Taxpayers

Subject to corporate income tax are all local legal entities, non-personalized structures equalized to entities for corporate income tax purposes, as well as foreign legal entities having local permanent establishments.

Tax Rate and Taxable Base

Corporate income tax rate is 10%.

It is levied on a taxable base that is the annual financial result of the taxable person adjusted for tax purposes. The following cases present examples of tax differences transforming the financial result:

  • the thin capitalization limits for interest deduction
  • differences between accounting and tax depreciation rates
  • donation expenses deduction limitations
  • carrying forward of losses for the next 5 consecutive years

Administrative Issues

The taxable year in Bulgaria is from 1 January until 31 December.

The corporate income tax is an annual tax payable and subject to declaration by 31 March of the following year.

Advance corporate income tax installments are required in certain cases.

Corporate Income Tax Incentives

Corporate income tax may be partly or fully reduced as well as certain tax allowances can be provided under specific conditions.

Taxpayers may take advantage of such opportunities in cases of investments in municipalities with high unemployment, hiring of unemployed or disabled persons, etc.

The Bulgarian tax system does NOT arrange for:

  • Controlled Foreign Corporation (CFC) rules per se
  • Fiscal unity
  • Holding companies related rules (e.g. participation exemption)
  • Carry back of losses