Tax Guide for Investors in Bulgaria

This material summarises the main tax rules for individuals (Bulgarian tax residents) investing in different asset classes.

Please note: This material is for information purposes only and does not constitute accounting or legal advice. Tax legislation changes over time, and some specific cases require consultation with a tax expert or the National Revenue Agency (NRA).

1. Cryptocurrencies (Crypto Assets)

According to the NRA's established practice, income from the sale or exchange of cryptocurrencies is treated as income from the sale of financial assets (Art. 33 of the Personal Income Tax Act, PITA).

• When tax is due: A taxable event occurs upon a sale (conversion into fiat money — EUR, BGN, USD) or upon an exchange of one cryptocurrency for another (e.g. BTC for ETH). Merely holding (hodl) does not create a tax liability. No VAT is due on cryptocurrency trading. However, reaching the VAT registration threshold through trading in crypto assets triggers VAT registration and a monthly obligation to report turnover.
• Tax rate: 10% on the taxable base (the sum of realised gains minus the sum of realised losses during the year).
• Filing and payment deadline: From 10 January to 30 April of the year following the year in which the income was realised. To use the 5% discount on the tax due (capped at EUR 255.65 — the equivalent of BGN 500), the return must be filed electronically by 31 March and the tax paid in full by the same date.
• Where to declare (annual tax return under Art. 50): Annex No. 5 (Income from transfer of rights or property), Table 2 (Income from the sale of financial assets). Income code: 508.

NB! Important clarification: The NRA distinguishes between managing a personal portfolio and trading. The 10% tax applies in the general case. Where the activity is found to be trading (systematic and by occupation), the person files as equivalent to a sole trader and the tax is 15% — and social security contributions may also be due!

Tip: Losses from the sale of one cryptocurrency can be offset against gains from another cryptocurrency within the same calendar year. Losses from previous years cannot be carried forward. Losses from sales of other property — for example, a car — cannot be deducted either.

2. Capital Markets (Stocks, Bonds, ETFs)

The tax treatment depends on where the market (exchange) on which the instruments are traded is registered.

A. Trading on Regulated Markets in the EU and EEA

• Tax rate (gains): 0%. Income from the disposal of financial instruments on regulated markets in the EU/EEA is tax-exempt (Art. 13(1)(3) PITA and § 1(11) of the Supplementary Provisions of PITA).
• Filing period: 10 January – 30 April.
• Where to declare: Declaring tax-exempt income is not mandatory, but it can be done in Annex No. 13 to evidence the origin of funds. If the shares are held with a foreign broker, their ownership (without a sale) is reported in Annex No. 8 (Part I).

Note! For this exemption to apply, the market must be a regulated exchange market! The status of the market can be verified in the database on the ESMA website or with the Bulgarian Financial Supervision Commission (FSC).

Second note! The exemption from tax on gains applies only to the following instruments: shares, collective investment schemes (such as ETFs, index funds and contractual funds) and government securities.

B. Trading on Markets Outside the EU (e.g. USA — NYSE, NASDAQ)

• Tax rate (gains): 10% on the realised capital gain.
• Filing and payment deadline: 10 January – 30 April.
• Where to declare: Annex No. 5, Table 2 (code 508). Year-end holdings must be reported in Annex No. 8 (Part I).

NB! Important clarification: The NRA distinguishes between managing a personal portfolio and trading. The 10% tax applies in the general case. Where the activity is found to be trading (systematic and by occupation), the person files as equivalent to a sole trader and the tax is 15% — and social security contributions may also be due!

C. Dividends (from Abroad)

• Tax rate: 5%.
• Where to declare: Annex No. 8 (income from foreign sources).
• Double taxation (tax treaties): If withholding tax has already been deducted abroad (e.g. 15% in the USA with a completed W-8BEN form), you report this in Annex No. 8. Thanks to the double taxation treaties, you usually do not owe anything extra in Bulgaria, but you are still required to declare the income.

3. Derivatives, Forex and Contracts for Difference (CFDs)

These instruments are not considered to be acquired on a "regulated market", so gains from them do not benefit from the tax exemption.

• Tax rate: 10% on the annual net gain (gains minus losses from the same type of instruments).
• Filing and payment deadline: 10 January – 30 April.
• Where to declare: Annex No. 5, Table 2.

Holdings and open positions are not declared in Annex No. 8, because they are neither shares nor equity interests.

NB! Important clarification: The NRA distinguishes between managing a personal portfolio and trading. The 10% tax applies in the general case. Where the activity is found to be trading (systematic and by occupation), the person files as equivalent to a sole trader and the tax is 15% — and social security contributions may also be due!

4. Precious Metals (Gold, Silver)

A distinction must be made between physical metal and "paper" (exchange-traded) metal.

A. Physical Investment Gold and Silver

• VAT: Investment gold is exempt from VAT. For silver and platinum, 20% VAT is due on purchase.
• Tax on gains: Under PITA, income from the sale of movable property is tax-exempt (with some exceptions). However, the NRA may treat the systematic sale of investment gold as trading by occupation or as a sale of financial property (10% tax, Annex No. 5). For occasional transactions with personal assets, tax is usually not due. It matters greatly whether your profile is that of a trader, an investor managing a personal portfolio, or a person making an occasional transaction — this determines which of the three tax treatment regimes you fall into.
• Declaring ownership: There is no legal requirement for individuals to declare holdings of physical gold in the annual tax return.

B. "Paper" Gold (ETC / ETF)

• If you buy an exchange-traded commodity (ETC) that tracks the price of gold, the tax treatment is not identical to that of shares: you owe 10% tax regardless of whether the trading takes place on a European exchange or outside the EU. The reason: ETCs do not fall within the scope of a collective investment scheme under the applicable legislation. It is declared in the same way (Annex No. 5 / Annex No. 8).

5. Real Estate

Real estate generates three types of income: from sale and from rent — long-term rentals and holiday (short-term) rentals.

A. Sale of Real Estate

Tax-exempt sales (0% tax):

1. Sale of one residential property, if more than 3 years have passed between purchase and sale. (The potential VAT aspects are not covered here!)
2. Sale of up to two properties (of any kind), if more than 5 years have passed since their acquisition. (Again, VAT matters are outside the scope of this note!)
3. Properties acquired by inheritance (regardless of when they are sold).

• Taxable sales (10% tax): If you do not fall within the above cases. The taxable base is (sale price − purchase price), reduced by 10% statutory deemed expenses.
• Filing deadline: 10 January – 30 April of the following year.
• Where to declare: Annex No. 5, Table 1. Tax-exempt sales are not mandatory to declare, but they can be listed in Annex No. 13. Our recommendation is to include them, so that you avoid future disputes about the origin of your funds.

B. Renting Out (Long-Term)

• Tax rate: 9% effective tax. (The law provides for 10% on the rent reduced by 10% statutory deemed expenses for depreciation/repairs.)
• Advance tax: For the first 3 quarters, a return under Art. 55 is filed by the end of the month following the quarter, and advance tax is paid. For the 4th quarter no advance payment is made — it is settled with the annual return.
• Annual filing deadline: 10 January – 30 April.
• Where to declare (annual return): Annex No. 4 (Rental income).

Note on the "3 properties rule": The law contains no explicit rule that renting out 3 or more properties automatically makes you a trader. However, this is a serious pitfall in tax practice, and during audits the NRA often interprets it as an activity by occupation, which leads to the person being treated as equivalent to a sole trader (filing in Annex No. 2).

Addendum on holiday properties: Even renting out a single holiday property (Airbnb/Booking) is treated as an activity by occupation, unless the host is registered as a self-insured person and falls under the patent tax regime, which derogates from taxation under PITA.

C. Short-Term Rentals (Airbnb, Booking)

• VAT registration: Mandatory registration under Art. 97a of the VAT Act before starting the activity (because you receive services from a foreign platform). Monthly VAT returns are filed.
• Patent tax: Paid to the respective municipality per bed, if the property is categorised and the person is not registered under the general VAT regime. If patent tax is paid, the income is not subject to the general 10% tax under PITA.

6. Applicable Legislation

The tax rules and rates described above are governed mainly by the following acts:

• Personal Income Tax Act (PITA / ЗДДФЛ): Governs the taxation of income from shares, cryptocurrencies, dividends, sale and rental of property, as well as the deadlines for filing the annual tax return.
• Value Added Tax Act (VATA / ЗДДС): Governs the exemption of investment gold (Chapter 19), the taxation of silver, and the mandatory registration (under Art. 97a) when using platforms such as Airbnb.
• Local Taxes and Fees Act (ЗМДТ): Governs the patent tax for short-term accommodation (Airbnb, Booking).
• Tax and Social Security Procedure Code (ДОПК): Governs the procedures for declaring, payment, and potential inspections and audits by the NRA.
• Double Taxation Treaties (СИДДО): International treaties that determine how taxes withheld abroad are credited (e.g. on dividends from the USA).
• NRA guidelines and opinions: Important for the interpretation of newer asset classes (such as cryptocurrencies), for which there is no explicit statutory regulation.

This publication is for informational purposes only and does not constitute legal, tax, or investment advice.