Correction — September 2026. This article, published in February 2025, presented several proposals as though they were settled law: lower corporate rates for small companies, a tax amnesty, progressive income tax and a carbon tax. None of them was enacted. Bulgaria’s tax rates have not changed. The text below has been replaced with what the law actually does say, and with the changes that did arrive.
Bulgaria’s headline tax rates have been stable for years, and every autumn brings a fresh crop of proposals that mostly do not survive the budget. If you run a company here, the useful skill is telling the two apart.
What has not changed
- Corporate income tax: 10% flat, for companies of every size. There is no reduced band for small firms.
- Personal income tax: 10% flat. No progressive scale exists and none has been legislated.
- Dividend withholding tax: 5%. The proposal to double it to 10% was tabled in November 2025 and dropped before the budget passed.
- Social security contribution rates: unchanged. The proposed increase of two percentage points was also dropped. The employee share is 13.78% and the employer share 18.52% plus the labour-accident contribution.
- VAT: 20% standard, 9% reduced for hotel accommodation, books and baby products. Restaurants returned to 20% on 1 January 2025 and a request to reverse that was refused in April 2026.
- There is no carbon tax on business, and no tax amnesty for old liabilities. The one thing in this area that is real is the EU carbon border mechanism, which entered its definitive phase on 1 January 2026 and affects importers of steel, aluminium, cement, fertiliser, electricity and hydrogen. It is an EU import scheme, not a Bulgarian tax on your profit.
What actually did change
- The euro replaced the lev on 1 January 2026 at the fixed rate of 1.95583. Accounts, invoices and tax returns for periods from that date are in euro.
- The VAT registration threshold is EUR 51,130, measured over the calendar year rather than any rolling twelve months, with seven days to apply once you cross it.
- A cross-border exemption for small businesses arrived on 1 January 2026: below EUR 100,000 of EU-wide turnover you can sell into other member states without registering there.
- The 2026 budget, adopted in July 2026, raised the maximum monthly insurable income to EUR 2,300 and the minimum for self-insured people to EUR 620.20, both from 1 August 2026.
- Two corporate reliefs took effect on 1 January 2026: an extra 25% deduction for research and development spending, and 50% annual depreciation for electric vehicles.
- Length of service will be counted in hours from 1 January 2027. Parliament approved the change in July 2026 and deferred it from the originally proposed 1 September 2026, so the existing rules run to 31 December 2026. It is a payroll-software matter for every employer.
- SAF-T reporting began in January 2026 for the largest companies only and reaches small and micro companies in 2029 and 2030.
How to prepare for a tax audit
The advice here does not change with the rumours. Keep your documents, file on time, reconcile your ledgers monthly rather than annually, and make sure the electronic records the revenue agency can see match your own. If an audit does come, what protects you is the paperwork behind each entry.
The tax calendar lists every filing date for the year, and our good to know ledger carries the current rates and thresholds. See also Tax Audits and Penalties: How to Prepare and Avoid Fines.