In 2023 tax rates and social security contributions in Bulgaria remain unchanged. However, the monthly expenses may increase due to the increase of the minimum wage and the minimum insurance thresholds which are different for each business and profession.
Here is a brief overview of 2023 tax and social security regime in Bulgaria:
The corporate tax rate remains at 10% in 2023.
The tax on dividends and liquidation shares remains at 5% in 2023.
Annual tax returns must be completed and submitted to the National Revenue Agency by no later than 30 June of the following year. The annual activity report shall be submitted together with the annual tax return. The taxable persons which did not carry out activity during the tax period shall not submit an annual tax return and annual activity report.
The companies shall pay the corporation tax for the 2022 on or before 30 June 2023.
INCOME TAX FOR INDIVIDUALS
From 1st of January 2023 the minimum monthly wage in Bulgaria is in the amount of 780 BGN (= 399 €).
Accordingly, the minimum hourly wage is 4.72 BGN (= 2.41 €), for normal duration of working time – 8 hours, 5 days a week.
The annual rate of the income tax for individual single taxpayers in Bulgaria also remains at 10% in 2023.
For income from employment relationships the employer is obliged to withhold monthly advance tax at the rate of 10% of the monthly tax base. Monthly tax base is determined, as the taxable income from employment, calculated for the respective month, is reduced by the withheld by the employer mandatory contributions, which are paid by the individual under the existing social legislation in Bulgaria. When during the respective month are made only partial payments for the current or for another month, the employer pays tax, determined on the gross amount of the partial payments.
The advance tax, which the employer is obliged to withhold, should be submitted by no later than 25th day of the current month following which the tax is withheld or partial payments are made.
VALUE ADDED TAX
The 2023 tax rate of VAT in Bulgaria remains 20% for all taxable supplies, unless explicitly indicated as zero-rated.
The reduced tax rate of 9% is applied to:
- supplies related to the provision of tourist accommodation services in hotels and similar establishments;
- supplies of books on physical carriers or carried out electronically or both (including textbooks, cognitive booklets and study sets, children’s picture, drawing and colouring books, music printed or in manuscript form), other than publications which are fully or mainly intended for advertising, and other than publications which are fully or mainly composed of video content or audio-music content;
- restaurant and catering services, consisting of supply of prepared or unprepared food. Restaurant and catering services consisting of supply of spirit drinks are excluded;
- food suitable for babies or for infants;
- napkins and napkin liners for babies;
- supply of single service to tourists, as well as excursions organised by tour operators and tourist agents with occasional bus transport of passengers;
- supply of sport facility use services.
The tax period for VAT reporting is one month and coincides with the calendar month. For each tax period, the companies submit a VAT return and accounting registers for VAT to the National Revenue Agency up to the 14th day of the month, following the tax period to which they relate.
In case of intra-Community supplies, supplies as an intermediary in a three partite operation or supply of services with location of performance on the territory of another Member State, together with the VAT return, the company submits and VIES-declaration for the purposes of international exchange of tax information.
For 2023 the amounts of social security contributions remains the same. They are as follows:
- Fund “Pensions” rate is 19.8% for employees, born prior to 1 January 1960 and 14,8 % for those born after 31 December 1959.
- Fund “Common Disease and Maternity” rate is 3.5 %.
- Fund “Unemployment” rate is 1 %.
- Fund “Health Insurance” rate is 8 %.
Moreover, employers are obliged to make for their own expense an additional social security contribution for the Industrial Accidents and Occupational Diseases Fund, which is within the range of 0,4% to 1,1% and which exact amount depends on the groups of main economic activities adopted in Bulgaria.
All persons born after the 31st day of December 1959 shall be compulsorily insured for a supplementary pension at a universal pension fund. The rate of supplementary compulsory retirement insurance is 5 %.
For 2023 thе maximum monthly amount of the contributory income in Bulgaria remains at 3 400 BGN (= 1 738,39 €).
Тhe minimum monthly amount of the contributory income for self-insured persons is 710 BGN (= 363 €).
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