Bulgaria

Adopting the euro as official currency as of 1 January 2026

As of 1 January 2026, the euro (EUR) replaces the Bulgarian lev (BGN) as Bulgaria's official currency.

All outstanding tax and other public liabilities are to be converted into EUR based on the official conversion rate on 1 January 2026.

All tax and other public liabilities after 1 January 2026 should be paid in EUR. As an exception, cash payments in BGN (where permitted) will be accepted during the dual circulation period (i.e., in January 2026).

As of 1 January 2026, the National Revenue Agency will refund any tax amounts claimed in 2025 in EUR (e.g., VAT refunds claimed in December 2025).

All amounts in tax or social security returns for periods ended on or before 31 December 2025 are to be reported in BGN (e.g., the annual corporate income tax return for 2025 and the VAT return for December 2025). Respectively, tax and social security returns for periods ended on or after 1 January 2026 are to be submitted in EUR. 

Municipalities will assess and issue notices for property tax and garbage collection fees in EUR after 1 January 2026.

According to the general conversion rule, values in BGN are divided by the full value of the official BGN/EUR conversion rate with all five decimal places, i.e., 1.95583. Conversion based on different, rounded, or shorter exchange rates is not permitted.

The resulting sum is rounded to the second decimal place on the basis of the third decimal place in accordance with the following mathematical rounding rule:

• if the third decimal place is less than five, the second decimal remains unchanged. (e.g., to convert BGN 50 to EUR, you must divide this amount by the official conversion rate of 1.95583, resulting in 25.56459, which rounds to EUR 25.56). 
• if the third decimal place is equal to or greater than five, the second decimal increases by one. (e.g., to convert BGN 100 in EUR, you must divide this amount by the official conversion rate of 1.95583, resulting in 51.12918, which rounds to EUR 51.13).

There are some exceptions to the above rounding principle, which do not have a direct impact on tax and other public liabilities (e.g. rounding up remunerations, compensations, pensions, etc. in favour of the employee).

New Transfer Pricing Ordinance effective from 1 January 2026

A new Transfer Pricing (TP) Ordinance will fully replace the previously applicable regulatory framework as of 1 January 2026. The Ordinance represents a significant enhancement of Bulgaria’s TP rules, aligning them with the latest OECD TP Guidelines. 

The key aspects covered in the new Ordinance include:

• Substance over form concept – Introduction of detailed rules for the accurate delineation of the transactions where the tax authorities assess the actual behaviour of the related parties in case it differs from or lacks the contractual framework.
• Functional and risk analysis – Expansion of the guidelines on the application of the comparability factors (contractual terms, functions of the parties within the group supply chain, characteristics of the transaction, etc.). The OECD risk-control framework is introduced for the first time, ensuring that the allocation of risks and related returns among related parties reflects actual control and financial capacity to bear the risk. 
• TP methods – The requirement to apply the “most appropriate method” replaces the previously strict hierarchy of TP methods.
• Comparability analysis – Introduction of new, detailed rules regarding the aggregation of related party transactions, the selection of comparable transactions in benchmarking and the period to be covered by the analysis.
• Service transactions – Extension of existing rules to include a benefit test analysis and provisions addressing duplication of services and shareholder costs.
• Intangibles – Adoption of OECD guidelines for hard-to-value intangibles, along with the so-called DEMPE framework, which examines the roles played by related parties in the development, enhancement, maintenance, protection, and exploitation of intangible assets to determine appropriate profit allocation.
• Financial transactions – Introduction of new rules aligned with Chapter X of the OECD TP Guidelines, covering aspects such as options realistically available, debt capacity analysis, and credit rating estimation.
• Tax control – Empowerment of tax authorities to disregard taxpayers’ analyses if these do not reflect relevant facts or are not provided in a timely manner.
• Reference to the OECD rules – The provisions of the new Ordinance should be interpreted in line with the latest version of the OECD TP Guidelines (including the application of the low-value added services concept). This reference is important in view of the expected changes in Chapter VII of the OECD TP Guidelines “Special Considerations for Intra-Group Services” next year.

15% global minimum tax adopted in Bulgaria as of 1 January 2024

While Bulgaria is keeping its standard 10% nominal corporate income tax (CIT) rate, starting 1 January 2024, Bulgarian entities in scope of the so-called ‘global minimum tax’ will be subject to a minimum effective tax rate of 15%.

The law implementing the European Union (EU) Global Minimum Tax Directive was finally voted by the Bulgarian Parliament on 12 December 2023.

New and complex rules are introduced in the Bulgarian CIT Act to determine the effective tax rate (calculated on an aggregate basis for all entities in a given jurisdiction) and top-up taxes due (where the effective tax rate for a jurisdiction is below 15%).

Ever since the publication of the draft bill in September 2023, the key debate was around some important reliefs allowed under the EU Directive that Bulgaria refused to introduce. After strong reactions from businesses, the Parliament granted at least a partial relief for capital investments in fixed assets in Bulgaria.

The complex Pillar Two legislation will impact many large businesses in Bulgaria. Companies should prioritise the analysis of the financial and administrative impact of the new rules on their business organisation.

Legislation to introduce 'SAF-T' in Bulgaria adopted

The legislation changes introducing a standard audit file for taxes (the so-called 'SAF-T') have been recently adopted. Based on the new provisions, taxpayers will have the obligation to provide detailed accounting information to the Bulgarian tax authorities on a monthly basis. Specific reporting timelines will apply to the information required for non-current assets balances and movements (filing due annually) and for inventory movements and balances (due upon request by the revenue authorities).

SAF-T reporting will become mandatory for businesses in several waves:

• From 2026 for large enterprises with annual net revenue exceeding 300 million Bulgarian lev (BGN) or annual net tax and social security liabilities exceeding BGN 3.5 million.
• From 2027 for large, medium, and small enterprises with annual net revenue exceeding BGN 300 million or annual net tax and social security liabilities exceeding BGN 3.5 million.
• From 2028 for large, medium, and small enterprises with annual net revenue exceeding BGN 15 million or annual net tax and social security liabilities exceeding BGN 1.5 million.
• From 2029 for all large, medium, and small enterprises.
• From 2030 for all VAT-registered enterprises that are not dormant.

Adjustment of input value-added tax (VAT) credit for scrapping or loss of goods

Taxpayers will no longer need to make adjustments of VAT credit in the case of (i) duly proved or confirmed destruction of goods, including as a result of scrapping due to objective obsolescence, and (ii) scrapping when the goods are sold as a taxable supply. Prior to the changes, the VAT Act required such adjustments unless other exceptions were applicable. Due to this, there may be opportunities to apply for refund of VAT paid in similar situations for past periods.

Public country-by-country (CbC) reporting adopted in Bulgaria as of 1 January 2025

The EU Directive on Public CbC Reporting has been recently implemented into the local legislation. The Directive is applicable to both EU-headquartered multinational enterprises (MNEs) and non-EU-headquartered MNEs doing business in the European Union through a subsidiary or branch with a total consolidated revenue of more than BGN 1.5 billion (750 million euros [EUR]).

Based on the legislation, MNEs would be required to publicly disclose certain tax-related information broken down by EU member states, non-cooperative jurisdictions, and all other jurisdictions on an aggregated level. Such information should be disclosed for the financial years starting on or after 1 January 2024. Accordingly, the first financial year subject to disclosure will be 2024 for companies using the fiscal year-end of 31 December.

Changes in the threshold for VAT registration  

From 1 January 2025, the VAT registration threshold was increased to BGN 166,000. Starting from 1 April 2025, the VAT registration threshold was decreased back to BGN 100,000.

Changes to the reduced VAT rates

The reduced VAT rate of 9% for restaurant and catering services was extended until the end of 2024. From 1 January 2025, the standard 20% VAT rate is applied.

The reduced rate of 9% VAT for the delivery of service for use of sports facilities and general tourist services was valid until 30 June 2024. From 1 July 2024, the standard 20% VAT rate is applied.

The 0% VAT rate for bread and flour was extended until the end of December 2024. From 1 January 2025, the standard 20% VAT rate is applied.