Maximize Your Finances

Need freelance registration in Bulgaria. Or you have a company and need accounting. Contact me.

Click for free consultation

Maximize Your Finances

Need freelance registration in Bulgaria. Or you have a company and need accounting. Contact me.

Click for free consultation

About Hristo Marinov - Freelance Bulgarian Accountant

My Experience

Experienced Accountant for Freelancers and Small Businesses in Bulgaria

Registered as a freelance 'Accountant' with the Registry Agency under No. 181190996.

Holder of Professional Indemnity Insurance for the role of "Accountant", policy No. 13150250390000002, issued by Allianz Bulgaria.

Bachelor of Accounting at the University of Economics

Experienced Accountant for Freelancers and Small Businesses in Bulgaria

Registered as a freelance 'Accountant' with the Registry Agency under No. 181190996.

Holder of Professional Indemnity Insurance for the role of "Accountant", policy No. 13150250390000002, issued by Allianz Bulgaria.

Bachelor of Accounting at the University of Economics Varna, accredited and certified as an academic and research organization as per ISO 9001:200, founded in 1920, one of the most reputable edication institution in Bulgaria.

Specialize small and medium enterprises and freelancer's accounting; VAT including special regimes, Intracommunity deals; Corporative taxes; Social insurances; Individual taxation; Property deals; Cross-border taxation; Tax treaties. Fluent in English and Russian language.

Mostrar menos

My Services

My Experience

Comprehensive Accounting Services for Freelancers and Small to Medium Enterprises in Bulgaria

We provide specialized accounting services tailored for freelancers, IT specialists, digital nomads, and small to medium enterprises in Bulgaria. Our services include:

Accounting for Freelancers and IT Specialists: Expert accounting support for di

Comprehensive Accounting Services for Freelancers and Small to Medium Enterprises in Bulgaria

We provide specialized accounting services tailored for freelancers, IT specialists, digital nomads, and small to medium enterprises in Bulgaria. Our services include:

Accounting for Freelancers and IT Specialists: Expert accounting support for digital nomads and IT professionals in Bulgaria.
Freelancer and Company Registration: Hassle-free registration services for freelancers and businesses looking to establish themselves in Bulgaria.
VAT Registration and Reporting: Full assistance with VAT registration, reporting, and compliance, including special VAT regimes in the EU.
Social Insurance Registration and Reporting: Guidance and management of social insurance registration and reporting for individuals and companies.
Corporate Taxes: Expert handling of corporate taxes to ensure compliance and optimal tax planning in Bulgaria.
OSS and EORI Registration: Comprehensive support with One Stop Shop (OSS) and Economic Operators Registration and Identification (EORI) for cross-border transactions.
Special VAT Regimes in the EU: Expertise in managing special VAT regimes, including VAT for three-party intracommunity deals.
Export and Import Accounting: Specialized services for managing export and import transactions.
VAT and LUCID Registration in Germany: Assistance with VAT and LUCID registration and reporting for businesses operating in Germany.
Property Deals: Professional accounting services for property transactions in Bulgaria.

With a deep understanding of Bulgarian tax laws and EU regulations, we ensure your accounting needs are met efficiently and effectively. Contact us today to learn how we can support your business or freelance activities in Bulgaria.

Mostrar menos

My Approach

Building Long-Term Relationships Through Personalized Accounting Services in Bulgaria

Building Long-Term Relationships Through Personalized Accounting Services in Bulgaria

I believe in building lasting relationships with our clients by providing personalized accounting services tailored to your specific needs. As an experienced accountant in Bulgaria, my approach is to be available whenever you need assistance, ensuring that your financial and tax needs are always met. We take the time to understand the unique goals and requirements of each freelancer, small business, or enterprise we work with.

I also firmly believe that the relationship between the government and clients should be fair and transparent. That's why my slogan is "KEEP IT FAIR." We strive to ensure compliance with Bulgarian tax laws while advocating for fair treatment for all our clients.

Mostrar menos

Certificate

My Approach

Bachelor of Accounting from the University of Economics – Varna

Bachelor of Accounting from the University of Economics – Varna

I hold a Bachelor of Accounting from the University of Economics – Varna, one of Bulgaria's most reputable educational institutions, founded in 1920. This university is accredited and certified as an academic and research organization under ISO 9001:2000 standards, ensuring a high-quality education in accounting and finance. My background provides a strong foundation for offering top-notch accounting services in Bulgaria, tailored for freelancers, small businesses, and enterprises..

Mostrar menos

Registering as freelancer in Bulgaria

Freelance registration - Frequently asked questions

Registering as freelancer in Bulgaria

If you’re a freelancer or small business owner looking to establish long-term residence in Bulgaria, here’s a step-by-step guide to help you through the process:

Apply for Long-Term Residence at the Migration Office
To apply for long-term residence in Bulgaria, you need to visit the Migration Office in person and present the following documents:
- A notarized declaration from your landlord confirming your rental agreement.
- A copy of your rental contract.
- A European Health Card with the longest possible validity, as your residency permit will match this term.
- If you do not have a European Health Card, a health insurance policy issued by a Bulgarian insurance company.
- A notarized declaration proving sufficient funds to cover your expenses during your stay in Bulgaria.
- Your passport.
- Note: Personal presence is required at the Migration Office.

Receive Your Bulgarian ID Card
Within about a week, you will receive a Bulgarian ID card, which includes a Personal Identification Number for foreign nationals.
- Note: You must collect the ID card in person.

Register with the Registry Agency
Once you have your Bulgarian ID card, you must register with the Registry Agency, known as "Агенция по вписванията регистър Булстат." The following documents are required:
- Your newly issued Bulgarian ID card.
- Your diploma, translated into Bulgarian.
- I can submit these documents online on your behalf with a notarized Power of Attorney (PoA).

Register with the National Revenue Agency (NRA)
To complete your tax and social insurance registrations, I will need a notarized PoA. You do not need to be personally involved except to provide me with the PoA. The steps include:
- VAT registration, mandatory if you are providing services to EU-registered companies before starting your activities.
- Social insurance registration.
- Submitting the necessary monthly, quarterly, or annual documents.

I can assist you with steps 3 and 4. If you need help with steps 1 and 2, you may want to contact a solicitor for guidance or visit the Migration Office with a translator or friend.

Important Notes:

Non-EU Citizens: If you are not an EU citizen, steps 1 and 2 do not apply. It is recommended to consult a solicitor who specializes in migration laws. Generally, non-EU citizens must apply for a "Visa D."
Working with a Company: If you decide to work with a Bulgarian company, steps 1, 2, and 3 are not necessary. You can work without a residence permit and Registry Agency registration. In this case, I will still need a PoA and a translated copy of your passport to submit to the NRA.

If you need assistance from a solicitor for steps 1 and 2, I can provide contact information for an experienced immigration solicitor.

VAT implications freelancers*

Freelance registration - Frequently asked questions

Registering as freelancer in Bulgaria

VAT Registration and Tax Scenarios for Freelancers and Businesses in Bulgaria

Depending on your business model—whether B2B (business-to-business) or B2C (business-to-customer)—and the location of your clients, there are different VAT registration requirements and tax scenarios for providing services as a freelancer or business in Bulgaria:

1. B2B Services Provided to Companies Established in the EU

VAT Registration: Mandatory before providing services.
VAT Rate: 0% due to the "reverse VAT charge" principle.

2. B2B Services Provided to Companies Established Outside the EU

VAT Registration: Not considered as income for VAT registration
VAT Rate: 0%.
Note: For UK companies paying for services to a VAT-registered freelancer, a 0% VAT rate applies due to the "reverse VAT charge" principle.

3. B2C Services Provided to Customers from the EU (Individuals)
VAT Registration: Mandatory after reaching a threshold of 10,000 EUR over the last 12 months.

VAT Rate: The standard VAT rate of the customer's country of residence (e.g., 19% in Germany, 23% in Ireland, 22% in Italy, 20% in Austria, etc.).
Additional Requirements:
- Registration in the OSS (One Stop Shop) system to report and pay VAT quarterly for each country.
- If services are provided through a website or online shop, the shop must be registered with the National Revenue Agency (NRA) in Bulgaria, with sales reported monthly, separately from VAT reporting.

4. B2C Services Provided to Customers Outside the EU (Individuals)

VAT Registration: Mandatory after reaching a threshold of 100,000 BGN for 2024, and 166,000 BGN from January 1, 2025.
VAT Rate: 0%.
Additional Requirements:
- If services are provided through a website or online shop, the shop must be registered with the NRA, and sales reported separately from VAT reporting.

5. B2B and B2C Services to Businesses or Customers in Bulgaria

VAT Registration: Mandatory after reaching a threshold of 100,000 BGN for 2024, and 166,000 BGN from January 1, 2025.
VAT Rate: 20%.
Additional Requirements:
- If services are provided through a website or online shop, the shop must be registered with the NRA, and sales reported monthly, separately from VAT reporting.

Additional Notes:

Digital Services: This guide assumes the freelancer is providing digital services.
Voluntary Registration: Freelancers may choose to register for VAT voluntarily before reaching the threshold or starting their activities.

Freelance registration - Frequently asked questions

How do I pay my taxes in Bulgaria?
As a client, you are responsible for paying your own taxes. I do not operate or have access to your funds. I will apply for a Personal Identification Code (PIC) issued by the National Revenue Agency (NRA). With this code, you will have personal access to your NRA account to check and pay any due amounts easily and securely using a bank card. This also allows you to monitor all the declarations I submit on your behalf.

Can I pay my taxes with a card issued by a foreign bank?
Yes, you can pay your taxes in Bulgaria with a card issued by a foreign bank.

What diploma or certificate do I need for the Registry Agency?
You need a document that includes:

The title "Diploma" or "Certificate."
Your full name.
The issuing authority.
A qualification or profession.
The Registry Agency generally does not scrutinize these documents in detail, but a relevant qualification is required by law.

Do I need to have a Bulgarian bank account?
No, you can receive your income in any bank jurisdiction you prefer. As long as you declare and pay your taxes in Bulgaria, the NRA is satisfied. You can use alternatives like PayPal, Stripe, Revolut, Wise, or foreign bank accounts.

Do I need a separate bank account for my income?
No, you can use a single bank account for both income and expenses. However, for convenience and security, especially if you have numerous expenses, it may be beneficial to maintain separate accounts for incoming and outgoing funds.

Can I register as a "sole trader" instead of a "freelancer"?
In Bulgaria, a "sole trader" is a specific legal entity, different from a freelancer. As a sole trader, you will have company-like accounting requirements and potentially higher costs due to paying both corporate taxes (15%) and maximum social insurance contributions. This is generally more expensive than operating as a freelancer.

If I decide to work with a company, how much does it cost to register it?
Company registration through my affiliated solicitor costs 200 EUR, including state fees. Notary fees and other expenses are not included. You must sign documents in front of a Bulgarian notary, a Bulgarian consulate/Embassy if abroad, or a local notary with an apostille if abroad.

Which is a better/cheaper option: freelancer or company?
Choosing between a freelancer or a company depends on your income. For easier access to your income, freelancing is generally better. For cost efficiency, if your annual income is below 125,000 BGN, a company might be cheaper. Above this threshold, freelancing could be more cost-effective. Note that my accounting fees are higher for companies due to the additional personal accounting for shareholders/managers.

I travel frequently and might not spend 183 days in Bulgaria. Is this a problem?
No, as long as you pay your taxes in Bulgaria, the Bulgarian authorities are not concerned about the number of days you spend in the country. However, this may differ in other countries where you reside.

Are there any other costs, one-time, monthly, or yearly?
There are no additional administrative costs. You will have monthly, quarterly, and annual tax and social insurance payments based on your income, plus my fee.

How long does it take to receive a Bulgarian VAT ID? Can I start invoicing before I have it?
It takes about 14 days to receive a VAT ID after applying. VAT registration can begin once you are registered with the Registry Agency or have registered a company. If you provide services to EU VAT-registered companies, you must be VAT-registered before offering those services.

Do I charge VAT on invoices I send to my clients (companies)?
No, you should issue invoices with a 0% VAT rate. For EU-based clients (including those in the UK), the "reverse charge" principle applies.

How do we manage accounting, and what do I need to provide?
You should email me monthly with the following:

Bank statements
Invoices sent to clients
Expense invoices (if operating as a company). Note: Many personal expenses are not tax-deductible (e.g., rent, food, restaurants). We can discuss acceptable expenses separately.

Do I need to do anything personally, like visiting authorities’ offices?
Aside from the initial registration activities, no personal visits to authorities are necessary. All tax and registration processes are digital, except for the registration at the Migration Office.

Can I refund VAT for expenses?
Yes, VAT on expenses directly related to your business can be refunded. Since invoices from freelancers or companies have a 0% VAT rate, VAT paid on expenses can be refunded to a bank account. This can be done monthly, quarterly, or annually. Note that all cash refunds are subject to a tax audit, which can take one to six months depending on the transaction volume. The monthly accounting fee does not include this service; it is an additional 100 EUR per audit.

What expenses can I claim?
Only companies can claim expenses, which reduce taxable income. Eligible expenses are directly related to the company's activities, such as mobile/internet services, office equipment, accounting and legal fees, and office rent. Personal expenses like food, clothes, flights, hotel bills, residential rent, and car expenses are not claimable. The NRA has strict rules regarding acceptable expenses, and it’s up to their discretion.

If you have any other questions or need further clarification, please do not hesitate to contact me.

Note: This article provides a general overview and may include options that do not apply to your specific situation. Please contact me to discuss your individual circumstances in detail.

Accouning offer for freelancer

TRADE OF SHARES AND OTHER FINANCIAL INSTRUMENTS, FREELANCER, SOLO TRADER, - MAIN ACTIVITY

Freelance registration - Frequently asked questions

Comprehensive Accounting Services for Freelancers and Companies in Bulgaria

As your dedicated accountant in Bulgaria, the services I provide are tailored to meet the specific needs of freelancers and businesses. My accounting work includes:

For Freelancers:

VAT Registration: Assistance with VAT registration in Bulgaria.
Monthly VAT Reports: Preparation and submission of monthly VAT reports.
Quarterly Income Reports: Filing quarterly income reports.
Annual Tax Declarations: Completing and submitting annual tax declarations.
Monthly Social Insurance Declarations: Managing monthly social insurance declarations.
Annual Social Insurance Declarations: Filing annual social insurance declarations.

For Companies (if you choose to operate as a company instead of a freelancer):

Submitting Annual Balance Sheets to the Commercial Register: Ensuring compliance by submitting annual balance sheets.
Submitting Annual Balance Sheets to the National Statistical Institute: Handling the submission of annual balance sheets to the National Statistical Institute.

Accounting Fee Structure:

1. Freelancer Accounting:

Monthly Fee: 100 EUR
This fee includes all activities, including initial registration with the National Revenue Agency (NRA) and the Registry Agency. It covers up to 5 incoming invoices and up to 5 incoming payments per month.
Non-VAT Registered Freelancer with One Incoming Invoice: Monthly fee of 75 EUR.

2. Company Accounting with Dividend Distribution:

Monthly Fee: 175 EUR
This fee includes all necessary activities, including initial registration with the NRA, and is valid for up to 10 incoming transfers and up to 10 expense invoices per month. It also includes a company address if needed. Note that this fee does not cover company registration; for that, you will need to contact a recommended solicitor.
Non-VAT Registered Company with One Incoming Invoice: Monthly fee of 125 EUR.

3. Company Accounting with Salary Distribution:

Monthly Fee: 250 EUR
This fee covers all accounting activities, including initial registration with the NRA, and is valid for up to 10 incoming transfers and up to 10 expense invoices per month. It includes a company address if needed, but does not cover company registration. For company registration, please contact one of the recommended solicitors.
Non-VAT Registered Company with One Incoming Invoice: Monthly fee of 125 EUR.

Important Notes:

B2B Services Only: These accounting fees apply only if you are providing services to companies (B2B), not individuals. Sales to individuals within the EU are subject to specific VAT regulations, and I will provide a separate quote if this applies.
Tax Checks or Revisions: The fees do not include managing a tax check or revisions for VAT refunds. My fee for handling such checks or revisions, if required by the NRA, is 100 EUR per instance.
Start Date: The first month of service is considered the month when VAT and Registry Agency registrations are completed.
Additional Income: The fees listed do not include accounting for income outside of your main activity. If you have additional income sources, an extra annual fee of 100 EUR will apply.

For any questions or to discuss your specific needs in more detail, please feel free to contact me.

TRADE OF SHARES AND OTHER FINANCIAL INTRUMENTS, FREELANCER NOT MAIN ACTIVITY.

TRADE OF SHARES AND OTHER FINANCIAL INSTRUMENTS, FREELANCER, SOLO TRADER, - MAIN ACTIVITY

Taxes on Trading Financial Instruments and Cryptocurrencies in Bulgaria

If you are a freelancer in Bulgaria with regular income from a different source and your trade with financial instruments is not your main activity, here are the tax implications for various financial instruments:

Shares, Stock Options, and Bonds

Shares:
- Tax-Free: Profits from trading shares on regulated EU and EEA stock exchange markets.
- Taxable: Profits from shares traded on other markets are taxed at 10%, with 10% recognized as expenses. This results in an effective tax rate of 9%.

Stock Options (including Vested Stock Options):
- Exercise of Stock Option: Tax-free.
- Sale of Shares from Options: Taxable according to the rules for shares (see above).

Vested Stock Units:
- Taxable based on the market value at the moment of vesting. The tax rate is 10%, with 10% recognized as expenses, resulting in an effective tax rate of 9%

Short Sales:
- Taxable at a rate of 10%.

Dividend from Shares:
- Taxable at a rate of 5%.

Bonds:
- Tax-Free: Bonds issued by EU and EEA governments.
- Taxable: Bonds from other issuers are taxed at 10%. A withholding tax may also apply.

Leverage:
Taxable at a rate of 10%.

Shares Listed on NYSE and NASDAQ:
- Taxable at a rate of 10%.

Investment Gold

Investment Gold:
- Tax-Free: Profits from trading gold on regulated EU and EEA stock exchange markets.
- Taxable: Profits from other markets are taxed at 10%, with 10% recognized as expenses. The effective tax rate is 9%.

Cryptocurrency

Cryptocurrency:
- Taxable. The tax base is the difference between the selling price and the purchase price. The tax rate is 10%, with 10% recognized as expenses, resulting in an effective tax rate of 9%.

VAT Implications

VAT-Free: All the above financial transactions are free of VAT.
VAT Registration Threshold: The turnover from these activities counts towards the VAT registration threshold of 100,000 BGN for 2024.

Stablecoins

Stablecoins are pegged to another currency, commodity, or financial instrument and are considered equivalent to fiat money for tax purposes.

Receiving Payment in Stablecoins: Treated as payment in fiat money and taxed as regular income, evaluated at the current rate to BGN at the time of invoicing.
Buying and Holding Stablecoins: Considered equivalent to fiat currency; hence, there is no need to report the purchase, sale, or available funds if it is merely an exchange and not a deal.

Important Notes

Main Income Considerations: The above information applies only to individuals for whom trading is not their main source of income. If trading becomes the main income, it is considered "commercial activity," and the tax base is calculated as the difference between purchase and sale prices minus expenses, with a tax rate of 15%.
VAT Registration for Main Income from Trading: If trading on EU stock exchanges is your main income source, the turnover (sales) is considered "VAT registration turnover," and VAT registration is mandatory. No VAT is calculated on these deals, but VAT registration and monthly reporting are required. Trades on markets outside the EU are not included in "VAT registration turnover."

This information is a general guide and not exhaustive. For detailed advice tailored to your specific situation, please consult with a professional accountant.

TRADE OF SHARES AND OTHER FINANCIAL INSTRUMENTS, FREELANCER, SOLO TRADER, - MAIN ACTIVITY

Taxes on Trading Financial Instruments as a Main Commercial Activity in Bulgaria

When trading shares, stock options, bonds, cryptocurrencies, or other financial instruments is your main commercial activity and primary source of income, the taxation rules in Bulgaria differ from those applied to individuals trading as a secondary activity.

Definition of Main Commercial Activity

A main commercial activity is when trading is your primary source of income and you do not have other regular income sources, such as a salary or freelance income. This status is determined not by the amount of income but by the lack of other regular income.

Taxation for Main Activity Trading

Tax Base:
The taxable income is calculated as the difference between the purchase price and the sale price, minus social insurance contributions and allowable business expenses (e.g., trader commissions, stationary expenses, office costs). Personal expenses (such as food, restaurants, and travel) are not deductible.

Tax Rate:
The tax rate on profits from trading as a main activity is 15%.

Social Insurance Contributions

If trading is your main source of income, you are required to pay social insurance contributions on your income. Here’s how these are calculated:

Monthly Contributions: Based on a chosen base amount between 933 BGN and 3,750 BGN (typically, the minimum base of 933 BGN is chosen).
Annual Recalculation: The annual profit is divided by 12 to determine the average monthly income:
- If the monthly average is 3,750 BGN or less, the social insurance contributions already paid monthly are deducted, and any remaining amount is used as the base for calculating additional contributions.
- If the monthly average exceeds 3,750 BGN, the maximum base of 3,750 BGN minus monthly contributions is used for calculating the additional contributions.

Example:
For an annual profit of 100,000 BGN, with monthly contributions paid on the minimum base of 933 BGN:

The monthly average is 8,333.33 BGN (100,000 BGN / 12).
The maximum base of 3,750 BGN minus 933 BGN equals 2,817 BGN, which becomes the base for additional contributions.

Social Insurance Rate:
Social insurance contributions are 27.80%. An optional additional 3.5% can be paid to cover maternity leave and illness benefits, making the total rate 31.30%, though this is less common.

VAT Implications

VAT Registration:
Sales turnover from trading shares and financial instruments on EU and EEA stock exchanges or other platforms registered in the EU counts towards the VAT registration threshold. VAT registration and reporting are mandatory upon reaching 100,000 BGN turnover in the past 12 months (160,000 BGN from January 1, 2025). No VAT is calculated on these sales.
Non-EU Markets:
Sales on markets outside the EU do not count toward the "VAT registration turnover."
Broker Commissions:
Commissions paid to brokers based in the EU are considered "VAT deals on the territory of Bulgaria," and VAT registration is required before paying the commission, regardless of the commission amount.

Tax-Free Trading with Shares

Trades of shares on regulated markets in the EU and EEA are free of tax and social insurance. Here is a list of the eligible markets:

Austria: Vienna Stock Exchange (VSE)
Belgium: Bats Europe (BATEEN), CHI-X Europe Ltd Clearnet (CHIXEN), ENEXT.BE, Euronext Brussels (BELFOX), Turquoise (TRQXEN)
Estonia: Nasdaq Baltic (N.TALLINN)
EU: Euronext Bonds
Germany: Bats Europe (BATEDE), CBOE EU, CHI-X Europe Ltd Clearstream (CHIXDE), EUREX (DTB), Frankfurt Stock Exchange (FWB / FWB2/ FSE), GETTEX / GETTEX2, Stuttgart Stock Exchange (SWB), Tradegate Exchange (TRADEGATE / TGATE), Turquoise DE (TRQXDE), XETRA (IBIS)
France: Bats Europe (BATEEN), CHI-X Europe Ltd Clearnet (CHIXEN), Euronext France (MATIF), Euronext France (MONEP), Euronext France (SBF), Turquoise (TRQXEN)
Hungary: Budapest Stock Exchange
Italy: Borsa Italiana, Borsa Italiana (BVME), Borsa Italiana (IDEM)
Latvia: Nasdaq Baltic (N.RIGA)
Lithuania: Nasdaq Baltic (N.VILNIUS)
Netherlands: Bats Europe (BATEEN), CHI-X Europe Ltd Clearnet (CHIXEN), Euronext NL Derivatives (FTA), Euronext NL Stocks (AEB), ICE Endex, Turquoise (TRQXEN)
Norway: OMXNO
Poland: Warsaw Stock Exchange
Portugal: BVL
Spain: Bats Europe (BATEES), Bolsa de Madrid (BM), CHI-X Europe Ltd Clearnet (CHIXES), Spanish Futures & Options Exchange (MEFF)
Sweden: Nasdaq OMX – Stockholm (OMS), Swedish Stock Exchange (SFB)

Note: Trades conducted over-the-counter (OTC) are subject to taxation.

This information is intended as a general guide and is not exhaustive. It is applicable to individuals whose trading is not their primary income source. If trading is your main source of income, please consult a professional accountant for personalized advice.

Tax Treatment of US LLC Income for a Bulgarian Tax Resident

Required Documents for Long-Term Residency Application for EU Nationals and Their Families

"Taxable Person" vs. "Non-Taxable Person" for Tax Purposes in the EU and Beyond

Taxation of US LLCs for Bulgarian Residents: A Guide

Unlike in the United States, where Limited Liability Companies (LLCs) benefit from "pass-through" taxation, Bulgarian law does not recognize this concept. The lack of specific regulations in Bulgarian tax legislation, combined with the absence of guidelines from the Minister of Finance and inconsistent court rulings, makes the taxation of US LLC income for Bulgarian residents subject to interpretation by accountants and officials of the Bulgarian National Revenue Agency (NRA).

However, some guidance can be derived from client responses available on the NRA's website (accessible with a Qualified Digital Signature). These responses can be considered an "official" position of the NRA and are generally accepted by tax professionals.

Important Note:
While the NRA's official statements provide useful guidance, they are not legally binding, as they are issued by NRA employees and are not explicitly outlined in Bulgarian law or confirmed by court decisions. However, these statements are typically well-founded and likely to be upheld in court.

Tax Obligations for Bulgarian Residents with US LLCs

If the shareholder of a US LLC is a Bulgarian tax resident, the LLC's activities are considered those of a foreign legal entity operating in Bulgaria. This status brings several tax obligations:

Registration with the NRA:
The LLC must be registered with the Bulgarian National Revenue Agency to obtain a registration number.
Corporate Taxation:
The LLC is subject to Bulgarian corporate tax rates, which include:
- 10% Corporate Tax on profits.
- 5% Dividend Tax on distributed profits.
  This results in an effective tax rate of 14.5% on the LLC's profits.

Regular Transfers to Shareholders:
If the LLC makes regular transfers to its shareholders, these are considered employment income and are treated as salary payments. This involves:
- Social Security Contributions: 32.7% on the actual income, up to a maximum of 3,750 BGN per month.
- Income Tax: 10% on the income.
  These payments are treated as expenses for the LLC, reducing the taxable profit.

For a detailed simulation of the tax and social insurance contributions, see the post "Tax and Social Insurance Simulation" on our Facebook page.

Frequently Asked Questions

Do I need to report to the NRA if the LLC receives income but does not transfer it to the shareholder?
No, you do not need to report it to the NRA if the income is not transferred.

What is a more cost-effective option than an LLC?
It depends on the amount of annual income. Operating as a freelancer or setting up a Bulgarian company can be more cost-effective.

What is taxed in Bulgaria: gross LLC income or net personal income?
Net personal income is taxed in Bulgaria.

Can I register as a freelancer in Bulgaria and invoice my LLC?
This is not recommended, as it could be considered tax evasion or avoidance.

Is the tax treatment of a UK LLP the same as a US LLC?
Almost. Both the UK LLP and US LLC use the "pass-through" taxation principle. However, income from a UK LLP is taxed in Bulgaria regardless of whether it is transferred to the shareholder, while income from a US LLC is taxed only when it is transferred to the shareholder.

Additional Resources

For more detailed information, please refer to the attached file, which provides the NRA's official position on the tax treatment of US LLCs (available in both English and the original Bulgarian).

Disclaimer:
This guide provides general information and is not fully comprehensive. For personalized assistance with your taxes, please consult a certified accountant.

"Taxable Person" vs. "Non-Taxable Person" for Tax Purposes in the EU and Beyond

Required Documents for Long-Term Residency Application for EU Nationals and Their Families

"Taxable Person" vs. "Non-Taxable Person" for Tax Purposes in the EU and Beyond

In international trade, particularly within the European Union (EU), distinguishing between a "taxable person" and a "non-taxable person" is crucial for businesses. This distinction directly impacts how VAT (Value Added Tax) is applied, reported, and managed when trading goods and services within the EU and with countries outside it. Below, we'll explore the definitions of these terms, their implications, and the differences from the perspective of a company established in Bulgaria.

What is a "Taxable Person"?A taxable person is any individual, company, or organization that independently carries out an economic activity, regardless of the activity's purpose or outcome. This category includes businesses, self-employed individuals (such as freelancers), and other entities engaged in offering goods or services with the intention of generating income.Under EU VAT law, taxable persons are required to apply VAT to their transactions. They are also entitled to reclaim VAT on purchases related to their business activities, provided they are VAT-registered.

What is a "Non-Taxable Person"?A non-taxable person refers to an individual or entity that does not independently carry out an economic activity. This primarily includes private individuals (consumers) who purchase goods or services for personal use rather than for resale or business purposes.Non-taxable persons are not required to register for VAT and do not need to charge VAT on any sales they make. Additionally, they cannot reclaim VAT on their purchases.

Trading Within the EU: Taxable vs. Non-Taxable Persons1. Selling Goods and Services

To Taxable Persons: When a Bulgarian company sells goods or services to a taxable person (a business) in another EU country, the transaction is typically zero-rated for VAT in Bulgaria, meaning no VAT is charged. The buyer is responsible for accounting for the VAT in their own country through the reverse charge mechanism, facilitating seamless cross-border transactions within the EU.
To Non-Taxable Persons: When selling to non-taxable persons (private individuals) in another EU country, a Bulgarian company must charge VAT at the rate applicable in the buyer's country. This is managed through the One Stop Shop (OSS) system, allowing businesses to report and pay VAT owed in various EU countries via a single return filed in Bulgaria.

OSS registration can be voluntary or mandatory, depending on the sales volume. If a company’s cross-border sales to EU consumers exceed 10,000 EUR within a 12-month period, OSS registration becomes mandatory. Before registering for OSS, the Bulgarian company must apply the local Bulgarian VAT rate of 20%, regardless of the customer’s location.

2. Buying Goods and Services

From Taxable Persons: When a Bulgarian company purchases goods or services from a taxable person in another EU country, the invoice generally does not include VAT. The company then accounts for the VAT in Bulgaria using the reverse charge mechanism, provided the goods or services are related to its business activities.
From Non-Taxable Persons: If a Bulgarian company buys goods from a non-taxable person in the EU, the transaction typically does not involve VAT. However, such situations are uncommon, as most business-related purchases are made from taxable persons.

Trading with Non-EU CountriesWhen trading with countries outside the EU, the rules differ significantly:

1. Selling Goods and Services

To Taxable Persons: Exports of goods from Bulgaria to taxable persons outside the EU are generally zero-rated for VAT. The buyer is responsible for handling any import VAT and customs duties in their own country.
To Non-Taxable Persons: When selling to non-taxable persons outside the EU, the transaction remains zero-rated for VAT in Bulgaria. However, the buyer is responsible for paying any VAT and duties upon importing the goods into their country.

2. Buying Goods and Services

From Taxable Persons: When a Bulgarian company imports goods from a taxable person outside the EU, the company must declare the goods at customs and pay the applicable VAT and any customs duties. If the goods are used for business purposes, the VAT paid can usually be reclaimed.
From Non-Taxable Persons: Importing goods from a non-taxable person outside the EU is rare for businesses. If it occurs, the Bulgarian company is still responsible for paying any VAT and duties upon importation.

Key Differences When Trading with Taxable vs. Non-Taxable PersonsThe primary difference between dealing with taxable and non-taxable persons lies in the VAT treatment:

Taxable Persons: Transactions are typically zero-rated across borders, with VAT being accounted for via reverse charge or local mechanisms. Taxable persons can also reclaim VAT on business-related purchases.
Non-Taxable Persons: VAT is charged based on the buyer’s location, often at the local rate applicable in the buyer’s country, especially within the EU. Non-taxable persons cannot reclaim VAT.

Key Criteria for Identifying a Taxable Person

1. Engagement in Economic ActivityA taxable person is someone or an entity that is independently engaged in economic activity. This includes businesses, freelancers, self-employed individuals, and organizations that provide goods or services for payment. Economic activities include any trade, business, profession, or occupation, such as manufacturing, buying and selling goods, providing services, renting property (excluding long-term rentals of a single property), and certain agricultural operations.

2. IndependenceThe individual or entity must operate independently, meaning they are not employed by another person or entity in a subordinate capacity. For example, an employee working under a contract of employment is not a taxable person; rather, their employer is the taxable person.

3. Regularity and ContinuityThe activity should be carried out regularly or continuously with the intention of generating income. Occasional or one-off transactions may not qualify the person as a taxable person unless these transactions are part of a broader, ongoing business activity.

4. Registration with Relevant AuthoritiesIn most jurisdictions, including EU countries, individuals or entities must register with tax authorities to be officially recognized as taxable persons. This process often involves obtaining a VAT number, although it is not always mandatory. Regardless, some form of registration is required, and a specific registration number is issued.

5. Not a Private IndividualA taxable person is not a private individual acting in a purely personal capacity. For instance, when someone buys goods for personal use and not for resale, they are not acting as a taxable person.

Practical Examples

Example 1: A Freelancer or Sole Proprietor
- A graphic designer working independently, offering services to various clients, is a taxable person. They are engaged in economic activity, operate independently, and provide services for payment.
Example 2: A Company
- A company that manufactures and sells products is a taxable person. The company engages in continuous economic activities and is registered with the tax authorities, and in some cases for VAT as well.
Example 3: A Landlord Renting Property
- An individual renting out commercial property or a residential property for short-term stays (e.g., tourist rentals) is a taxable person, as renting property is considered an economic activity.
Example 4: A Private Individual Selling Personal Items
- If someone occasionally sells personal items, like used furniture online, they are not a taxable person because this activity is not regular, continuous, or carried out with the intention of generating business income.

Note: The information provided is a general overview and may not cover all specific situations. For personalized advice, please consult your accountant.

Required Documents for Long-Term Residency Application for EU Nationals and Their Families

Requirements and Instructions for Applying for a Residence Permit in Bulgaria

To apply for a residence permit in Bulgaria, the following documents and steps are required:

Required Documents

Application Form

Ensure names are typed in both English and Cyrillic.

Declaration of Available Funds

Must be notarized.

Rental Agreement

If you own property, provide both a copy and the original title deed.

Declaration from the Landlord

Must be notarized. If you own the property, this document is not required.

Copy of EU Health Card

If the EU Health Card is unavailable, provide proof of insurance from a Bulgarian insurance company covering at least €30,000. The standard cost for this insurance is approximately 200 BGN for one year. No other forms of insurance are accepted.

Copy of Passport

The original passport must be presented during the application process.

Bank Statement or Document Showing Available Funds

It is recommended to show funds equivalent to 12 x 933 BGN (approximately €5,800). Although not mandatory, some Migration Offices may accept a copy of a credit card if the amount is not specified.

Document for Paid State Fee (7 BGN)

Payment can be made at nearby EasyPay offices or bank branches.

Submission Instructions

Submit all documents in one copy.
After submission, you will receive a small receipt (approximately 2x5 cm) with a number and information on when the residence permit can be collected.
Processing time is typically between 3 to 7 working days, depending on the Migration Office’s schedule.

Additional Information

Upon receiving your residence permit (white card), you may apply for a plastic card. While not mandatory, the plastic card serves as a photo ID and can be used with various state authorities, such as the National Revenue Agency (NRA), police, and Registry Agency.
The residence permit and card can be collected by another person with a notarized Power of Attorney (PoA).

TAX-EXEMPT INCOMES IN BULGARIA

Pensioners (Retirees) Working as Freelancers: Is It Possible? What Taxes Do I Pay?

Required Documents for Long-Term Residency Application for EU Nationals and Their Families

Movable and Immovable Assets

Sale of Residential Property

Tax-exempt if it involves the sale of a single residential property (such as an apartment, house, or villa) that has been owned for more than 3 years.

Sale of Multiple Properties

Tax-exempt if it involves the sale of up to two properties, including agricultural and forest land, provided each property has been owned for more than 5 years.

Inherited Property

The sale of inherited property is tax-exempt.

Rental Income

Income from renting out agricultural land.

Sale of Vehicles and Boats

Tax-exempt if the sale involves vehicles, aircraft, or boats that have been owned for more than 1 year.

Trade in Shares

Profit from trading shares on regulated stock exchanges within the EU and EEA is generally tax-exempt.

Dividends

Dividends received from shares and any increase in share value are subject to tax.

Capital Increase

Shares received from an increase or deposit of company share capital may be taxable.

Interest on Bonds

Interest earned from bonds issued by countries within the EU and EEA is typically tax-exempt.

Compensations and Interest

Bank Deposits

Interest on deposits held with banks registered in the EU and EEA.

Court Awards

Interest on court-awarded payments and court expenses.

Personal Injuries

Compensation for death, professional illness, personal injury, and both pecuniary and non-pecuniary damages awarded by the court.

State and Municipal Compensation

Compensation from the state or municipality for seized properties.

Insurance Compensation

Insurance payouts.

State Benefits

Pensions

Pensions from public or private pension funds.

Maternity and Sickness Benefits

Benefits received for maternity leave and sickness.

Other State Benefits

State and municipal benefits, including those for students.

Other Income Types

Gambling Winnings

Income from gambling with operators registered in the EU and EEA.

Family Donations

Donations between “first-line” relatives (e.g., parent to child, child to parent) and marital partners (e.g., husband to wife, wife to husband). This includes money, movable or immovable assets, and financial instruments such as shares, bonds, and cryptocurrencies.

International Income

Income taxed abroad if the tax paid exceeds the Bulgarian tax rate under applicable tax treaties. Such income may be subject to declaration.

Foreign Employment

Salary from employment performed in a foreign country.

Note: This information serves as a general guide and may not cover all specific circumstances. It is applicable to individuals only. For personalized advice, please consult with an accountant or tax advisor.

Different Types of VAT Registration for Freelancers

Pensioners (Retirees) Working as Freelancers: Is It Possible? What Taxes Do I Pay?

Understanding VAT Registration for Freelancers in Bulgaria

This guide is designed for freelancers who provide professional services in Bulgaria. It's crucial for freelancers to understand their VAT obligations to avoid potential issues. From my experience, there is often confusion among accountants and their clients regarding the VAT treatment of cross-border services under different VAT registration types. This post will simplify and explain the three most common types of VAT registration for freelancers, focusing on the essentials without delving too deeply into legal complexities.

1. Mandatory VAT Registration (Article 97a(1)(2) VAT Law)

Mandatory VAT registration is required without reaching a specific threshold if any of the following conditions are met:

Services Received: This applies to services (including VAT-exempt services like financial and insurance services) used in the freelancer’s main activity and received from EU or non-EU companies, regardless of the purchase amount. Services used for personal purposes do not trigger mandatory VAT registration.
Services Provided to EU Companies: Registration is required if you provide services to companies based in the EU.

Deadline for VAT Registration Application:

For services received: Register 7 days before receiving an invoice or making a payment, whichever comes first.
For services provided: Register 7 days before issuing an invoice or receiving a payment, whichever comes first.

VAT Reporting After Registration:

Monthly Reporting:
- Include in VAT reports:
  - Sales to EU-based companies (if applicable) with a 0% VAT rate.
  - Services received from EU and non-EU companies related to the freelancer’s main activity, charged with the 20% Bulgarian VAT rate, unless exempt.
- Excluded from VAT reports:
  - Sales to non-EU-based companies.
  - Sales to Bulgarian, EU, and non-EU-based individuals.
  - Services or goods received from Bulgarian companies.
  - Services from EU and non-EU companies that are VAT-exempt, unless related to the freelancer's main activity.

VAT Charging:

Services received from EU and non-EU companies are charged at the 20% Bulgarian VAT rate, unless VAT-exempt.
Sales to Bulgarian, EU, and non-EU individuals are not subject to VAT.
Sales to EU and non-EU-based companies are subject to a 0% VAT rate.

VAT Reimbursement:

No VAT reimbursement is available under this registration type.

Additional Notes:

If a freelancer registered under Article 97a(1)(2) later reaches the threshold for VAT registration under Article 96(1), they must register under Article 96(1).
Freelancers registered under Article 97a(1)(2) can also opt for voluntary registration under Article 100(1), which alters the reporting and VAT treatment of transactions.

Conclusion:
This type of registration primarily benefits the government by collecting 20% VAT on services paid to foreign companies and may offer minimal benefit to freelancers. It can be avoided with voluntary registration under Article 100(1).

2. Mandatory VAT Registration Due to Reaching the Threshold (Article 96(1) VAT Law)

Freelancers must undergo mandatory VAT registration when they reach the threshold of 100,000 BGN within a 12-month period (this threshold changes to 166,000 BGN from January 1, 2025).

Which Sales Count Towards the Threshold:

Included in the Threshold:

Sales to individuals based in Bulgaria and the EU.
Sales to companies in Bulgaria.
Services provided to non-EU individuals, except for certain specified services.
Sales of financial instruments and crypto derivatives, but only if this is the main business activity.
Sales of insurance products (including commissions), but only if this is the main business activity.

Excluded from the Threshold:

Sales to non-EU-based companies.
Sales to non-EU individuals involving specific services (e.g., licensing, consulting, financial services).
Sales of financial instruments and crypto derivatives if not the main business activity.
Services received from EU and non-EU companies

Deadline for VAT Registration Application:

No later than 7 days after the end of the month following the 12-month period during which the threshold was reached, OR
No later than 7 days from the date the threshold is reached if this period is less than 2 months.

VAT Reporting After Registration:

Monthly Reporting: VAT reports must include all sales and purchases, except for sales declared under the OSS (One Stop Shop) scheme.
Quarterly Reporting: Freelancers registered under the EU OSS scheme must submit an OSS declaration quarterly.

VAT Charging:

20% Bulgarian VAT Rate Applies To:
- Sales to individuals and companies within Bulgaria.
- Sales to individuals in the EU up to a threshold of €10,000 over a 12-month period. Once this threshold is reached, VAT must be charged according to the client’s location under the EU OSS scheme

VAT Reimbursement:

Freelancers can reclaim VAT paid to Bulgarian suppliers for services or goods directly related to their main business activities.
Services and goods purchased from EU suppliers are treated as intra-community transactions and are exempt from VAT.

3. Voluntary VAT Registration without Reaching a Threshold (Article 100(1) VAT Law)

Voluntary VAT registration can be initiated by freelancers even if they have not reached the threshold.

VAT Reporting After Registration:

Reporting requirements are the same as for VAT registration under Article 96(1) VAT Law.

VAT Charging:

The rules for charging VAT are the same as those for VAT registration under Article 96(1) VAT Law.

VAT Reimbursement:

The conditions for VAT reimbursement are identical to those for VAT registration under Article 96(1) VAT Law.

Conclusion:
Voluntary VAT registration under Article 100(1) allows freelancers to manage VAT more proactively and avoid mandatory registration under Article 97a(1)(2) if they receive services from abroad.

Final Note:
This article provides a general overview of VAT registration types for freelancers in Bulgaria and is not exhaustive. For more detailed information, please consult your accountant.

Pensioners (Retirees) Working as Freelancers: Is It Possible? What Taxes Do I Pay?

Can Pensioners Work as Freelancers in Bulgaria?

Yes, pensioners can work as freelancers in Bulgaria. However, their tax and social insurance obligations differ from those of non-pensioners. Here’s a breakdown of the obligations for both groups:

For Non-Pensioner Freelancers

Social Insurances:
Social insurance contributions are calculated based on income, with specific thresholds:

Minimum Base: If your actual income is below 933 BGN, social insurances are calculated based on this minimum base.
Maximum Base: If your income exceeds 3,750 BGN, social insurances are calculated based on this maximum base.

The total social insurance rate is 27.8%, which includes:

14.8% for the Pension Fund.
8% for the Health Fund.
5% for the Private Pension Fund.

Tax:
A flat tax rate of 10% applies. Freelancers can deduct 25% of recognized expenses from their income. The tax base is calculated as the actual income minus 25% recognized expenses and minus the social insurances paid.

For Pensioner Freelancers

Social Insurances:
Pensioners have reduced social insurance obligations:

They are required to pay only 8% for the Health Fund.
Pensioners are exempt from contributing to the Pension Fund and the Private Pension Fund.

Tax:
The same flat tax rate of 10% applies to pensioners. The tax calculation method is identical to that of non-pensioners: actual income minus 25% recognized expenses and minus the social insurances paid.

Tax and Social Insurance Simulation

To better understand your tax and social insurance obligations, you can use the attached simulation file. Update the relevant amounts by entering new numbers in the yellow cells; the updated calculations will appear in the orange cells. All amounts are shown in BGN.

Note: The information provided here is a general guide and may not cover all specific situations. For personalized advice and further assistance, please consult your accountant.

Contact me

Better yet, see me in person!

Feel free to visit during normal business hours. With appointment only.

Hristo Marinov - Freelance Accountant

str. Krali Marko 26, office 1, Varna 9000, Bulgaria

+359899945699 info@insurebulgaria.com More information can be found on the Facebook group I manage: Expats in Bulgaria - Taxes and Legal aspects

Hours

lun	09:00 – 17:00
mar	09:00 – 17:00
mié	09:00 – 17:00
jue	09:00 – 17:00
vie	09:00 – 17:00
sáb	Cerrado
dom	Cerrado