Bulgarian Taxation: 10% on Corporations and Income

Bulgaria’s main advantage is its taxation. The corporate tax rate is set at 10%, one of the lowest in Europe. By comparison, Ireland taxes at 12.5%, the United Kingdom at 19%, and France at 25%.

But that’s not all: personal income tax is also 10%, a flat tax rate that greatly simplifies tax management.

This means that a director can optimize both their company and personal compensation without having to navigate a complex progressive tax scale.

A European Union Member State

Bulgaria is not an isolated tax haven: it has been a member of the European Union since 2007. This provides several advantages:

• Direct access to the European single market.
• Application of European directives (including the parent-subsidiary directive and the VAT directive).
• Compatibility with the euro, even though the local currency remains the Bulgarian lev (BGN).

An offshore company established in Bulgaria therefore benefits from credibility far superior to that of a company based in an exotic jurisdiction outside the EU.

Types of Companies in Bulgaria: OOD, EOOD, and AD

The most common form is the OOD (Druzhestvo s Ogranichena Otgovornost), equivalent to the French SARL.

• EOOD: single-member company, ideal for freelancers and consultants.
• OOD: company with multiple shareholders, suitable for SMEs.
• AD: joint-stock company, used for more ambitious projects or fundraising.

These structures are simple to establish, with a minimum share capital often symbolic (2 levs, approximately €1).

Practical Advantages for Entrepreneurs

In addition to its taxation, Bulgaria offers practical advantages:

• Rapid incorporation of a company (a few days).
• Access to local and European banks (UniCredit, DSK, etc.), as well as the option to use fintechs (traditional banks vs fintechs).
• Qualified workforce and competitive labor costs.
• Legal framework harmonized with the EU.
• Ability to obtain an intra-community VAT number and invoice throughout Europe.

Comparison: Bulgaria vs Other European Jurisdictions

Bulgaria

• Corporate tax: 10%
• Income tax: 10% (flat tax)
• Incorporation time: 3 to 5 days
• Minimum capital: €1
• Credibility: high (EU member state)

Ireland

• Corporate tax: 12.5%
• Income tax: 20% to 40%
• Incorporation time: 5 to 10 days
• Minimum capital: €1 symbolic
• Credibility: very high (EU member state)

United Kingdom (LTD)

• Corporate tax: 19%
• Income tax: 20% to 45%
• Incorporation time: 24 to 48 hours
• Minimum capital: none required
• Credibility: high (outside EU)

France

• Corporate tax: 25%
• Income tax: 0% to 45%
• Incorporation time: 2 to 3 weeks
• Minimum capital: €1 (SASU)
• Credibility: local (France)

Limitations and Precautions to Consider

While Bulgaria is fiscally attractive, it is not a magic solution.

• Local banks apply strict controls on beneficial owners.
• A company without economic substance risks being denied a bank account.
• The country still suffers from an image sometimes associated with “low cost,” although this is rapidly changing.
• Language and cultural distance may represent a barrier for some entrepreneurs.

As with an LTD or LLP, the key to success remains credibility and transparency.

Conclusion and Recommendations

Bulgaria is a competitive, simple, and fiscally advantageous European jurisdiction. With 10% taxation on corporations and income, it attracts more and more entrepreneurs seeking a clear, compliant, and recognized legal framework.

The right approach is to use Bulgaria as a strategic tool:

• Establish an OOD or EOOD to benefit from the 10% tax rate.
• Set up real substance (bank account, address, contracts).
• Properly manage your intra-community VAT to invoice across Europe.

At service-societe.com, we support our clients in establishing and managing their Bulgarian company, from registration to bank account opening, including VAT and accounting.