Bulgaria Tax Deductions

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Bulgaria Tax Deductions

  • All forms of tax relief relate to the income of an individual in Bulgaria.
  • The following amounts are subject to the definitions and limits in Bulgarian law.
Personal Tax Relief Comments
Compulsory social security payments Fully deductable.
Voluntary payments for a pension and medical insurance Up to 10% of taxable income.
Donations Up to 65% of taxable income.
Disabled Children BGL 6,000 per one child

Bulgaria Business Deductions

In addition to the reductions/credits specified above, reductions and business expenses may be claimed in Bulgaria as follows:
  • Offset of losses - a loss may be offset up to 5 years forward.
  • Consolidated statements - it is not possible in Bulgaria to offset a loss in one company in a group against the profit of another company in the group.
  • Financing costs - Interest on credit is allowable for tax, if not exceeding the 3:1 debt to equity ratio,up to 30% of the company income before EBITDA. Non deductible interest can be carried forward, subject to certain terms.
  • Rental income - There is a 10% deduction for rental income.
  • Agriculture Income - There is a 60% deduction.
  • Royalties Income - There is a 40% deduction.
An employer's contributions to pension and health funds that are not legally compulsory are allowable to a limit of BGL 40 a month for each employee.

Bulgaria Depreciation of Fixed Assets

  • The customary method of depreciation in Bulgaria is the straight line method.
  • An asset that cost less than BGL500 is not defined as a fixed asset.
  • A table of rates of depreciation according to the straight line method is as follows:

Type of Asset Depreciation Percentage
Buildings 4%
Machinery and equipment 30%
Infrastructure, roads and transport vehicles 10%
Computers and software 50%
Vehicles 25%
Other fixed assets 15%
Intangible Assets 33.3%

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