Dividend tax in Bulgaria: 5%
Dividends and liquidation shares in Bulgaria are taxed at 5%, withheld at source under Article 194 of the Corporate Income Tax Act (NRA withholding tax page, checked 23 August 2026). There is, however, one significant case in which no withholding happens at all — and it is the case most people overlook.
Companies and taxes · Last reviewed: 2026-08-23
The rate is 5%, but not every distribution is withheld on
Article 194 taxes dividends and liquidation shares at 5%. The NRA states a clear exception: where a Bulgarian company distributes profit to another Bulgarian company, or to a company resident in the European Union or the European Economic Area, no obligation to withhold and remit dividend tax arises. This is Bulgaria's implementation of the parent-subsidiary regime, designed so that the same profit is not taxed a second time when it crosses an internal EU border.
In practice that means structure has a cash value. Paying profit from a Sofia ЕООД straight to an individual outside the EU is not the same as routing it through an EU company first. Work the difference out before the structure is built; rebuilding it later always costs more.
The combined burden is 14.5%, not 10%
„Tax in Bulgaria is 10%“ describes only the first layer. Profit bears 10% corporate tax; the remainder, once distributed, bears a further 5%. On 100 units of profit that is 10 units of corporate tax plus 5% of the remaining 90, or 4.5 units, for 14.5 units in total. That figure is arithmetic drawn from two verified rates — it is not a separate statutory rate.
| Layer | Rate | Basis / note |
|---|---|---|
| Company profit | 10% | corporate income tax (ЗКПО) |
| Distributed dividend and liquidation share | 5% | withholding tax, Art. 194 ЗКПО |
| Distribution to a Bulgarian or EU/EEA-resident company | no withholding | NRA: no obligation to withhold arises |
| Other income under Art. 195 ЗКПО | 10% | interest, royalties, certain service fees |
When the tax is due
The payer withholds — the company, not the shareholder, declares and remits. According to the NRA the Article 194 tax is paid by the end of the month following the quarter in which the decision to distribute the dividend or liquidation share was taken. The trigger is therefore the date of the resolution, not the date the money reaches the shareholder's account. Companies that resolve in one quarter and pay months later turn that gap into late-payment interest.
Dividend, salary and management remuneration are not interchangeable
A dividend is not the only way money leaves a company, and each route carries a different load. A dividend is a distribution of profit: it comes after corporate tax, attracts no social contributions, and bears the 5%. Remuneration under a management contract is deductible for the company but attracts income tax and contributions. Labelling every payment a dividend because the rate looks low invites reclassification on audit; the paperwork has to match what the payment actually is.
- Dividends may only be distributed on the basis of adopted annual financial statements and a properly taken shareholders' resolution.
- No distribution is permitted where there is a loss or where statutory reserves have not been set aside.
- For an individual shareholder the rate is also 5% and the tax is final.
- For distributions abroad a double taxation treaty may set a lower rate, but treaty relief is never automatic.
- Pay through the bank, in the amount the resolution states.
Confirm the rate and the exceptions officially
This is not legal or financial advice
Frequently asked questions
What is the dividend tax rate in Bulgaria?
5% withheld at source under Art. 194 ЗКПО; no withholding applies to distributions to a Bulgarian company or to an EU/EEA-resident company.
What is the total tax on distributed profit?
On 100 units of profit: 10 units of corporate tax plus 4.5 units of dividend tax, so 14.5 units in total.
When must the tax be paid?
By the end of the month following the quarter in which the distribution decision was taken.
Sources
The information on this page is based on the official sources listed below. Legislation changes — open the links and verify the current position.
- Национална агенция за приходите — Данък, удържан при източника (ЗКПО чл. 194–195) — https://nra.bg/wps/portal/nra-en/taxes.en/witholding.tax.en/withholding.tax2.en · 2026-08-23
- Национална агенция за приходите — Withholding taxes (обзорна страница) — https://old.nra.bg/en/page?id=520 · 2026-08-23
- Министерство на икономиката и индустрията — Разпределение на печалбата — https://www.mi.government.bg/en/general/razpredelenie-na-pechalbata/ · 2026-08-23
- Европейска комисия — Директива за дружествата майки и дъщерните дружества — https://taxation-customs.ec.europa.eu/taxation/business-taxation/parent-subsidiary-directive_en · 2026-08-23
- Lex.bg — Закон за корпоративното подоходно облагане (ЗКПО) — https://lex.bg/laws/ldoc/2135540562 · 2026-08-23
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