Few rules are quoted as often, and misunderstood as often, as the 183-day rule. The popular version goes: spend fewer than 183 days a year in Germany and you no longer pay tax there. That is wrong. The 183 days appear in two quite different places, and where you are taxable is decided by your home, your family and the centre of your life.
This article explains the four concepts that actually count when moving from Germany to Bulgaria: unlimited and limited tax liability, residence under the double taxation treaty, and the extended limited tax liability. Position as of September 2026. The German side is not a substitute for advice from a German tax adviser; we describe it so you ask the right questions, and advise on the Bulgarian side ourselves.
Unlimited tax liability: the home decides, not the calendar
You are subject to unlimited tax liability in Germany if you have a residence or your habitual abode there (section 1 of the Income Tax Act). Unlimited means on your worldwide income.
- A residence (section 8 of the Fiscal Code) is a dwelling you keep and can use at any time. The number of days is irrelevant. Someone who keeps their owner-occupied flat in Germany and has the key still has a residence there, even if they spend the whole year in Varna. A room at your parents’ that is always available can be enough.
- A habitual abode (section 9 of the Fiscal Code) exists if you stay in Germany continuously for more than six months. This is the one genuine half-year rule in German law, and it works in one direction only: it can create tax liability, but falling below it does not end that liability as long as a dwelling remains.
Deregistering at the residents’ registration office is evidence, no more. The tax office asks about the dwelling, the spouse and children, the workplace, the doctor, the sports club. A move that is meant to survive an audit gives up the German dwelling or lets it long-term to third parties.
Limited tax liability: what stays in Germany
Someone with neither a residence nor a habitual abode in Germany is only subject to limited tax liability there (section 1(4) of the Income Tax Act), on income with a German source: rent from German property, profits of a German permanent establishment, salary for work performed in Germany, dividends of German companies. Worldwide income no longer interests the German tax office; the basic allowance and joint assessment are generally unavailable.
When Bulgaria treats you as resident
Bulgaria defines residence in article 4 of the Personal Income Tax Act (ЗДДФЛ). You are resident if you meet any one of the following:
- you have a permanent address in Bulgaria,
- you are present in Bulgaria for more than 183 days in any twelve-month period, counting the day of arrival and the day of departure, or
- your centre of vital interests is in Bulgaria: family, home, work, property.
This is the first place where the 183 days genuinely appear. The permanent address alone is not enough, though: someone who has one but demonstrably lives their life elsewhere is not resident. Conversely, the centre of vital interests suffices even without 183 days.
As a resident you pay Bulgarian tax on your worldwide income at a flat 10%, and on dividends at 5%. The tax authority НАП issues a certificate of tax residence on request, which you present to the German tax office and to German banks so that withholding taxes are limited to the treaty rate.
The double taxation treaty resolves a dual residence
The treaty between Germany and Bulgaria, signed on 25 January 2010 and applicable since 1 January 2011, deals with the case where both states regard you as resident under their own law. Article 4 then tests, in order:
- Where do you have a permanent home? In one state only: you are resident there.
- In both? Then the centre of vital interests decides: the closer personal and economic ties. Spouse and children weigh heavily.
- Unclear? Then the habitual abode, meaning where you spend most of your time.
- Still unclear? Then nationality, and finally an agreement between the two tax administrations.
Whoever is resident in Bulgaria after this test counts as non-resident in Germany for treaty purposes, even if they would still be subject to unlimited liability under section 1 of the Income Tax Act. That very switch, incidentally, also triggers the German exit tax if you hold GmbH shares.
The treaty then allocates the income. The rules that matter most to people relocating:
- Real estate is taxed where it is located. German rental income stays German.
- Business profits are taxed where the business is actually managed. A Bulgarian EOOD whose manager works from Germany has a German permanent establishment.
- Dividends may be taxed in the source state at no more than 15%, or 5% where a company holds at least 10%. Interest and royalties at no more than 5%.
- Salary is taxed in the state where the work is performed. Here is the second genuine 183-day rule: a Bulgarian resident who works temporarily in Germany stays taxable in Bulgaria if they are in Germany for no more than 183 days in the calendar year, the employer is not German-resident and no German permanent establishment bears the salary. The rule is about working days, not about residence.
Extended limited tax liability: the rule for low-tax countries
One German provision targets moves to countries like Bulgaria specifically: the extended limited tax liability under section 2 of the Foreign Tax Act. It applies if you
- are a German national,
- were subject to unlimited tax liability for at least five of the ten years before moving,
- move to a low-tax country, which Bulgaria at 10% unambiguously is under the statutory definition, and
- keep substantial economic interests in Germany: a shareholding of at least 25% in a German corporation or a German business, German income above 30% of your total income or above 62,000 euro a year, or German assets above 30% of your total assets or above 154,000 euro.
You then remain taxable in Germany for ten years after the year of departure on all income that is not foreign income, at the progressive rate with your worldwide income counted for the rate. A de minimis threshold protects small cases: the rule applies only if that income exceeds 16,500 euro a year.
In practice the double taxation treaty limits the reach considerably, because Germany may only tax what the treaty allocates to it. But the provision extends the duty to file German returns, and it makes a half-hearted move expensive. Anyone who keeps the German GmbH and continues running it from Bulgaria very probably has both problems: the extended limited tax liability and a German permanent establishment.
The clean move in five points
- Give up the German dwelling or let it long-term. No key, no dwelling available at any time.
- Move the centre of your life to Bulgaria: family, lease or property, registration with the migration authority, bank account, doctor, daily life.
- Apply for the certificate of tax residence from НАП as soon as the conditions are met, and present it to German payers.
- Sort out German shareholdings before leaving, because of the exit tax and the 25% threshold of section 2 AStG.
- Actually manage the company from Bulgaria. Contracts, decisions, office and bookkeeping here. That is the condition for the 10% applying at all.
The whole road from the move to ongoing bookkeeping is described in our guide to company formation in Bulgaria for people relocating. Whether the move adds up for you personally is something we are happy to discuss in advance: get in touch.