Germany GmbH vs Bulgaria EOOD: Real Tax Comparison for German Founders (2026)

Germany has one of the highest effective corporate tax burdens in the EU. Between corporate tax, trade tax (Gewerbesteuer), and the solidarity surcharge, a profitable GmbH pays roughly 30% on retained profits, then another layer when the shareholder takes money out. A Bulgarian EOOD pays 10% corporate tax and 5% dividend tax. On the same €200,000 profit, that is a difference of about €40,000 per year.

This guide compares the two structures line by line, with real 2026 rates, and shows where a Bulgarian EOOD genuinely wins and where a German GmbH still makes sense.

The headline numbers for 2026

Item	German GmbH	Bulgarian EOOD
Corporate income tax (Körperschaftsteuer)	15%	10%
Solidarity surcharge	5.5% of CIT (≈0.825%)	none
Trade tax (Gewerbesteuer)	7% to 17% depending on municipality	none
Effective corporate tax	28% to 33%	10%
Dividend withholding tax (individual, resident)	26.375% (Abgeltungsteuer + soli)	5%
Combined tax on distributed profit	≈47% to 50%	≈14.5%
Minimum capital	€25,000 (half paid up)	BGN 2 (about €1)
Notarised statutes	required	required
Annual accounts	required, HGB	required, Bulgarian GAAP or IFRS

The gap is not marginal. On €100,000 of distributed profit, a German shareholder keeps about €50,000. A Bulgarian EOOD shareholder keeps about €85,500. That is the entire reason this comparison exists.

Where the German GmbH still wins

Before assuming the EOOD is always better, be honest about what a GmbH gives you.

Domestic credibility. German customers, banks, and large procurement departments trust a GmbH. If 80% of your revenue is B2B inside Germany, a Bulgarian invoice can slow down onboarding.

Employee optics. Hiring German talent into a Bulgarian entity is possible via an employer of record, but it adds cost and friction. If your team is entirely in Germany, keep the GmbH.

Real estate. German property held through a GmbH benefits from local tax rules and Grunderwerbsteuer planning that do not translate to a Bulgarian holding.

Regulated activity. BaFin-regulated businesses (payment services, some crypto) need a German license. The entity has to be German.

Where the Bulgarian EOOD wins

Remote services and digital businesses. SaaS, agencies, consulting, licensing, IP holding, e-commerce sold across the EU via IOSS. The customer does not care where the invoice comes from as long as VAT is handled correctly.

Retained profits for reinvestment. 10% CIT means 90 cents of every euro of profit stays in the company to reinvest. In Germany it is 70 cents.

Shareholder distributions. 5% dividend tax versus 26.375%. For any founder who wants to actually take money out, this is the deciding number.

Speed and cost of setup. €390 all-in in Bulgaria, done remotely in about 10 business days. A GmbH costs €2,000 to €4,000 with notary and lawyer fees.

The scenario that trips most Germans up: Wegzugsteuer

If you own more than 1% of a German corporation and you move your tax residency abroad, Germany can assess an exit tax (Wegzugsteuer under §6 AStG) on the unrealised capital gains of your shares. The tax is calculated as if you had sold at fair market value on your last day of German residency.

Since the 2022 reform, the automatic 7-year interest-free instalment for moves inside the EU is gone. You now pay in seven annual instalments, but you have to post security, and the deferral is not automatic.

This does not apply to a fresh Bulgarian EOOD that you set up from scratch. It applies to an existing German GmbH that you try to migrate. The clean structures we see work in one of two ways:

1. Set up a new Bulgarian EOOD, wind down the GmbH after German customers have moved over, and time the personal move so gains crystallise cleanly.
2. Keep the German GmbH as a dormant or minor entity for legacy contracts and route new business through the EOOD.

We cover the mechanics in our dedicated Wegzugsteuer guide.

VAT: not the reason to move, but manageable

Both countries apply EU VAT rules. If you sell B2B inside the EU, the reverse charge applies either way. If you sell B2C digital or physical goods across the EU, IOSS/OSS filings are identical in mechanics. Bulgarian VAT registration takes about 14 days once you cross the €51,130 threshold, or immediately if you register voluntarily.

For the full mechanics, see Bulgaria VAT Registration: Thresholds, Timing, and Traps.

Payroll: cheaper, but with a real ceiling

If you or your team draw salary from the company, Bulgaria's payroll is dramatically cheaper. Employer social contributions cap at 18.92% of gross salary, and the insurance base is capped at BGN 4,500 per month (about €2,300). Compare that with Germany's roughly 21% employer contributions on uncapped salary above the Beitragsbemessungsgrenze.

For a shareholder-director, the sweet spot is a modest salary up to the insurance cap plus dividends for the rest. That combination is what makes the 14.5% effective tax number real. Full breakdown in Bulgaria Payroll 2026.

Substance: what Germany will actually challenge

The German tax office is not blind. If you register an EOOD in Sofia but continue to live, work, and make decisions in Munich, they will treat the EOOD as tax-resident in Germany under §10 AO (place of effective management) and assess German corporate tax on the profits.

Real substance means:

• You spend more than 183 days a year in Bulgaria, or your centre of vital interests genuinely moves there.
• Board decisions are made in Bulgaria (documented board minutes).
• The company has a real Bulgarian address, not a mailbox.
• If practical, a Bulgarian-resident co-director or employee.

The 10% rate is real. Fake substance is not a plan.

When it does not make sense

Do not move if:

• Your business is 100% German B2B with local contracts that require a German counterparty.
• You cannot spend meaningful time in Bulgaria.
• You are pre-revenue and the setup cost is a bigger deal than the tax saving.
• You have significant unrealised capital gains and no exit-tax plan.

When it obviously makes sense

Move (or start fresh) if:

• You run a location-independent digital business.
• Your customers are outside Germany or accept EU-wide invoicing.
• You want to reinvest profit and hate paying 47% on distributions.
• You are willing to actually live in Bulgaria or split time credibly.

Next steps

If you are seriously considering the move, three things need to happen in parallel: entity setup, personal tax residency planning, and a substance plan. We cover all three during a free consultation. Or start with the numbers using our tax calculator.

Related reading:

• Moving from Germany to Bulgaria: the Wegzugsteuer guide
• Bulgaria's 10% corporate tax, explained in full
• Bulgaria tax residency: the 183-day rule
• Netherlands BV vs Bulgaria EOOD

FAQ

Can I keep my German GmbH and just add a Bulgarian EOOD?

Yes, and this is often the cleanest first step. The GmbH handles German contracts; the EOOD handles new international business. Just be careful about transfer pricing between the two entities and about where the value is actually created.

Does Bulgaria have a treaty with Germany to prevent double taxation?

Yes. The Germany-Bulgaria double tax treaty (in force since 2011) allocates taxing rights and prevents the same income from being taxed twice. Dividends from a Bulgarian EOOD to a German-resident individual are taxed in Bulgaria at 5% and then topped up in Germany, unless you have moved your personal tax residency to Bulgaria.

How long does it take to set up a Bulgarian EOOD from Germany?

About 10 business days end to end, done remotely with a notarised power of attorney. See our full formation guide for the exact steps.

What is the minimum time I need to spend in Bulgaria?

For personal tax residency: more than 183 days per year, or center of vital interests. For the company to have Bulgarian substance: no fixed number, but decisions and management have to genuinely happen from Bulgaria.