Business type guide · 2026

Bulgarian company for IT outsourcing and development teams

Nearshore development is the use case Bulgaria was already known for before the tax became the headline. You get EU membership, English-speaking engineers, salary levels well below Western Europe and a 10% corporate rate on whatever margin the delivery model produces.

Corporate tax: 10% flat
Dividends: 5% withholding
Setup: Remote, 3-7 business days

Why it fits IT outsourcing and development teams

Engineering salaries are fully deductible, so the 10% applies only to the delivery margin you actually keep.
Bulgarian employment law and payroll are straightforward and cheap to administer relative to Germany or France.
EU membership means clients face no third-country data or procurement friction.
A single entity can serve clients across the EU, the UK and the US on reverse-charged or out-of-scope invoices.

VAT

Development services to EU business clients are reverse-charged and reported in VIES; UK and US clients are outside the scope. Once you cross the Bulgarian registration threshold on any domestic supplies, registration follows in the normal way.

Substance and residency

This is the strongest substance profile available: real employees, a real office, real delivery. Watch the other direction instead, which is engineers working permanently from a client's country and creating a taxable presence for you there.

Paying yourself

Founders normally sit on payroll alongside the team, which keeps contributions and health cover clean, then distribute the annual margin at 5%.

What it costs

Formation from €890; accounting €200-400 a month once you run payroll for a team.

Full pricing

Mistakes IT outsourcing and development teams make

Classifying full-time engineers as contractors to avoid payroll, which Bulgarian authorities do challenge.
Placing staff long term at a client's site abroad without checking permanent-establishment thresholds there.
Fixed-price contracts priced on gross revenue rather than the margin the 10% actually applies to.

Frequently asked

What does it cost to employ a developer in Bulgaria?

Employer social contributions add roughly 19% on top of gross salary, with a monthly cap on the contribution base, which makes senior hires cheaper on the margin than in most of Western Europe.

Can the company hire contractors in other countries?

Yes, and their invoices are deductible. Watch whether long-term individual contractors are treated as employees in their own country.

Do US clients complicate anything?

Not on the VAT side, since the supply is outside the scope. Expect W-8BEN-E paperwork and check treaty positions on any withholding.

Guides by home country Tax calculator What an EOOD actually is Country tax comparisons

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