Bulgaria Corporate Tax Guide 2026: the 10% Flat Tax Explained
This guide explains how Bulgaria’s corporate tax system works in 2026: the flat 10% corporate tax, the 5% dividend tax, VAT, and what non-residents should plan for.
Current as of 23 September 2026. General information, not tax advice. Bulgaria joined the eurozone on 1 January 2026, so amounts are in euro (€1 = 1.95583 BGN).
At a glance:
| Tax | Rate 2026 |
|---|---|
| Corporate income tax | 10% flat |
| Personal income tax | 10% flat |
| Dividend tax | **5%**¹ |
| VAT (standard / reduced) | **20% / 9%**² |
| VAT registration threshold | €51,130 (calendar-year turnover) |
¹ The first draft of the 2026 budget proposed 10%, but that was dropped. The rate for 2026 is 5%. ² The 9% rate now covers only a few items, mainly accommodation. Restaurant and catering services have been taxed at 20% since 1 January 2025.
A 10% flat corporate tax
Company profits (EOOD, OOD, AD) are taxed at a flat 10% corporate tax. There are no progressive brackets, so the rate is the same whatever the size of the profit. It is one of the lowest corporate tax rates in the EU; only Hungary’s 9% is lower.
10% flat personal income tax
Personal income is also taxed at a flat 10%. For an owner-manager, this combination of low corporate tax and low personal tax is what makes Bulgaria attractive.
Dividend tax: 5%
When profit is distributed to the owner, a 5% final dividend tax applies.
Note: the first draft of the 2026 budget proposed raising the dividend tax from 5% to 10%. That proposal was dropped, and the 2026 State Budget Act (State Gazette No. 69 of 31 July 2026) does not change the rate. Dividends distributed in 2026 are taxed at 5%.
A worked example
For a company with €50,000 taxable profit:
- Corporate tax (10%): €5,000
- Profit after tax: €45,000
- Dividend tax (5%): €2,250
- Net to the owner: €42,750
That is an effective total tax of roughly 14.5% from profit to the owner’s pocket, which is very competitive within the EU.
A second worked example: owner who takes a salary
Suppose the owner-manager also draws a salary instead of taking everything as dividends. A salary and the employer’s contributions on it are deductible business expenses, so they reduce taxable profit. The salary itself bears social contributions and 10% personal income tax. A simplified picture on €60,000 profit before any salary:
- Owner draws a €20,000 gross salary. The employee’s contributions (13.78%) are about €2,756, and income tax is 10% of the salary after those contributions, about €1,724. The owner nets about €15,520.
- The company pays the employer’s contributions (18.92%), about €3,784, which also reduce its profit.
- Remaining taxable profit: €60,000 − €20,000 − €3,784 = €36,216, so corporate tax (10%) is about €3,622.
- Distributing the €32,594 after-tax profit as a dividend brings dividend tax (5%) of about €1,630.
In total the owner keeps about €46,480, against €51,300 if the whole €60,000 were taken as a dividend. The difference buys pension, health and sickness cover. The salary route adds payroll obligations, and the right mix between salary and dividend depends on your situation, so check it with an accountant. Model your own numbers with the Bulgaria tax calculator.
VAT
The standard VAT rate is 20%, with a reduced 9% for a short list of items such as accommodation. Mandatory VAT registration applies above €51,130 of taxable turnover (from 2026, on a calendar-year basis). Cross-border supplies of services within the EU can trigger registration regardless of turnover. See VAT registration in Bulgaria.
Tax obligations and the annual cycle
The 10% headline rate is simple, but compliance has a rhythm. A Bulgarian company typically deals with:
- Monthly VAT returns once registered (plus purchase and sales ledgers).
- Annual corporate income tax return, filed and paid by 30 June of the following year.
- Annual financial statements filed with the Commercial Register.
- Payroll and social contributions if there are salaried staff or an owner-manager drawing pay.
Late returns bring penalties and interest that quickly erode the low rate, which is why most owners hand these filings to local accounting support.
Edge cases worth knowing
- The dropped dividend tax increase. Older articles still mention a 10% dividend tax for 2026. It was never adopted; the rate is 5%.
- Withholding tax to non-resident shareholders. Dividends paid abroad may interact with double-tax treaties and EU directives, so the effective rate can differ from the headline 5%. Dividends to companies in most EU/EEA states are not taxed in Bulgaria.
- Holding structures. A foreign parent owning a Bulgarian EOOD is common and fully allowed, and treaty relief may reduce tax on outbound dividends.
- Loss carry-forward. Tax losses can be carried forward against the profits of the next five years, which smooths the effective rate over time.
Common mistakes
- Assuming the 10% is the whole story. Profit-to-pocket also includes the 5% dividend tax, so budget for both.
- Relying on outdated dividend figures. The 10% proposal was dropped; don’t over-withhold on distributions made in 2026.
- Missing the VAT threshold timing. From 2026 it’s a calendar-year basis at €51,130. Track turnover from 1 January, not on a rolling window.
- Neglecting filings. The rate is low, but late returns bring penalties that wipe out the saving.
Frequently asked questions
What is Bulgaria’s corporate tax rate in 2026? A flat 10% on company profit, one of the lowest in the EU.
How much is dividend tax? 5% final tax on distributions. A rise to 10% was proposed in the first draft of the 2026 budget but dropped.
What is the effective total tax from profit to the owner? Roughly 14.5% (10% corporate tax plus 5% on the after-tax distribution).
Is personal income also 10%? Yes, a 10% flat personal income tax.
When must I register for VAT? Above €51,130 of taxable turnover (calendar-year basis), or earlier for certain EU cross-border supplies.
Why non-residents choose Bulgaria
The taxes are low and predictable: 10% corporate, 10% personal and 5% on dividends. Bulgaria has been in the eurozone since 2026 (see Bulgaria and the euro), so euro business carries no currency risk, and a Bulgarian company has full access to the EU market and VAT system. Setting one up is inexpensive, with a minimum capital of €1.
To set one up, see company formation in Bulgaria; we handle the whole process remotely. You can run the numbers first with the Bulgaria tax calculator.