Expat Tax Residency in Bulgaria

What determines Bulgarian tax residency?

Article 4 of the Income Taxes on Natural Persons Act (Zakon za Danachite varhu Dohodite na Fizicheskite Litsa, ZDDFL) establishes four independent triggers, any one of which is sufficient to make an individual a Bulgarian resident for tax purposes. The National Revenue Agency (Natsionalna Agentsiya za Prihodite, NAP/NRA) applies these criteria on a calendar-year basis. PwC's 2026 Bulgaria Worldwide Tax Summaries confirm that where a double-tax treaty (DTT) is in place, treaty tie-breaker rules prevail over domestic ZDDFL criteria. Bulgaria has DTTs with more than 70 countries.

What are the four residency tests?

The NRA applies the following four criteria under Article 4 ZDDFL, confirmed by PwC's 2026 Bulgaria individual residence summary:

The centre of vital interests test under Article 4(1)(4) ZDDFL was interpreted by the NRA and documented in the OECD's Bulgaria tax residency information sheet. Four factors guide the assessment: (1) where the individual's spouse or partner and children reside; (2) location of real estate and significant assets; (3) where employment or professional activity is performed; (4) from where investments and finances are managed. No single factor is determinative — the test asks which country has the stronger overall connection.

For the 183-day count, both the day of arrival and the day of departure from Bulgaria count toward the total, as confirmed by practitioner analysis citing NRA guidance. The threshold is strict: exactly 183 days does not satisfy the test; the 184th day triggers residency.

What income tax rate applies to Bulgarian residents?

Bulgarian tax residents pay a flat 10% personal income tax on worldwide income under Title II of the ZDDFL. There are no progressive brackets and no basic tax-free allowance for most income categories. This 10% rate is one of the lowest headline personal income tax rates in the European Union — matched only by Romania's flat 10% rate. PwC's 2026 Bulgaria individual taxes on personal income summary confirms: "A flat tax rate of 10% applies to all personal income, with some exceptions."

Non-residents are taxed only on Bulgarian-source income, also at a flat 10% (or at applicable DTT withholding rates on passive income).

Bulgaria adopted the euro on 1 January 2026, replacing the Bulgarian lev (BGN) at the official conversion rate of 1.95583. Tax returns for periods starting on or after 1 January 2026 must be filed in EUR. PwC's significant developments note confirms all outstanding public liabilities were converted at that rate.

How are dividends and investment income taxed?

Dividends paid by Bulgarian and foreign entities to Bulgarian resident individuals are subject to a 5% final withholding tax (WHT) under Article 38(1) ZDDFL, as confirmed by PwC's 2026 Bulgaria income determination summary. The 5% rate acts as a final settlement — dividend recipients do not include this income in their annual personal income tax return. Bulgaria's draft 2026 Budget Law proposed increasing the dividend WHT to 10%, but that proposal was not adopted following early parliamentary elections in April 2026. The 2025 budget was extended for 2026, leaving the 5% rate in force for the full 2026 tax year, as confirmed by Innovires Legal's 2026 dividend tax analysis.

Capital gains from disposals of shares of public companies traded on the Bulgarian Stock Exchange or on any regulated securities market in EU/EEA countries are exempt from personal income tax. This exemption was extended effective 1 January 2021 to include equivalent third-country stock exchanges and SME growth markets as defined in EU Directive 2014/65/EU, per PwC's 2026 Bulgaria income determination summary. Capital gains on unlisted shares or property (other than an owner-occupied primary residence held more than three years) are generally taxed at 10% as ordinary income.

What social security contributions apply?

Bulgaria levies mandatory social insurance contributions on employment income, split between employee and employer. The combined rate is approximately 32.7% to 33.4% of gross salary, with employees contributing 13.78% and employers contributing 18.92% to 19.62% depending on occupational risk category. Monthly contribution bases are capped — effective January 2026 the cap is 4,130 BGN (approximately EUR 2,112), meaning contributions cease above that monthly threshold. Taxravens' 2026 Bulgaria personal taxation summary notes the system covers pension (19% combined), health insurance (8% combined), general illness and maternity (3.5% combined), and unemployment (1% combined). The social security contribution structure is separate from the 10% flat personal income tax and not offset against it.

For comprehensive analysis of residency transition timing, foreign-income credit claims against Bulgarian tax, and centre-of-vital-interests documentation strategy, see the Bulgaria country overview. Engaging a licensed Bulgarian tax consultant registered with the Institute of Certified Public Accountants of Bulgaria (ICPA) or a member firm of one of the major international networks is strongly recommended for any individual planning to establish or terminate Bulgarian tax residency, given the interaction between domestic ZDDFL rules, applicable double-tax treaties, and the compliance obligations that arise upon becoming a worldwide-income taxpayer.