Correction — September 2026. This article, published in January 2025, announced a package of reliefs that was never enacted: a 50% first-year corporate tax discount for new companies, extended grace periods for VAT registration and wider R&D deductions. None of it became law in 2025. Two genuine reliefs did arrive, a year later. The text below replaces the original.
There is no first-year discount on corporate tax in Bulgaria, and no grace period for VAT registration. What the country offers small companies instead is a low flat rate that applies from day one, plus a short list of reliefs that are real and worth claiming.
The reliefs that exist
- Research and development. Since 1 January 2026 a company may deduct an additional 25% of qualifying R&D spending, on top of the expense itself. Projects funded from public sources are excluded.
- Electric vehicles. Cars in category V acquired from 1 January 2026 may be depreciated at 50% a year, which brings the deduction forward substantially.
- No advance instalments for new companies. A newly incorporated company pays no corporate tax instalments in its year of incorporation or the following year. It settles the tax once, with the annual return. This is the closest thing to a start-up concession, and it is genuinely useful for cash flow.
- No instalments for small turnover either. A company pays no advance instalments at all where its net sales revenue in the year before the previous year was at or below EUR 153,387.56. Note the reference period: it is not last year’s figure.
- Personal reliefs that reach owner-managers, claimed in the annual personal return: children, mortgage interest for young families, donations, voluntary pension and health insurance, and non-cash payments.
The reliefs that do not
- No reduced corporate rate for micro-enterprises. The rate is 10% for everyone.
- No 50% first-year discount for new companies.
- No extended grace period for VAT registration. You have seven days from crossing the EUR 51,130 threshold, and that has not been relaxed.
- No tax amnesty for old liabilities.
Where the real saving is
For most small companies here the saving does not come from a special relief at all. It comes from the structure: a flat 10% on profit, 5% withholding when you take a dividend, and no instalments in the early years. Getting the salary-versus-dividend split right, and claiming the ordinary business expenses properly, is worth more than any of the schemes that circulate each January.
Compare the two routes with the company versus freelancer calculator, check what you can claim on the tax reliefs calculator, or talk to us about your own position.