6 September 20265 min read
Austrian GmbH profits face 23% corporate tax plus 27.5% KESt on dividends, an effective 44%. Bulgaria lands at 14.5%. Full 2026 numbers, exit tax rules and what actually has to move.
Austrian founders pay one of the highest combined burdens on distributed company profit in the EU. This guide sets the 2026 numbers side by side with a Bulgarian EOOD, then covers the parts most comparisons skip: Wegzugsbesteuerung, place of effective management, and what genuinely has to change for the lower rate to hold.
| Item | Austria GmbH | Bulgaria EOOD |
|---|---|---|
| Corporate income tax | 23% | 10% |
| Tax on dividends to an individual | 27.5% KESt | 5% withholding |
| Combined on distributed profit | ~44.2% | 14.5% |
| Minimum share capital | EUR 10,000 (EUR 35,000 for older AG-style setups) | BGN 2 (about EUR 1) |
| Minimum annual corporate tax | EUR 500 Mindestkoerperschaftsteuer | None |
| Standard VAT | 20% | 20% |
| Formation time | 2 to 4 weeks | About 5 business days |
On EUR 200,000 of profit taken out in full, Austria costs roughly EUR 88,400 and Bulgaria roughly EUR 29,000. That is a difference of about EUR 59,000 a year on the same work.
The 23% corporate rate is no longer extreme by EU standards. The pain is the second layer. Kapitalertragsteuer at 27.5% applies to dividends paid to a resident individual, and it is a final withholding tax with no reduced band. Add the compulsory GSVG social insurance on a managing shareholder and the real cost of extracting money from a GmbH climbs further.
Bulgaria applies 10% corporate tax and a 5% dividend withholding. The 14.5% effective figure is the whole story, not a headline rate with surcharges bolted on. See the dividend tax guide for how payouts are decided and documented.
In Austria, paying yourself a director salary moves income into a progressive scale reaching 55%, with social contributions on top. Dividends at 27.5% are usually cheaper, which is why most Austrian owner-managers keep salaries modest.
In Bulgaria the calculation is different. A manager on a management contract pays social contributions on a capped base, so a moderate salary is inexpensive and creates a clean substance record. Dividends then carry 5%. Our payroll and employer cost guide has the 2026 contribution bases and worked examples.
Austria applies Wegzugsbesteuerung on unrealised gains in substantial shareholdings when you give up Austrian tax residence. Within the EU and EEA an instalment arrangement is available for business assets, spread over years, and private shareholdings can be taxed immediately on departure. This is why the sequence matters: the tax position of shares you already own is set by how and when you leave, not by where you incorporate next.
A parallel exists for German founders, covered in the Wegzugsteuer guide, and the mechanics are similar enough to be useful reading.
A Bulgarian company managed day to day from Vienna is, in Austrian eyes, an Austrian tax resident company. It then owes Austrian corporate tax on worldwide profit and the Bulgarian rate saves nothing. The tie-breaker in the Austria-Bulgaria treaty points to the place of effective management.
Practical substance means:
For most single-founder consulting and software businesses, this works cleanly only if the founder actually relocates. If you stay in Austria full time, treat the structure as an Austrian-managed foreign company and budget accordingly.
B2B services to Austrian VAT-registered clients are reverse charged once you hold a VIES-validated Bulgarian VAT number, so you invoice without VAT and the client self-accounts. Consumer sales into Austria run through OSS above the EUR 10,000 pan-EU threshold. The VAT registration guide sets out the triggers and monthly filing cycle.
The documents checklist lists what to prepare and the annual filing calendar shows every deadline and penalty.
Yes, and many founders do, splitting new international work into the Bulgarian entity. Transfer pricing rules apply between related companies, so any services flowing between them must be priced at arm's length and documented.
Not legally, but if you keep it the Austrian authorities will usually treat the Bulgarian company as managed from Austria, and Austrian tax follows. The saving is real only where management genuinely sits in Bulgaria.
If you relocate and work solely through the Bulgarian company, Bulgarian social security applies under the EU coordination rules. Working across several countries requires an A1 assessment to determine which system covers you.
Above roughly EUR 60,000 of annual distributable profit the saving comfortably exceeds the cost of running a compliant Bulgarian structure. Below that, the admin usually is not worth it.
Bulgaria is a full EU member with a standard corporate system, not a listed offshore jurisdiction. The 10% rate is ordinary domestic law. Problems arise from a lack of substance, not from the rate.
Run your figures through the tax calculator, compare jurisdictions on the EU tax comparison page, then book a free consultation for a direct answer on your case.
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