Bulgaria Corporate Tax Guide 2026: the 10% Flat Tax Explained
Bulgaria is one of the most tax-efficient jurisdictions in the European Union. Here is how its 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 2026 — verify changes. 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% |
| VAT registration threshold | €51,130 (calendar-year turnover) |
¹ A rise to 10% was proposed in the 2026 draft budget but is not enacted as of writing.
A 10% flat corporate tax
Company profits (EOOD, OOD, AD) are taxed at a flat 10% corporate tax. There are no progressive brackets — the rate is the same regardless of profit size. This is one of the lowest corporate tax rates in the EU.
10% flat personal income tax
Personal income is also taxed at a flat 10%. For an owner-manager, this combination — low corporate tax plus 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 2026 draft budget proposes raising the dividend tax from 5% to 10%. As of 31 May 2026 this is not yet enacted. Always check the current rate at the time of distribution.
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 — 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. Salaries are a deductible business expense, so they reduce taxable profit — but they are subject to 10% personal income tax plus social contributions. A simplified picture on €60,000 profit before any salary:
- Owner draws €20,000 gross salary → personal income tax (10%): €2,000 (plus social contributions, which also build pension/health rights).
- Remaining taxable profit: €40,000 → corporate tax (10%): €4,000.
- Distribute the €36,000 after-tax profit as dividend → dividend tax (5%): €1,800.
The salary route adds payroll obligations but converts profit into a deductible cost and builds social security entitlements. The right mix between salary and dividend depends on your situation — a point worth checking with an experienced accountant. Model your own numbers with the Bulgaria tax calculator.
VAT
The standard VAT rate is 20%, with a reduced 9% for certain categories. 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, with the 10% tax due after year-end.
- Annual financial statements filed with the Commercial Register.
- Payroll and social contributions if there are salaried staff or an owner-manager drawing pay.
Staying current with these is what keeps the low rate genuinely low — penalties and interest erode the advantage quickly. This is where local accounting support pays for itself.
Edge cases worth knowing
- Proposed dividend tax increase. The 2026 draft budget floated raising the 5% dividend tax to 10%. It is not enacted as of writing — always confirm the rate in force at the moment you distribute profit.
- Withholding tax to non-resident shareholders. Dividends paid abroad may interact with double-tax treaties and EU directives; the effective rate can differ from the headline 5%.
- Holding structures. A foreign parent owning a Bulgarian EOOD is common and fully allowed; treaty relief may reduce tax on outbound dividends.
- Loss carry-forward. Tax losses can generally be carried forward against future profits, smoothing the effective rate over time.
Common mistakes
- Assuming the 10% is the whole story. Profit-to-pocket also includes the 5% dividend tax — budget for both.
- Treating the proposed 10% dividend rate as already law. It is not enacted; don’t over-withhold based on a proposal.
- 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 for 2026 but is not enacted.
What is the effective total tax from profit to the owner? Roughly 14.5% (10% corporate + 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
- Low, predictable taxes — 10% corporate, 10% personal, 5% dividend.
- Eurozone member since 2026 — no currency risk. See Bulgaria and the euro.
- Full EU market access and VAT system.
- Low setup cost and symbolic minimum capital (from ~€1).
Want to base your company here? See company formation in Bulgaria — we handle the whole process remotely — and run the numbers first with the Bulgaria tax calculator.