Understanding Tax Residency in Bulgaria

Tax residency determines where an individual or company is obligated to pay taxes, often based on residency duration and connections to a country.

In Bulgaria, tax residency is established if:

• An individual stays more than 183 days within a year in Bulgaria.
• Economic connections exist, such as owning property or having family in Bulgaria.
• The individual’s primary interests, like business operations or bank accounts, are in Bulgaria.

How to obtain Bulgarian Tax Residency

Gaining tax residency in Bulgaria involves specific procedures. Legal assistance can simplify the process. This residency is essential for businesses and individuals to utilize Bulgaria’s double taxation agreements. The Tax Residence Certificate from Bulgaria’s National Revenue Agency confirms tax residency status and is vital for claiming tax benefits under Double Taxation Treaties.

Limitations and Special Considerations

The effectiveness of Bulgarian tax residency can vary by nationality. For example, Italian citizens might still face taxation in Italy despite having a Bulgarian tax residency certificate. This residency is particularly beneficial for incomes sourced outside Italy.

Retroactive Tax Residency

Bulgarian tax residency can be applied for retroactively. This means that if you met the necessary conditions in 2016, you can still apply and obtain Bulgarian tax residency for that year. We encourage applicants to apply for previous periods as soon as possible to avoid potential issues with their home country tax authorities.

If you are unsure whether you met the tax residency conditions for previous periods, we can analyse your situation and assist you in meeting the criteria.

Difference Between Tax Residency and Residency Card

A Tax Residency Certificate differs from a Residency Visa. The former is for those eligible under Bulgaria’s income double taxation avoidance agreements, while the latter is a permit for foreigners to stay in Bulgaria for specific purposes. It’s important to note that while possessing a Residency Card is a necessary step towards achieving tax residency status, the card itself doesn’t automatically confer the right to be taxed in Bulgaria. The Residency Card is essentially a prerequisite for tax residency, but it’s the Tax Residency Certificate that ultimately determines your tax obligations in the country.

Process Duration and Becoming a Tax Resident

Obtaining a tax residency certificate in Bulgaria involves a processing time of about one month from the submission of the application. It’s essential to understand that Bulgarian tax residency is not automatically granted. Merely spending an extended period in Bulgaria does not guarantee tax residency status. Proactive action is required, as you must formally apply to be considered a tax resident.

Is Tax Residency Status Granted Once or Renewable Annually?

Tax residency in Bulgaria is determined on an annual basis, necessitating a regular assessment and renewal of your status each year. The tax residency status covers the entire fiscal year regardless of when the application is submitted. For example, a tax residency application submitted in November 2024 will be approved in December 2024, and the residency status will be valid from January 1st to December 31st, 2024.

What is Your Process?

Our process for obtaining Bulgarian tax residency may differ based on your personal circumstances. You will need to visit Bulgaria for a week to prepare the necessary documentation. Our process requires that you have a business or freelancer registration in Bulgaria and that your accounting is managed by Advocate Markov’s team.

What are Your Service Fees?

Service fees vary depending on the specific preconditions required to secure tax residency. Based on your progress and specific needs, our tax residency assistance fees may range from EUR 500 to EUR 3,500.

By following this process, you can efficiently secure Bulgarian tax residency and enjoy the associated benefits. For more detailed information tailored to your situation, please contact us for a personalized consultation.

Advantages of Bulgarian Tax Residency

One of the primary benefits of becoming a tax resident in Bulgaria is the access to some of the most favorable tax rates within the European Union. This aspect alone positions Bulgaria as a highly appealing location for those seeking tax residency. As a tax resident in Bulgaria, you are subject to taxation on your global income under Bulgaria’s tax regime.

However, it’s important to be aware that certain types of income are taxed based on their source. For instance, rental income generated from a property located in your home country would not be subject to taxation in Bulgaria. This distinction is crucial for understanding the full scope of tax implications as a Bulgarian tax resident.

Certified Copies of Tax residency certificate

If you have lost your tax residency certificate or need additional copies that were not ordered during your initial Bulgaria fiscal residency application, you can easily request an apostilled tax residency certificate.

Company Tax residency and Place of Management

For more information on Bulgarian taxation and tax residency, please feel free to contact our team.