Bulgaria sits 45th out of 217 in our world ranking, with a FiScore of 7.2 out of 10. It has the lightest tax system in the European Union, and also the simplest: one rate, everywhere.
Since 1 January 2026 it also has the euro.
One rate, and that is all
| Tax | Rate |
|---|---|
| Personal income | 10% |
| Companies | 10% |
| Dividends | 5% |
| VAT | 20% |
Ten per cent on income, whatever the amount. No brackets, no progressivity, no surcharge. An employee on EUR 20,000 and a director on EUR 500,000 pay the same rate.
Ten per cent on companies too, from the first euro of profit.
On dividends, be careful what you read elsewhere. The rate is 5%. An increase to 10% did appear in the draft 2026 budget, but it was not passed: the previous budget was rolled over after the snap elections of April 2026. Many pages already state 10%. That is wrong as things stand.
For a company owner the arithmetic is simple: the company pays 10% on its profit, then 5% on what is distributed, a total charge of about 14.5% on profit taken out as dividends. Inside the European Union that is hard to beat.
The euro since 2026
Bulgaria joined the euro area on 1 January 2026. That is not a tax point, it is a practical one, and it changes a good deal: no exchange risk with European clients, no conversion costs, and more banking credibility.
The lev had been pegged to the euro for decades, but formal membership removed the last reservation many people had.
If you are not an EU citizen
This is where a British or American reader's position differs sharply from a French one's, and most pages skip it entirely.
An EU national simply moves: free movement, no visa, no residence programme. A Briton or an American does not. You need a residence permit, and the ordinary routes are employment, running a business with real activity, or family.
That single requirement changes the comparison. Against somewhere like the United Arab Emirates, where residence follows from forming a company almost mechanically, Bulgaria asks for more paperwork and more substance for a broadly similar headline rate.
What EU membership actually gives you
Once you are lawfully resident, membership means:
- freedom to provide services across the Union, which neither Andorra nor Switzerland offers;
- European directives apply, notably on dividends between associated companies;
- and automatic exchange of information, of course.
That combination is the real strength: the rate of an offshore jurisdiction with the regulatory passport of a member state.
If you are American
Citizenship-based taxation applies whatever Bulgaria does. Bulgarian tax paid generates foreign tax credit, but a 10% local rate leaves a large part of a United States liability standing.
Where Bulgaria genuinely helps an American is on the corporate side and on the absence of complexity, not on the personal bill. Read leaving the US before assuming otherwise.
The drawbacks
The country is poorly known and poorly liked. A Bulgarian invoice goes down less well with a German client than an Irish one at a comparable rate. It is irrational, and it is real.
Corruption and administrative slowness appear regularly in European rankings, on the wrong side.
Political instability is chronic. Repeated snap elections are precisely why the 2026 budget was never passed.
Substance matters here as everywhere. A Bulgarian company run from London is a British company as far as HMRC is concerned.
Sofia is not Lisbon. The living environment is decent and cheap. It is not what will convince your family.
So, who is Bulgaria for?
- A European entrepreneur wanting to stay inside the Union: the best rate-to-simplicity ratio in the single market.
- A high-earning freelance: 10% on everything, with no bracket, is mechanically unbeatable in the EU.
- Someone selling services to European clients: freedom to provide services is the decisive argument against Andorra.
- Someone chasing sunshine and lifestyle: not the point here. Look at Cyprus.
The full table of Bulgarian rates is on our Bulgaria page, and the comparison tool puts it next to anywhere else. Before deciding anything, read how to actually leave.
Sources
The Bulgarian tax administration, PwC Tax Summaries and firms established in Sofia, verified in August 2026. An error reported to us gets fixed.
This page informs, it does not advise. Before deciding anything, talk to a professional who will look at your situation, as our terms of use set out.