US LLC vs Bulgaria EOOD: Real Tax Comparison for American Founders (2026)

Most US founders default to a Delaware or Wyoming LLC because it is fast, cheap, and familiar. But once profits pass roughly $150k and you have real flexibility about where you live, a Bulgarian EOOD starts to look very different on paper - 10% corporate tax, 5% dividend tax, no self-employment tax, full EU market access.

This guide is the honest comparison. Not "move offshore and pay zero" - that does not exist for US citizens. Just the real numbers, the real IRS filings, and the situations where each structure actually wins.

The headline numbers

Item	US LLC (single-member, pass-through)	Bulgaria EOOD
Entity-level tax	0% (pass-through)	10% corporate income tax
Owner tax on profits	Federal 10-37% + state 0-13.3%	5% dividend withholding
Self-employment tax	15.3% on ~first $168,600, 2.9% above	None - dividends only
Combined effective tax on $200k profit	~35-45% depending on state	~14.5% (10% CIT + 5% on the 90% distributed)
Filing complexity	Schedule C or 1065	Bulgarian annual return + monthly VAT if registered
Setup cost	$50-$500 + registered agent	~€1,500-€2,500 all-in
Ongoing accounting	$500-$2,000/yr	€150-€400/mo

The gap looks enormous. It is real - but only if you are not a US tax resident. See the next section before you get excited.

The one rule that changes everything: US worldwide taxation

The United States is one of two countries on earth (with Eritrea) that taxes citizens and green card holders on worldwide income, regardless of where they live or where the company is registered.

This means:

• A US citizen who owns a Bulgarian EOOD is still filing a US 1040 every year.
• The EOOD is a Controlled Foreign Corporation (CFC) under Subpart F and GILTI rules.
• You will file Form 5471 annually (a serious form - $10,000 penalty for late filing).
• Bulgarian corporate profits can be taxed in the US in the year earned via GILTI, not when distributed.

If you are a US citizen or green card holder still living in the US, an EOOD gives you almost no federal tax benefit and adds significant compliance cost. State tax may still improve (a Bulgarian EOOD is not a California or NY tax resident), but at the federal level GILTI generally claws back the arbitrage.

The EOOD story only becomes powerful when you either:

1. Leave the US and use the Foreign Earned Income Exclusion (FEIE) - up to $126,500 of earned salary excluded in 2024 (indexed each year), or
2. Give up US citizenship / green card (a permanent, expensive decision - beyond scope), or
3. Are not a US person at all - e.g. non-resident aliens serving US clients through an EOOD.

The rest of this guide assumes you are willing to move.

Scenario A: US freelancer earning $180k, staying in the US

Delaware LLC, single-member, taxed as sole proprietor.

• Gross profit: $180,000
• Self-employment tax: 15.3% on $168,600 = $25,796 + 2.9% on $11,400 = $331 → $26,127 (half deductible)
• Federal income tax after QBI deduction: ~$28,000
• State tax (assume 5%): ~$8,000
• Take-home: ~$118,000

Now imagine you set up a Bulgarian EOOD but stay in the US. Because of GILTI, the entire $180k profit is picked up on your 1040 anyway, at rates similar to your ordinary income. You avoid self-employment tax at the federal level (no SE tax on foreign corp dividends), but you add:

• Bulgarian 10% CIT: $18,000
• Bulgarian accounting: ~$3,600/yr
• US Form 5471 preparation: $1,500-$3,000/yr

For most staying-in-the-US freelancers, this is worse, not better. Stick with the LLC or elect S-corp status if profits exceed ~$70k. See our US LLC → S-corp playbook discussion below for the reasonable-salary math.

Scenario B: The same $180k freelancer, moving abroad and using FEIE

You establish an EOOD, become a Bulgarian tax resident, spend >183 days outside the US, and qualify for the FEIE.

• Bulgarian EOOD profit: $180,000
• Reasonable owner salary: $60,000 (covered by FEIE - $0 US federal tax on the salary)
• Bulgarian payroll/social on $60k salary: ~$11,000 (this is real cost - see our Bulgaria payroll guide)
• Bulgarian CIT on remaining $120k: $12,000
• Bulgarian dividend tax on $108k distributed: $5,400
• US tax on dividends above FEIE-covered salary: dividends are not earned income, so FEIE does not cover them. However, they can be excluded/deferred through GILTI high-tax election if effective rate ≥ 18.9%. In practice, expect some US tax residual.

Net take-home in this scenario is typically $140-$150k, and the difference grows as profits rise. At $500k profit, the delta between staying and leaving can be $80-$120k per year.

The break-even for "worth leaving the US for tax reasons" tends to sit around $250k of business profit, once you factor in relocation, dual filing costs, and the compliance premium.

Scenario C: Non-US founder who happens to sell to US customers

If you are, say, a Canadian, UK, or EU citizen with US customers, none of the CFC/GILTI/FEIE story applies. An EOOD invoicing US clients works exactly like any other EU company:

• 10% corporate tax on profits
• No US withholding on services (assuming no US permanent establishment)
• No sales tax collection needed for pure B2B SaaS in most states
• Stripe/PayPal accept EU businesses without issue

This is the cleanest use case. See our remote consulting teams guide and the SaaS bootstrappers post.

When the LLC still wins

A US LLC beats a Bulgarian EOOD when:

• You are a US person living in the US and cannot/will not move.
• Business profit is under ~$100k (SE tax and QBI make the LLC competitive).
• You want US-jurisdiction contracts, US bankruptcy protection, and simple Stripe onboarding.
• You raise money from US VCs (they want Delaware C-corps).
• You need employees in California, New York, or Texas.

When the EOOD wins

A Bulgarian EOOD beats a US LLC when:

• You are (or will become) non-US-tax-resident.
• Profit is $150k+ and you can build real substance in Bulgaria (office, employee, decisions made locally). See our substance requirements guide.
• Your customers are EU-heavy (VAT registration, EUR invoicing, no FX friction).
• You want a 10% flat rate with predictable, boring compliance.
• You want the EU-in-good-standing story for banking, payment processors, and enterprise contracts.

What people always underestimate

1. US expat tax prep is expensive. Budget $1,500-$4,000/year for a competent CPA who handles Form 5471, 8858, FBAR (FinCEN 114), and FEIE elections. This is on top of Bulgarian accounting.
2. Bulgaria has real substance rules. A shell EOOD run from a US home office is a tax risk in both jurisdictions - see substance requirements.
3. Exit is easier than entry for US persons. If you set up an EOOD wrong and want to unwind, closing a foreign corp with retained earnings is a US tax event.
4. Delaware is not a magic sauce. For most solo founders, a home-state LLC is fine. Delaware only matters if you plan to raise VC money.

Bottom line

• Staying in the US? Use an LLC. Consider S-corp election above $70k. An EOOD is usually the wrong answer.
• Moving abroad, $150k+ profits, EU-heavy customers? A Bulgarian EOOD combined with the FEIE is one of the most tax-efficient legal structures available to Americans in 2026.
• Non-US founder? An EOOD is often just better than a US LLC full stop - see the full formation guide.

Frequently asked questions

Can a US citizen own 100% of a Bulgarian EOOD?

Yes. Bulgaria places no citizenship restriction on EOOD ownership. You will need a tax ID (BULSTAT) and a Bulgarian address for the registered office, both of which we handle.

Do I have to move to Bulgaria to open an EOOD?

No, but for the tax benefits to be real you generally need to become a non-US-tax-resident somewhere. Bulgaria is a strong option because personal income tax is a flat 10% and dividends are 5%. See our residency rules guide.

What is GILTI in one sentence?

GILTI (Global Intangible Low-Taxed Income) forces US shareholders of Controlled Foreign Corporations to pay US tax on the CFC's profits in the year earned, if the foreign effective rate is below ~13.125%. Bulgaria's 10% CIT falls under this - though a high-tax election can neutralize it in many cases.

Do I still need to file US taxes if I move abroad?

Yes. US citizens file worldwide, forever, until they renounce. The FEIE and Foreign Tax Credit reduce or eliminate the actual bill in most cases, but the filing obligation is permanent.

What about a US-Bulgaria totalization agreement?

There is no US-Bulgaria social security totalization agreement as of 2026. This means self-employment income earned via an EOOD is generally not subject to US SE tax (because it flows as foreign corp dividends), but earned income paid to yourself as EOOD salary may create double social security exposure depending on structure.

Next steps

• Run your numbers against our free tax calculator.
• Read the full company formation guide.
• If you are relocating, start with the EU founders relocation checklist - most of it applies to Americans too.
• The companion post: How US citizens actually open a Bulgarian company (FATCA, FBAR, Form 5471).

Or book a free 30-minute call and we will walk through your specific numbers.