June of the respective year);Second instalment (by 31 October of the respective year).It is important to know that those who prepay the tax for the full year by 30 April have the right to a discount of 5% of the tax due. | Between 0,1 and 4,5 per mille of the tax assessment of the real estate. The specific amount is set in the Ordinance on the local taxes and fees adopted by the respective municipal council. |
| Annual motor vehicle tax | The motor vehicle tax is paid in two equal instalments within the following deadlines:First instalment (until 30 June of the respective year);Second instalment (by 31 October of the respective year).It is important to know that those who prepay the tax for the full year by 30 April have the right to a discount of 5% of the tax due. | The tax is determined based on a formula which includes three components:the engine power of the vehicle;the manufacturing year of the vehicle;the environmental category of the vehicle. |
| Tax upon acquisition of property and motor vehicles by way of donation and against consideration | In case of acquisition of property without consideration the tax should be paid within two months as of possession of the property (except the transfer of right on real estate and motor vehiclesUpon acquisition of property by way of donation and real estate and motor vehicles against consideration the tax is paid upon the transfer of the rights on the real estate and the motor vehicles. | In case of acquisition of property without consideration: – 0,4 to 0,8 % of the assessment of the property in case of donation between brothers and sisters and their children;– 3,3 to 6,6 % of the assessment of the property between parties other than those stated above;Upon acquisition of property against consideration: – 0,1 to 3 % of the assessment of the transferred property. The specific amount is set by the municipal council in the Ordinance on the size of the local taxes and fees. |
| Patent tax | Patent tax is paid in four equal instalments:For the first quarter – by 31 January;For the second quarter – by 30 April;For the third quarter – 31 July;For the fourth quarter – by 31 October. | The municipal council determines the size of the patent tax in the Ordinance on the size of local taxes and fees. The amount is set within limits in accordance with Appendix No 4 of the LTFA and depends on the location of the site on the territory of the respective municipality. |
| Tourist tax | The tourist tax due for the calendar year is paid by the tax liable person by the 15th day of the month following the month during which the accommodation services per night occurred. | The municipal council sets the size of the tax in the Ordinance on the local taxes and fees within limits of BGN 0,20 to BGN 3,00 per night. |
| Tax on taxi services to passengers | The tax is paid prior to obtaining the permit to render taxi services in accordance with the Automobile Transport Act. | The municipal council sets the size of the tax for the respective year in the range between BGN 300 and BGN 1000 in the Ordinance on the local taxes and fees. |
Accounting Outsourcing – Common Reasons
Do Less. Achieve More. Focus on What Really Matters.
- Save Up to 50% on Your Accounting Costs,
- Create More Revenue. With Current Staff,
- Grow your Business. Not Staffing Worries,
- No More Training New Accountants. EVER,
- Reach Us Anytime. 24-hours-a-day.
Our promises & invitation for a partnership
Paramount Accounting & Legal Services firm can provide complete legal & administrations services & information about other applicable taxes in Bulgaria, such as the corporate tax business trips expenses tax treatment social expenses taxation taxes on representative expenses.
Our special PROMISES:
- ALWAYS to keep our services prices at least 15% below the competition’s prices level,
- Till 3,000 EUR monthly turnover ZERO Taxation,
- 5% taxation burden maximum,
- 4 hours expert support on all your questions w/o extra charge,
- 100% reimbursement of all damages (if any) caused by our advices,
- Loyalty, Integrity & Commitment is not just empty words/declarations, but everyday practice,
- Keeping to our promises 24/7 @ any circumstances.
See you Friends, looking forward to contribute to your business growth & success.