Jurisdiction comparison · 2026
Luxembourg is built for funds and holding structures, not for owner-managed trading companies. For an operating business, Bulgaria delivers the same EU standing at a fraction of the setup and running cost.
| Bulgaria 🇧🇬 | Luxembourg 🇱🇺 | |
|---|---|---|
| Corporate tax | 10% flat | ~23.9% (CIT + municipal business tax + fund) |
| Dividend tax | 5% | 15% withholding, 0% under participation exemption |
| VAT rate | 20% (0% intra-EU B2B) | 17% |
| Min. share capital | BGN 2 (≈ €1) | €12,000 (Sàrl) |
| Setup time | 3-7 business days | 2-4 weeks |
| EU membership | Yes (since 2007) | Yes (founding) |
| Social contributions | ~32% (capped at BGN 4,130/mo) | ~25-28% combined |
Luxembourg's headline corporate income tax looks moderate until the municipal business tax and the employment fund contribution are added; in Luxembourg City the combined rate lands close to 24%. The bigger obstacle for a small operating company is fixed cost: €12,000 of paid-in capital for a Sàrl, a notarial incorporation deed, and in practice a domiciliation agreement plus an accountant whose annual fee often outweighs the entire Bulgarian compliance budget. A Bulgarian EOOD charges one flat 10% on profit and 5% on dividends, with about €1 of capital and no domiciliation requirement. Luxembourg remains the better answer where the participation exemption, its treaty network or fund regulation genuinely matter; for consulting, software and ecommerce profits taken out as dividends, the arithmetic favours Bulgaria heavily.
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