Bulgaria, a member state of the European Union, is an attractive residency option, a decent business jurisdiction and one of the easiest countries in which to open a bank account as a non-resident. This guide covers that as well as how taxation works and more.
Bulgaria has been a popular residency option for EU citizens ever since it implemented full freedom of movement in 2015. It has also become a popular residency option for non-EU citizens thanks to its fairly affordable fast-track residency and citizenship program. While most migrants choose Bulgaria for its low cost of living and reasonable tax burden, lifestyle and community have also become factors as the expat population and the quality of the services serving it continues to increase.
As per EU rules, EU citizens have the right to live and work in Bulgaria indefinitely, with few conditions. Registration after three months is mandatory and certain documents must be supplied such as proof of health cover and proof of financial means (if no employment has been secured). As for permanent residency, it can be achieved after five years of uninterrupted residency. Provided that certain conditions are met, naturalization is also possible.
For non-EU nationals with half a million EUR burning a hole through their pocket, getting a Bulgarian passport is an easy, straightforward process. It also is, in my opinion, a must-do. Why? Because getting the right of abode for nearly an entire continent at such a low cost (both time and money) really is a no-brainer not to mention a smart diversification move. It can also be a good tax move considering the flat 10% rate for both individuals and businesses.
To qualify, all you need is to have a clean criminal record and one million BGN of capital (around half a million EUR). You can get a loan for the million BGN but if you do, you will need to prove that your net worth is over one million EUR. Two visits to Bulgaria are required, one to submit the permanent residency application and one to get the PR card. In total, less than a week has to be spent in-country. I do recommend spending a bit more time though as some local knowledge will help when travelling with the Bulgarian passport (pretty suspicious at a border if you do not know anything about your “home country”).
It is important to understand that the million BGN is refunded in full after a few years, it is not a fee or donation (unlike in many Caribean and Pacific countries). It is invested in Bulgarian government bonds but does not accrue interests. Is it safe? Unless something dramatic happens, yes. The reasoning for that is the good credit score of Bulgaria, the peg of its currency against the EUR and the country’s positive fundamentals. If Bulgaria were to join the Eurozone, the million BGN would most likely be converted into EUR. That said, I do not foresee that happening in the near-term.
What is the timeline? First of all, you will need to prepare your documents and make the investment. An investment certificate will then be issued to you within the following three months allowing you to apply for a visa (category D). Approval for the visa will be granted within a few weeks and you will then need to visit the country for the first time to deposit your application for permanent residency. That application should be approved within three months. You will then need to visit the country for a second time to apply for a PR card. The card will be delivered to you within three days. Depending on your situation, you will become eligible for naturalization a year later (some conditions apply). There is no need to spend any time in-country once you have received your PR card and you are exempted from the requirement of learning the Bulgarian language.
Interestingly, as a permanent resident, you will have the right to live anywhere within the EU, subject to certain conditions.
Non-EU citizens are limited to spending a maximum of 90 days for every rolling period of 180 days. Because Bulgaria is not a full member of the Schengen area, time spent in other Schengen countries does not count towards the 90 days limit. Time spent in Bulgaria under a resident visa also does not count.
Bulgaria is one of Europe’s easiest countries in which to register a business. It also is one of the few with no ownership or residency restrictions which means that nearly everyone can own a Bulgarian business (except the citizens of countries under EU sanctions obviously).
The most popular entity type, and most appropriate in the context of location independence, is the Limited company (OOD). It is legally separate from its owners and is taxed as such.
Registering a Limited company takes no more than 2-3 days, including the bank account opening. The process can be completed in person in Bulgaria or remotely, using the services of an agent. If self-registering, plan to spend around 100 EUR. If using the services of an agent, plan to spend at least 200 EUR.
There are no annual fees to pay to the Bulgarian government. That said, you will need to file a tax return as specified in the taxation section below. You may also need to pay for a local address, bookkeeping etc. It is safe to say that you should plan to spend at least 300 EUR annually to keep your company active and in good standing.
Bulgaria’s main strength is its taxation system, one of the European Union’s least burdensome. The rate for both personal and business income is a flat 10%.
For personal income, however, you need to add a social security contribution of up to 33.4% (employer and employee sides combined). That said, the contribution only applies to the first 2600 BGN in income, anything above that is exempt. European citizens can also get around having to pay social security in Bulgaria by electing to continue paying for it in their home country (for up to two years, see EU form A1).
A 5% withholding tax may apply when distributing business profits via dividends. This is the case when the recipient is a private individual, a non-profit organization or a non-resident (except if a treaty says otherwise). This is not usually the case, however, when the recipient is a legal entity established in Bulgaria or another EU country.
While Bulgaria has no CFC rules of its own, as a member of the EU was forced to implement the Anti Tax Avoidance Directive on the first of January 2019. You can learn more about it here. Because Bulgaria is a CRS-compliant country, any applicable financial transactions involving non-residents are automatically exchanged with the relevant countries.
A tax resident of Bulgaria is an individual who either is deemed to be domiciled (ties) in the country or who spends at least 183 days in-country in any twelve months period. As for legal entities, residency is determined by either the place of registration or the place of effective management. That said, if a foreign-registered legal entity is determined to be a Bulgarian tax residency via the place of effective management rules, only the income attributed to its Bulgarian operations (permanent establishment) will be liable for Bulgarian taxation.
Both individual and corporate residents are liable for taxation on their worldwide income. Non-residents are only liable for their Bulgarian-sourced income. The fiscal year is the calendar year, individual returns must be filed by the 30th of April and corporate returns by the 31st of March.
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Bulgaria is certainly no banking center. Even the international banks with a local presence tend to only focus their products on the local market. There is also the issue of the BGN, a fairly impractical currency. Some banks do offer EUR accounts but then you may as well open an account in a Eurozone country and save yourself the trouble. Fees also tend to be on the high side.
If you do need a Bulgarian account, however, the good news is that opening one is very easy even as a non-resident. I recommend Raiffeisenbank and Postbank as they have the best branch and ATM coverage.
Opening an account
To open a Bulgarian bank account, simply show up at a branch of your favourite bank with your passport or ID card. While you will need to provide an address, there is usually no need to present a proof of address. Bring along some cash as you will likely need to make an initial deposit (a few hundred BGN should suffice). In most cases, your debit card will be mailed to the address you provided and will arrive within a week or two. The procedure to open a business account is the same as for a personal account, except that you must also bring along your company documents.
Bulgaria uses the IBAN system for all local accounts and is a member of SEPA. In most cases, it is possible to initiate transfers online but it rarely makes sense to do so due to fees. TransferWise is a better option in most cases. Both debit cards and local transfers are supported and you will struggle to find a better rate especially when changing to the USD, EUR and GBP.
Bulgaria’s main entryway is Sofia’s international airport, SOF. From there, you can easily reach the capital city and other destinations around the country. Plovdiv and Varna are also important entryways. If you are already in the region, it is also possible to enter the country overland from Turkey, Romania, Serbia, Macedonia and Greece. Once in-country, the best way to move around is by rental car, train or, if on a budget, bus. Do make sure to check out Bansko, a growing nomad hub in the Pirin mountains. Sunny Beach is also worth a visit, especially if you like beach resorts. Immigration-wise, most non-EU visitors can visit Bulgaria visa-free for up to 90 days. That said, I recommend having a look at the “Visa requirements by nationality” link below to confirm whether a visa is required or not for your passport.
Local SIM cards
Telenor has by far the best coverage, especially in the countryside. Their prices are also very competitive, with data costing only a few EUR cents per GB. SIM cards issued elsewhere in the EU can be used at no extra cost and so can Project Fi, China Mobile Supreme Global and T-Mobile USA.
As per EU law, non-EU residents can claim a VAT refund on eligible transactions at the moment they leave EU territory. An eligible transaction in Bulgaria is one of a value of at least 250 LEV per shop (can be multiple items) and only when said shop displays the Tax-Free Bulgaria logo.