Bulgarian Tax Residency: the 183-Day Rule and the 10% Flat Tax

The four tests that make you a Bulgarian tax resident

Most people who relocate to Bulgaria arrive with a number in their head: 10%. It is the lowest flat personal income tax rate in the EU, paired with a 10% corporate tax and a 5% dividend tax, and it is the reason a lot of founders move a company and themselves here at the same time. But the 10% only applies to your worldwide income once you are a Bulgarian tax resident, and that status is not something you elect. It is a factual test in the law.

The rules sit in Art. 4 of the Personal Income Taxes Act (ЗДДФЛ), and the National Revenue Agency (NRA, the Bulgarian tax authority) sums them up as four alternative tests. Meeting any one of them makes you resident:

• you have a permanent address in Bulgaria;
• you spend more than 183 days on Bulgarian territory in any 12-month period;
• you were sent abroad by the Bulgarian state, its bodies or organisations, or by Bulgarian enterprises (this also covers family members);
• your centre of vital interests is in Bulgaria.

Anyone who fails all four is a non-resident individual under Art. 5. Citizenship appears nowhere in the test. A Bulgarian passport holder living in Dubai can be a non-resident, and an American who moves to Sofia in February can be a full Bulgarian tax resident for that same year. Your passport does not answer the question, and neither does your residence permit.

The 183-day rule, counted properly

Everyone remembers this test and almost everyone counts it wrong. The statute says more than 183 days in any 12-month period, not per calendar year. The window rolls: it can open in May and close the following April.

Once you cross the threshold, you are treated as resident for the year in which your stay exceeded 183 days. Cross it in September and you are a resident for that entire year, not from September onward. That retroactivity is the part that catches new arrivals: income you earned in February, before you had any connection to Bulgaria, falls into the Bulgarian net once the count tips over in the autumn.

Two details the NRA states explicitly:

• Your day of arrival and day of departure each count separately as days of presence. A Friday-to-Sunday trip is three days, not one.
• Time spent in Bulgaria solely for education or medical treatment does not count as presence. A semester at a Bulgarian university or a long course of treatment will not, on its own, make you resident.

If you are deliberately building a residency case, keep the paperwork as you go: boarding passes, entry stamps, a lease, utility bills, card transactions with Bulgarian dates on them. If you are deliberately staying under the threshold, keep the same records. Either way, when a tax authority questions your count, you are the one who has to prove it.

Permanent address and centre of vital interests

The day count gets the attention, but the other two tests are what decide close cases.

Permanent address means a registered address in a Bulgarian municipality's population register. It does not require you to actually live there. For foreigners this usually follows from getting a residence permit and registering an address, so it is easy to trip the test without spending 183 days anywhere near the country.

The law has an explicit escape hatch. Art. 4(5) ЗДДФЛ: a person who has a permanent address in Bulgaria but whose centre of vital interests is outside the country is not a Bulgarian tax resident. Registration on paper loses to where your life actually is.

So what is a centre of vital interests? The statute gives no formula, only a set of circumstances weighed together: your family, your property, the place from which you carry out employment, professional or business activity, and the place from which you manage your assets. This is a substance test, which cuts both ways. It is the test that lets a genuine relocation succeed even in a year with fewer than 183 days, and the test that a tax authority in your old country will use to argue you never really left. If your spouse and children stayed behind, expect that argument.

What residency actually costs: 10% on worldwide income

The consequence is short and consequential:

• Residents are taxed on income from all sources, in Bulgaria and abroad (Art. 6 ЗДДФЛ).
• Non-residents are taxed only on Bulgarian-source income (Art. 7 ЗДДФЛ).

The rate on the general annual tax base is 10%, flat, with no brackets and no tax-free allowance (Art. 48(1) ЗДДФЛ). Registered sole traders (ЕТ) pay 15% instead. Dividends sit outside the general base and carry a 5% final tax on the gross amount (Art. 38 and Art. 46(3) ЗДДФЛ), including dividends from foreign companies, which a resident self-assesses and reports in Appendix 8 of the annual return.

Put the three numbers together and you get the arithmetic that draws founders here. Profit inside a Bulgarian company is taxed at 10% corporate tax (Art. 20 of the Corporate Income Taxes Act, ЗКПО). Distributing what is left costs 5%. That is roughly a 15% total burden on money moved from company profit into your own pocket, and 10% flat on everything else you earn anywhere in the world. There is no non-dom regime, no remittance basis, and no holiday period: residency means worldwide income from day one, at 10%.

The filing side is modest. The annual return under Art. 50 ЗДДФЛ is due between 10 January and 30 April of the following year, or 1 March to 30 June if you are a sole trader or farmer. Social security is a separate question decided by a separate rulebook (within the EU, Regulation (EC) No 883/2004), so do not assume your tax answer and your contributions answer land in the same country.

When two countries both claim you

Dual residency is common in a relocation year, and it is resolved by treaty rather than by argument. Bulgaria has more than 70 double tax treaties in force, and under Art. 75 ЗДДФЛ a treaty takes precedence over domestic law. A standard treaty runs a tie-breaker in order: where you have a permanent home available to you, then where your centre of vital interests is, then where you habitually stay, then nationality, and if all of that is inconclusive the two tax administrations settle it between themselves. Where no treaty exists, Art. 76 ЗДДФЛ gives you a credit for foreign tax paid, capped at the Bulgarian tax on the same income. To claim treaty benefits with your former country's tax office you will need a Bulgarian certificate of tax residency from the NRA: application form Окд-273, no state fee, issued within 7 days by your competent territorial NRA office (14 days if you file at a different one). Ask for it early. It is the single document your old jurisdiction will want to see.

Your company's residency is not your residency

This is where founders most often get it backwards, in both directions. Company tax residency and personal tax residency are two separate questions with two separate answers.

An EOOD or OOD incorporated under Bulgarian law is a Bulgarian tax resident company under Art. 3 ЗКПО, taxed on its worldwide profits at 10%, regardless of where its owner lives. Registering a Bulgarian company does not make you a Bulgarian tax resident, and moving abroad does not make your Bulgarian company foreign. Watch the other edge too: if you run the company from a country where you are personally resident, that country may claim the company has a permanent establishment or is managed from there. A Bulgarian company managed from a high-tax country is not the structure you thought you bought.

How the profit reaches you depends on your personal status:

• As a Bulgarian resident individual, your dividend carries a 5% final tax, withheld and paid by the company (Art. 38 and Art. 46(3) ЗДДФЛ). Nothing further is due.
• As a non-resident individual, the dividend is still Bulgarian-source income and still carries the same 5%. The difference is that your country of residence may tax it again, with the treaty deciding how much relief you get for the Bulgarian 5%.
• If the shareholder is a non-resident company, a 5% withholding tax applies under Art. 194 ЗКПО, with an exemption where the recipient is an EU parent company under Directive 2011/96/EU.

So the company side is the predictable part. Your own residency is the variable, and it can flip because of one extra summer.

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How FreeMe.bg helps

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