How to Pay Only 4% - 7.5% Tax in Bulgaria 🇧🇬

[@alexnezhynsky9707]

Ah yes, the question everyone keeps asking. Thanks for addressing this

[@OffshoreCitizen]

Always a pleasure! Anything you'd like to see next?

[@mrkcur]

Very interesting. My Bulgarian accountant didn’t tell me about this. Thanks!

[@OffshoreCitizen]

Always a pleasure ! How long have you been there?

[@mrkcur]

@@OffshoreCitizen Just a few weeks. I'm really liking Bulgaria so far. Watching your videos helped me pull the trigger.

[@PaulKalak]

@@mrkcur Hey there, sorry to bother, will you be so kind to shed some light on this for me?.. I'm a Bulgarian citizen even, living in the UK so far, and I tried to talk to an accountant there in BG, which couldn't provide a proper professional consultation on taxation, for some reason🤦‍♂️ My question is super straightforward: I started to work as a freelancer (part-time) and planning to move to Bulgaria and become a resident back there. From what I know, being a freelancer as a physical entity I'll have to pay 10% Tax (which sounds good) + around 20% Osigurovki (national insurance), which already makes it at least 30% of all my income.. which is way too much, in my humble opinion. Some people say that it's much cheaper to register a LLC company in Bulgaria, however there's no clear information on how much taxes a company pays there + Osigurovki etc. If you could please share the information you hold, by any chance, on all the above, I'd really appreciate mate🙏🤲 thanks in advance!

[@Bri-wi8kq]

This is even better Michael! Thank you for another awesome video explaining another great tax tip. Bulgaria is becoming more and more enticing....that is if I can get out of AlkatrazAustralia!

[@tw9419]

Interestingly, many people have no idea about this option for tax reduction in Bulgaria. Even some of my friends who lived there for years (foreign entrepreneurs) had no clue. I'm wondering why people don't know about this, as it's a great option for anyone living in Bulgaria.

[@vimalcurio]

What your freinds do?

[@tw9419]

@@vimalcurio They pay regular tax rate of 10% or 5% on dividends.

[@inhocsignovinces8061]

Very interesting, thanks for the video. Bulgaria seems like a very good choice within the EU (for both personal residence & incorporation), even better when they join Schengen area. With surface research, there's plenty of accountants in BG that are able to communicate in English, which is a must.

[@OffshoreCitizen]

You're welcome! It is! We've made many videos on Bulgaria. Have you seen some of them?

[@inhocsignovinces8061]

@@OffshoreCitizen Yes, at least a couple of them. Keep up the good work.

[@abhishekdutta2211]

@@OffshoreCitizen I am a citizen of a EU country. I currently live and work in Turkey. How can I make my tax residence in BG ?

[@mvogt]

@@OffshoreCitizen How is the option to use both a company and pay yourself as an individual at the same time supposed to work? Bulgaria has laws against ostensible self-employment. I hear everywhere that you either have to pay yourself a salary or pay out dividends, but that prevent you from getting the 25% deduction that freelancers get.

[@nicolet2165]

Bulgaria sounds good but the covid situation is just crazy in Europe so I left went back to South Africa where everything is actually going on normal.Otherwise indeed Bulgaria seems a great choice. I worry about the English aspect. I don't mind learning some Bulgarian but Sofia it wasn't like Warsaw or even Belgrade where I found people more willing or able to speak English if you needed assistance. So that does worry me.

[@shielconor]

Thanks for the video! Are you required to live in the country?

[@vikinggeorge7007]

What you're referring to is called Нормативно признати разходи here. But I have discovered it beforehand. You're not exactly going to pay under 7.5%, but you can pay around 8% instead of 10%. 2% is still 2%. If you're earning 10,000 BGN per month, then you're saving 200 BGN. That's a dinner at a fine dining restaurant with your girlfriend.

[@karfenske]

Very good to know, thanks for the great content. In your opinion, what percentage would private CFD traders pay in Bulgaria and is it advisable to register for self-employment here or is it even possible? Otherwise I would choose UAE :)

[@aeconomopulos]

Did you find a solution yet?

[@bamboozle999]

Thanks for the vid. Does the tax on dividends only relate to local businesses? How about dividends paid by overseas companies? Thanks

[@pt7609]

Can you register as self-employed when you trade FX CFD's (own funds only and no prop trading) and be eligible for said 7.5% or would 10% apply? Do they wanna see some qualifying certificate for the BULSTAT registration?

[@alexnezhynsky9707]

Michael, do you know when you receive a dividend from abroad and let's say 5% gets withheld at the source, do you get any tax credits for that? I.e. does the Bulgarian 5% dividend tax get canceled out?

[@CarlosRubio1]

As far as I know dividends are taxed in origin, so 5% just once or whatever the dividends tax is

[@rdix2501]

Can you also please mention how crypto HODL or active trading is taxed in future videos like this one?

[@OffshoreCitizen]

Sounds like a great idea! How did you like today's video?

[@rdix2501]

@@OffshoreCitizen I always enjoy learning something new about money and other countries.

[@dawidwaz1568]

@Offshore Citizen great videos! So on ltd you pay 10 percent on dividends and after when you transfer to you as income another 5 percent from it?

[@OffshoreCitizen]

No dividends are the 5%, corporate tax is 10%

[@HandsomeBoy99999]

Hi Michael hope you can help me with the following question How much tax in total for a non US company will incure if dividend from US companies listed on US stock market is paid to its Bulgarian subsidy company then repratrate it back to home country in Malaysia?

[@OffshoreCitizen]

Please book a call to discuss

[@lerryperry]

Bulgaria seems like an excellent place to have as one's tax residence

[@OffshoreCitizen]

Right. Are you considering becoming a resident there?

[@ivageorge6969]

Great video 👌🏻👌🏻👌🏻

[@OffshoreCitizen]

Thank you! Are you in Bulgaria?

[@ivageorge6969]

@@OffshoreCitizen I’m living in Dubai at the moment but from Bulgaria 🇧🇬

[@axlcinema]

This is amazing advice, thank you. Do you do accounting in Bulgaria, or can you recommend a good accountant in Sofia?

[@OffshoreCitizen]

Very hard to find good accountants in Bulgaria and they tend to be very overpriced unfortunately. My experience is you generally need a mediocre accountant and then micro manage them a little

[@axlcinema]

@@OffshoreCitizen Thank you. I completely agree what you're saying. I had an accountant in Ireland and there was never any attempt to encourage write-offs or lower taxes.

[@fjorddenierbear4832]

Your comments still stand. My accountants answer my emails as succintly as possible. I'm paying 200 EUR per month for them to do probably 15 minutes of work on my account. Bulgaria was a great start, but my tax rate for 2023 is looking to be about 15-20%, which is great compared to back home in Norway, but now I am eyeing Georgia for 1% flat with a Small Business arrangement. I will also consider Cyprus while I'm at it, as long as I can get a tax exemption and have Norway acknowledge it without getting finnicky. After 1 year in Bulgaria I have to agree with Offshore Citizen that the Bulgarian winter is nothing to write home about, except to say "it's really quite too cold." I think it would be ideal to use Bulgaria as a summer paradise between April and November, while having tax residence elsewhere, unless you make something like 1 million EUR a year and can structure things to get a comfortable sub 10% overall tax rate. It may very well be that I could have gotten a lower tax rate, but I really can't see the point of optimizing here when half the year is a cold European winter. Georgia, Cyprus and of course Oman, UAE, Qatar all seem like better tax jurisdictions to me as a freelance translator with a somewhat limited cap on my annual income potential. Georgia may have some issue which Offshore Citizen has pointed out, but they may not be an issue to me personally.

[@alfonsliguori9220]

And one more question: I understand that a new government has just taken over in Bulgaria. Do you think that they will increase taxes?

[@mariyaanyova2083]

No!They clearly said they won't raise the taxes.

[@g498s]

The new government will not increase taxes for sure 100%! They are really open for foreign investors. Other thing they will do it's lower the time and needs for company licenses and make most of them to be done online. Their motto is zero tolerance to corruption, witch is going to be better for any investor.

[@OffshoreCitizen]

They've said no but then again you can't trust politicians so...

[@alfonsliguori9220]

What about exit taxation (if you leave Bulgaria on day)? Doesn't the ATAD provide for an exit taxation for all EU countries? Is there certain minimum period that you need to have lived there in order to become subject to exit taxation once you eventually leave the country? Has the exit taxation regime been a factor for you when you decided to set up shop in Bulgaria?

[@OffshoreCitizen]

Exit tax on companies was part of ATAD actually a lot of the EU doesn't really have it in any meaningful sense personally

[@gn2650]

If you don't have income, only dividends, can you skip paying social security? Can you pay yourself in dividends as a sole trader if you have an American LLC and pay only 5%?

[@OffshoreCitizen]

The US LLC will usually be subject to cfc rules

[@gn2650]

@@OffshoreCitizen How am I going to trigger them if I don't live in Bulgaria?

[@OffshoreCitizen]

If you don't live in Bulgaria you wouldn't have the 5% either

[@enimos]

So, owning a Bulgarian company that pays all of it's profits out to it's beneficial owner as a payment for a service they provide to said company as a self employed individual keeping that company's profits at 0 raises no issues with the local tax office considering it aggressive, artificial or illegitimate tax planning?

[@mrkcur]

I get the sense Michael wasn't suggesting that. My Bulgarian accountant said you can't pay yourself directly from your own company as if you are a contractor for services. If you pay yourself directly from the company, it needs to be in the form of a salary or a dividend. She said the usual thing was to use a dividend (10% + 5% for an effective 14.5%). Michael brought up an interesting point that social security caps out so being paid a salary might be better if you pay yourself a high salary?

[@enimos]

​@@mrkcur What is the suggested structure then? Doing what I described but with a non-Bulgarian company? Sounds like crucial data is missing. Or do you mean that said salary is taxed at the self employed rate if you're registered as such?

[@mrkcur]

@@enimos It’s interesting that Michael has a way where you can have a company where you can take deductions and then somehow receive the profits as self-employment income taxed only at 7.5%. But he didn’t explain how, and I don’t know.

[@enimos]

@@mrkcur indeed, would be glad to hear how

[@vasilGerginski]

@@enimos not thrue

[@bappikhan4761]

i need some help and idea for fish business in Bulgaria ..???

[@dialecticalmonist3405]

Is trading crypto or getting APY from crypto "freelancing"?

[@Frugal_granny]

Can an expat apply for residency as a pensioner without returning to our home country & applying thru our own country’s Bulgarian consulate?

[@namenl2205]

As an EU citizen can you setup a self employment registration in Bulgaria and The Netherlands? And stay 8 months in NL, 4 months in Bulgaria physically? Because in NL you need unregister yourself as a Dutch citizen if you live more than 8 months abroad. I would still be paying 10% over freelancing gigs since I'm registered in Bulgaria with an office address there?

[@OffshoreCitizen]

No doesn't work that way

[@shabsa2637]

hey watching ......

[@gn2650]

Can I work as a freelancer and pay myself on dividends to get a 5% tax rate?

[@OffshoreCitizen]

You'd pay 10% + 5%

[@ajaznawaz37]

Just a simple question, does the 10% lets say apply to services or transactions executed abroad in this case another EU country?. So just to be clear I am a foreigner and wish to create a company in Bulgaria and then from there I wish to issue invoices to my EU clients.

[@OffshoreCitizen]

Bulgaria taxes worldwide income

[@ajaznawaz37]

@@OffshoreCitizen Foreign income is taxed at source when invoicing from Bulgaria, by every EU country … So! the 10% does not apply, rather the normal tax rates will apply and normally deducted by the paying party.

[@Adamatere]

to apply for the ability to freelance in bulgaria, you need b1 proficiency in bulgarian. it's a hard requirement afaik, otherwise this would probably be the best option in the eu

[@OffshoreCitizen]

You don't need b1 to be classed as self employed

[@Adamatere]

@@OffshoreCitizen everywhere I google says you need a 'freelancing permit' and one of the requirements for this is b1 certificate

[@gn2650]

Can I still get a 7,5% even if I have employees?

[@OffshoreCitizen]

You'd need to do some fancy tricks

[@WiresNStuffs]

I make £20000 about 24k euro. I am a bulgarian resident, soon to become a bulgarian tax resident. I receive all my income through royalties. What would you recommend is the best way for me to pay the least taxes. My current idea is to pay the 10% corporation tax on a company, then issue dividend which i pay 5%. Problem is apparently you can only issue dividend annually. I dont have enough cash in the bank to live a whole year without paying myself

[@Tradefy]

pay your self a loan from your company!

[@ronbieman4049]

Are they calculating how much tax you pay on revenue or net income? It didnt quite make sense to me

[@OffshoreCitizen]

Revenue that's why they give you the discount because they assume you've got expenses, it's useful when you can create 100% margins

[@AndyMiron]

I assume this all relates to someone staying 6 moth inside BG. What if I want to stay 100% outside of BG what are my tax rates then?

[@OffshoreCitizen]

Why would you use BG at all if you didn't live there?

[@AndyMiron]

This is what I’m asking: what is the tax rate in case I just run business in BG but don’t live there?

[@pak74x]

In case of income from one person US LLC, would it be considered a self-employed income in Bulgaria?

[@patrick1992]

Yes

[@OffshoreCitizen]

Bulgaria doesn't have an LLC so it's a bit of a hybrid mismatch so depends on how it is treated

[@MinResa]

@@OffshoreCitizen I am a resident in Bulgaria and thinking about setting up a US LLC for various reasons. I also have a Bulgarian Ltd, but it seems to me that it might make things extra complicated to have the Bulgarian Ltd own the US LLC. Do you have any recommendations on someone who may be able to give a reliable answer on how to handle the taxation for US LLC income in Bulgaria?

[@kallaji7383]

SWEET! 😛

[@OffshoreCitizen]

It sure is 😄 Are you in Bulgaria?

[@kallaji7383]

@@OffshoreCitizen I'm flying to Sofia next month. 😃🛬🇧🇬

[@sgill4833]

What if you get dividends from etf funds.

[@OffshoreCitizen]

They are typically subject to withholding taxes

[@krasimiracle]

When you reach 50000 leva(about 25600 euro) annually then you have to register with VAT and pay it as well, don't you?

[@OffshoreCitizen]

Well VAT is a consumer tax not a business tax. The business is just the collector

[@jensgromann7951]

7,5% as a Freelancer is fine, but you have to pay also some social insurance, calculated on basis from the mimimum wage !

[@OffshoreCitizen]

Yeah I talked about that but it's capped pretty low. If you make decent income it's not a big deal as a share of the total

[@tomson5894]

What's the cap?

[@moiaccaunt]

@@tomson5894 35% from the income or max 1000 eur per month lol

[@PaulKalak]

@@moiaccaunt Gosh... damn it, 35% of the income... and THAT is low?😶

[@Gunzberg]

@@PaulKalak 26% of 1700 is the cap

[@bappikhan4761]

Hello..am Bappi ..from Bangladesh.. Taj fish company..

[@Kurrkabin]

Does self-employed for 10% tax rate apply for people who trade cryptocurrency regularly w/o setting up a company?

[@OffshoreCitizen]

No you can't use this directly as a trader you need to build around it to do that

[@Kurrkabin]

@@OffshoreCitizen Meaning setting up a company?

[@gunitg1378]

@@OffshoreCitizen But do you need to start a company to build around it?

[@PaulKalak]

Hey there, did you get any sort of an answer to your question?.. I'm trying to find the answer to the same question, and the info is so controversial everywhere...🤦‍♂️ I also wonder, if you trade stocks as well, what's the taxation then? Is it the same as with crypto, or is it different....

[@chocmilkisgood]

"How to reduce your tax like the 1% by moving to the beautiful black sea in Bulgaria!" Rough draft that I would have started with for the title.

[@vasilGerginski]

Hmmm this is not thrue. As long you have company (LTD) in Bulgariq you MUST "work" at this company and pay for helt retirement ect.. whitch is 35 % from your income , and after that you can get 6%-7% on tax on your profit as URT (self empl),so it is much cheeper to put all of your income to to the LTD and pay 14.5% (10% carp tax and 5% divident) then pay 35% from your income streem for bulshits.And the cheepest way is to set up company in ISOM or Nederlands and pay 0 % corp tax and pay just 5 % divident in Bulgaria from abroad dividents.P.P. sry about bad ENGL i was working 16h and i feel like ...... .From my point of vue the best way is buy asset (in negative value(like trash)) comen prac. in Bulgaria go on "-" and dont pay tax at all.You can FLASH LASS the asset 30 from 31 december to 30 of january.

[@draganku]

What's the idea to buy asset? And flash it in January?

[@a0nmusic]

Thanks for sharing fantastic knowledge yet again! Having watched all your videos my understanding of the structuring would be to form a company in 0% zone, then have a license agreement for IP that would give 40% deduction, leaving 6% total?

[@OffshoreCitizen]

Depends on substance, there's no one size fits all, need to look at it case by case to find the best option