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Corporate Tax in Bulgaria 2026 — ZKPO Guide for Businesses

Bulgarian corporate tax 2026: 10% flat rate under ZKPO, deductible expenses, dividend withholding, advance payments, loss carryforward. By Fakturka.bg.

Corporate Tax in Bulgaria 2026 — ZKPO Guide for Businesses

💶 Amounts shown in BGN first, then EUR. Bulgaria adopted the EUR on 1 January 2026 at fixed rate 1 EUR = 1.95583 BGN.

TL;DR:

  • Bulgaria has a 10% flat corporate income tax — among the lowest in the EU.
  • Tax base = accounting profit ± tax adjustments under the Corporate Income Tax Act (ZKPO).
  • Dividend withholding tax: 5% for residents and most non-residents (treaty rates may apply).
  • Quarterly advance corporate tax if previous-year profit exceeded 300,000 BGN (153,388 EUR).
  • Loss carryforward: 5 years (ZKPO Art. 70).
  • Annual return due 30 June (extended to 30 September if filed online).

Table of contents

  1. Why Bulgaria's corporate tax is competitive
  2. The 10% flat rate explained
  3. The taxable base — from accounting profit to tax base
  4. Common non-deductible expenses
  5. Dividend withholding tax
  6. Advance corporate tax payments
  7. Loss carryforward
  8. Tax incentives and reliefs
  9. Filing the annual return
  10. How Fakturka.bg helps with corporate tax
  11. Frequently asked questions (FAQ)
  12. Sources

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Why Bulgaria's corporate tax is competitive

Bulgaria's corporate income tax has been a flat 10% since 2007, and the regime has remained stable through every major political cycle. Combined with EU membership, low operating costs and a developed banking system, this makes Bulgaria a serious contender for:

  • Holding companies.
  • Software development and IT services.
  • Cross-border consulting.
  • E-commerce structures within the EU single market.

For comparison: Germany ~30% effective, France ~25%, Romania 16%, Hungary 9%, Ireland 12.5%. Bulgaria's 10% is the lowest standard rate in the EU together with Hungary.

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The 10% flat rate explained

Under the Corporate Income Tax Act (ZKPO — Закон за корпоративното подоходно облагане), the standard rate is 10% of the tax base (broadly: accounting profit adjusted for tax purposes).

There is also:

  • 5% withholding on dividends paid by Bulgarian companies (with treaty exemptions and the EU parent-subsidiary directive applying to qualifying intra-EU structures).
  • 10% withholding on certain royalties and interest paid to non-residents (subject to treaty reductions).
  • 15% alternative tax on representative expenses, social and welfare expenses (instead of treating them as taxable benefits).

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The taxable base — from accounting profit to tax base

The starting point is the accounting profit from your annual financial statement, prepared under Bulgarian National Accounting Standards (NSS) or IFRS for larger entities.

To arrive at the tax base you apply tax adjustments:

  • Increases: non-deductible expenses (see below), excess representative expenses, fines and penalties, donations beyond the legal cap, related-party transactions outside arm's-length pricing.
  • Decreases: previously taxed and now reversed provisions, certain dividends received, loss carryforward from prior years.

Final formula (simplified): Tax base = Accounting profit + tax-deductible adjustments – tax-deductible decreases. Apply 10% to get the corporate tax due.

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Common non-deductible expenses

The tax authority will not let you deduct:

  • Representative expenses above 1% of total expenses for the year (and the rest is taxed at 10% alternative tax).
  • Fines and administrative penalties of any kind.
  • Donations beyond the legal caps (typically 10% of profit before adjustments, and only to qualifying recipients per ZKPO Art. 31).
  • Losses on disposals to related parties below market value.
  • Expenses without proper documentation (no compliant invoice = not deductible).
  • Withholding tax paid on behalf of others when the contract did not require gross-up.
  • Voluntary social and welfare expenses above the safe-harbour amount (taxed at 10% alternative).

Practical tip: Keep airtight documentation. The NRA tax audit is brutal on missing invoices — even a 1,000 BGN (511 EUR) expense with a non-compliant document gets fully disallowed plus penalty.

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Dividend withholding tax

When your Bulgarian company distributes profit:

  • Resident individual shareholder: 5% withholding tax. The shareholder receives the dividend net.
  • Resident corporate shareholder (Bulgarian company): typically 0% — dividends between Bulgarian companies are not taxed.
  • EU corporate shareholder qualifying under the parent-subsidiary directive: 0% withholding (subject to ≥10% holding for ≥1 year).
  • Non-EU corporate shareholder: 5% default, possibly reduced by tax treaty.
  • Non-resident individual: 5% default, treaty rates may apply.

The withholding is deducted by the company at the moment of distribution and paid to the NRA by the end of the month following distribution.

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Advance corporate tax payments

Two regimes apply depending on the previous year's profit:

Monthly advances (large profit)

If previous-year tax profit exceeded 3,000,000 BGN (1,533,876 EUR), monthly advance corporate tax payments are due by the 15th of each month.

Quarterly advances (mid-size profit)

If previous-year tax profit was between 300,000 BGN (153,388 EUR) and 3,000,000 BGN (1,533,876 EUR), quarterly advances apply:

  • Q1: 15 April.
  • Q2: 15 July.
  • Q3: 15 October.
  • Q4: 1 December (note the earlier date for Q4).

No advances

If previous-year profit was at or below 300,000 BGN (153,388 EUR), no advance payments are required — you settle the full amount with the annual return.

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Loss carryforward

Under ZKPO Art. 70, tax losses can be carried forward and offset against future tax profits for 5 years. There is no carry-back.

This is a powerful tool for early-stage companies: a loss in Year 1 can shelter profits in Years 2-6.

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Tax incentives and reliefs

Bulgarian ZKPO offers targeted reliefs:

  • Investment in disadvantaged regions — corporate tax may be assigned (effectively retained) for investment in regions with high unemployment.
  • Agricultural producers — assigned tax for reinvestment in the activity.
  • Education-related donations — full deductibility within statutory caps.
  • Hiring of long-term unemployed — wage and social security cost reliefs.

Each incentive has strict conditions; consult an accountant before relying on any of them.

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Filing the annual return

Form

The annual corporate tax return is filed under ZKPO Art. 92 on the standard NRA template (Form Образец 1010).

Deadline

  • 30 June of the following year — paper or in-person filing.
  • 30 September of the following year — extended deadline if filed online with KEP through the NRA portal.

Payment

The corporate tax balance is due by the same date as the filing (30 June or 30 September depending on channel). Quarterly advances already paid are credited.

Annual financial statement

Separate from the tax return: the annual financial statement is filed with the Commercial Register (BRRA) by 30 September. This is a public filing.

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How Fakturka.bg helps with corporate tax

Although Fakturka.bg does not file your corporate tax return for you, it provides the clean primary data that makes that return painless:

  • Compliant invoices — every line and tax adjustment can be reconciled to a source document.
  • Automatic VAT ledger — purchase and sales ledgers ready for the accountant.
  • Expense scanner — Gemini AI extracts data from PDFs and photos, reducing missed deductions.
  • Multi-user access (Business plan) — your accountant gets read-only access during year-end.
  • Reports and exports — P&L, balance sheet, custom date ranges.

Free plan: 15 invoices/month. Pro: 7.50 EUR (14.67 BGN) per month. Business: 15 EUR (29.34 BGN) per month. Accountant Basic: 9.90 EUR (19.36 BGN) per month.

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Frequently asked questions (FAQ)

Is Bulgaria's 10% corporate tax really 10%?

Effectively yes for a clean company that distributes nothing. If you take dividends, add 5% withholding, putting the combined effective rate around 14.5% at the shareholder level. Still significantly below most EU jurisdictions.

When can I deduct VAT paid on purchases?

VAT is a separate filing. Input VAT is reclaimed in the monthly VAT return, not the corporate tax return. Corporate tax operates on net amounts (excluding VAT) once the company is VAT-registered.

What if my company has no activity?

You still file an annual corporate tax return, even with zero activity. Penalty for missed filing is 500 to 3,000 BGN (256 to 1,534 EUR) plus interest.

Do I need to file an annual financial statement if my EOOD is dormant?

Yes. Every commercial entity registered with BRRA must file an annual financial statement by 30 September, even if dormant. Penalty for missed filing escalates over time.

Can a foreign parent receive Bulgarian dividends tax-free?

Yes, under the EU parent-subsidiary directive — if the parent is an EU/EEA company, holds at least 10% for at least 1 year, and meets the directive's conditions. Otherwise the default 5% withholding applies, possibly reduced by tax treaty.

How do I know if I'm liable for advance payments?

Look at last year's annual corporate tax return — if the tax profit exceeded 300,000 BGN (153,388 EUR), advances apply this year. Your accountant calculates the instalment in January.

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Sources

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Last updated: 2026-04-27 Author: The Fakturka.bg team