Bulgaria's personal income tax: a flat 10%

Companies and taxes · Last reviewed: 2026-08-23

One rate, two different ways of building the base

The Personal Income Tax Act (ЗДДФЛ) applies 10% to the annual tax base. The rate is single, but the base is assembled differently by income type. For employees the base is gross pay less the employee's own mandatory social and health contributions, and the employer withholds monthly at source. For freelancers and for rental income, statutory recognised expenses come off first, then contributions, and only then does the same 10% apply.

This is why arguing about whether 10% is high or low misses the point. For an employee the heavy item is not the tax but the contributions; tax lands on what remains. For a self-employed person, statutory expenses can shrink the base substantially. The same gross figure produces a very different net result depending on how you are engaged.

Employees usually file nothing

Someone with a single employer and no other income has tax withheld every month and the annual reconciliation done by that employer; as a rule no annual return is required. The filing duty appears when there were several employers in the year, when there is income outside employment — rent, freelance work, capital gains, foreign income — or when the taxpayer wants to claim reliefs.

The calendar and the 5% discount

Under Article 50 of the Act the annual tax return is filed between 10 January and 30 April of the year following the year the income was earned. A taxpayer who files electronically by 31 March and who, at the moment of filing, has no public liabilities subject to enforced collection may take a 5% discount on the tax due, capped at roughly €256. That cap is published in the national currency; the euro figure here was calculated at the official fixed rate. Persons carrying on business as traders, sole traders included, file on a different window: 1 March to 30 June.

Returns are filed electronically with a personal identification code (ПИК) or a qualified electronic signature. The ПИК is issued free at any NRA office and is used well beyond the return — for checking liabilities, insurance records and more. It is one of the first administrative steps for anyone who will earn income in Bulgaria.

Resident or not — the scope of taxable income turns on this

The second question that decides what the 10% bites on is tax residence. A resident individual is taxed on worldwide income; a non-resident only on Bulgarian-source income. Individuals treated as residents of an EU or EEA state are given a statutory option to have certain final taxes recalculated, exercised by filing the annual return.

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