Bulgaria's 10% Corporate Tax: How It Actually Works

The headline number

Bulgaria has the lowest flat corporate income tax rate in the European Union: 10%. It applies to every limited company (OOD, EOOD, AD) on worldwide taxable profit, regardless of size or sector — no progressive brackets, no surtaxes, no municipal piggyback.

How the effective rate is built

Taxable profit = accounting profit, adjusted for:

• Non-deductible expenses (entertainment > 60% deductible, fines, certain donations)
• Tax depreciation schedules that differ slightly from accounting depreciation
• Thin capitalisation rules on related-party debt
• Loss carry-forward: up to 5 years, no time limit on carry-back

A well-run service company with clean books typically lands at an effective rate of 9-11%.

Dividend tax: the other 5%

When you distribute profit to yourself as a shareholder:

• 0% withholding if the recipient is an EU/EEA-resident company (Parent-Subsidiary Directive)
• 5% withholding on dividends paid to individual shareholders (resident or not)
• 5% withholding on dividends paid to non-EU corporate shareholders, unless a treaty reduces it

Total tax leakage for a typical founder taking everything as dividend: 10% + (90% × 5%) = 14.5%. Compare with Germany (~30%), France (~25%+), or Spain (~25%+).

What's deductible

• Salaries, social security contributions, and bonuses
• Rent, utilities, software, hosting
• Marketing, travel, professional services
• Equipment (capitalised and depreciated)
• R&D — fully deductible in year incurred

What isn't

• Expenses without a proper VAT invoice or fiscal receipt
• Personal expenses run through the company
• Excessive related-party charges without documentation

Filing calendar

Obligation	Deadline
Advance corporate tax instalments	Monthly or quarterly
Annual corporate tax return	30 June
Annual financial statements	30 September

Bottom line

The 10% rate is real, not promotional, and applies to every euro of profit. With proper accounting, EU founders consistently see an all-in tax burden in the mid-teens — roughly half what they would pay in most Western European jurisdictions.