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BULGARIAN CORPORATE SERVICESACCOUNTING - BANKING - INCORPORATION - EU VAT - TAX PLANNING
If your company is big enough, it can afford to hire own accounting crew on board. But if you have some family business or other type of small enterprise – well, it looks like an overload to bring in a bookkeeper and pay additional salary for activity which can be shared to some outside professional.
So no matter if you run the best bakery in your neighborhood, grow vegetables and feed livestock for trade in a family farm or operate own small scale software company – you need accounting services. And since you can’t afford anyone full time for this job and no one in the firm have the expertise to do it, it is out of the question that your company have to outsource the work to someone who really knows to maintain order in documents and numbers.
Essential segment of any business such as bookkeeping and accounting is activity that has to be entrusted to experienced and highly prepared professionals. In Bulgaria these services can be performed by organizations known for their skill and good repute. Firms in this branch have strictly organized structure and can provide all the main types of accounting services for small, medium-sized and big companies. The majority of work is based on month by month activity so it has to be conducted and monitored by experts.
The most common types of accounting service in Bulgaria include monthly and annual close of accounts, VAT registration and VAT planning, payroll and keeping health and social security payments to public budget, tax planning, financial accounting and banking advice.
All taxes in Bulgaria is under the administration and monitoring by the National Revenue Agency (NRA) and there are two major types of taxes: direct taxes and indirect taxes.
Direct taxes include corporate tax, income tax of individuals and withholding tax.
The corporate income tax in Bulgaria is for 12-month period and it is flat tax of 10%. This tax is proclaimed by 31 of March of the following year of its appearing. National Revenue Agency has offices in each municipality which accepted the declaration form for their incomes. There is a possibility to submit the declaration form electronically. This tax is collected by each residential or foreign legal entity which has their business and economic activity on the territory of the country.
Income tax of individuals has to be paid for the previous year and every person who is a Bulgarian citizen and lives in the country more than 6 months and have incomes of activities in the country or abroad is obliged to pay a fixed tax of 10 %of his/her incomes.
The withholding tax mainly is referred to the “dividend tax”.
There are three types of banks: commercial banks, postal banks and international bank. Their interest rates are regulated by the National Bank of Bulgaria (NBB). On the site of the NBB you can find full list of the licensed banks in Bulgaria.
To open a bank account in Bulgaria you could be a resident or non-resident of the country, but having an account in the country could help you to make your life easier.
You need an identification document (national ID card or valid passport) and proof of address which will use for corresponding purposes. For the opening procedure you will not pay anything, but some banks are required a minimum deposit in lava or euro for activating the account.
The bank account could be open by third party on your name or of the name of the company in accordance with your desires, but in that case the bank needs a notary empowerment of your will. Also choose the credentials of the agency that you used to act on your behalf.
If you want to open a bank account on the name of your company, you need to show that company is in the registry and proof that the company is active at the time of applying for a bank account.
On the next step corporate applicant has to show list of the people who will represent the company or organization and how they are authorized.
According to the law in Bulgaria you mandatory need to have an account to receive or to pay some of taxes or make different payment.
You can open your bank account in BGN currency, but also in euro. You can also choose to use Internet banking, but with it you can check online the payment that you have been made.
When you chose a bank read very careful term and conditions, especially for any charges and fees.
„Low prices“ is a typical way to advertise Bulgaria to the tourists – the bait for the foreign visitors are cheap hotels and cheap restaurants and bars. „Low taxes“ is a typical way to advertise Bulgaria to the investors – and in fact the country have one of the lowest numbers in terms of both income and corporate taxes.
Let's start with the latter. Two words can describe corporate tax in Bulgaria – flat and low. All companies are subject to a tax rate of 10 percent. It is based on the profit of the company and the after-tax profit is allowed to be distributed as a dividend or it can be kept within the company. The corporate tax rate has one of the lowest levels in Europe – actually only Hungary cuts less from companies (9%) when we take a look at list of European Union countries. 10 percent is much lower than the rates in Belgium (33,99%), Germany (22,825-32,925), Greece (29%), Italy (27%) and Netherlands (25%) for example. Subjects of corporate taxation are both Bulgarian and foreign entities that conduct commercial activities, and also Bulgarian non-legal entities that generate profits on transactions as well as unincorporated companies in Bulgaria. There are exceptions in numbers of the rate – state budget-funded entities have reduced rate of 3 percent and 2 percent tax rate applies for municipal authorities. Tax withholding is also applied for companies.
Income tax is flat too – it is 10 percent no matter whether the annual income is 5 000 or 50 000 leva. Bulgarian income tax has the lowest rate in whole European Union – actually 10 percent looks like tiny cut compared to the levels of 40-55 in countries like Denmark, Germany, Italy, France, etc. Aforementioned have progressive tax system which was used in Bulgaria too but replaced by flat tax system more than 10 years ago. Most European countries also have personal allowance – there is a certain threshold of annual income and if the individual who receives less than that (for example – 5 963 Euros in France) pay less or no tax at all. There is no such thing in Bulgaria – all individuals pay income tax if they work or have other kind of profit.