The tax year in Bulgaria is, without exception, the calendar year.
In general, taxpayers have to submit annual tax returns. Employees who work on the basis of an employment contract with a local employer are not obligated to submit tax returns if they have employment income only, the entire income has been taxed during the year via the employer’s monthly payroll withholding, and at 31 December of the tax year they have only one employer who makes an annual reconciliation of the due tax by 31 January of the following year. In all other cases, individuals, including those who receive income under employment contracts with non-resident employers, are obligated to file an annual tax return.
For tax purposes, spouses are treated as separate taxpayers. No income splitting is allowed. Income is declared in the year in which it is actually received, regardless of the year when it was earned and to which it relates.
The deadline for submission of tax returns is 30 April of the following year. A reduction of 5% of the outstanding income tax is applicable if the annual tax return is filed electronically by 31 March of the following year, the individual has no outstanding public liabilities, and the tax is paid by 31 March of the following year. The discount of 5% is capped at BGN 500.
Individuals are allowed to file a one-off corrective tax return without a penalty by 30 September of the following year.
The following information also needs to be declared in the annual PIT return of a Bulgarian tax resident:
- Dividend income from shares in foreign entities received in the tax year, although taxable with a final tax of 5%.
- Shares acquired in foreign companies.
- Immovable property owned abroad.
- The following amounts of granted and received monetary loans:
- The outstanding part of monetary loans granted during the tax year if the total amount of the loans exceeds BGN 10,000.
- The outstanding part of monetary loans granted during the current and the preceding five tax years if the total amount of the outstanding part exceeds BGN 40,000.
- The outstanding part of monetary loans received during the tax year if the total amount of the loans exceeds BGN 10,000, except for the loans received from credit institutions.
- The outstanding part of monetary loans received during the current and the preceding five tax years, except for the loans received from credit institutions, if the total amount of the outstanding part exceeds BGN 40,000.
As of 1 January 2018, Bulgarian tax resident individuals are able to report the following in their annual PIT return:
- Received non-taxable income;
- Inherited property;
- Property acquired as a result of restored title by virtue of legislation.
The reasons for this amendment are optimisation of the processes related to tax inspections and tax audits of individuals concerning the comparison of the property acquired in the course of the year and the reported income. Up to now, there was no possibility to report received non-taxable income, and its assessment was possible only through the performance of a tax inspection or tax audit.
Payment of tax
The deadline for payment is 30 April of the following year.
PIT for employees is withheld by the employer from the gross remuneration on a monthly basis. The employer acts as an agent of the revenue authorities and transfers the tax due to the budget. Certain taxpayers who are not employees, such as freelancers, must pay quarterly advance taxes, regardless of whether the payer is a Bulgarian or non-Bulgarian resident entity.
Statute of limitations
The statute of limitation is currently five years from 1 January of the year following the year in which the tax was due for payment.