How Does the 10% Flat Tax Work?
For Italian entrepreneurs used to high and complicated tax rates, Bulgaria offers something almost unbelievable: a 10% flat tax on corporate profits and personal income.
This simple and transparent tax system is one of the main reasons why Bulgaria is becoming a magnet for businesses across Europe. But how exactly does this flat tax work and how can it benefit your business? Let’s take a closer look.
What is the 10% flat tax?
In Bulgaria, the flat tax of 10% applies to:
- Corporate profits: all companies, regardless of size or sector, pay a flat tax of 10% on their annual profits.
- Personal income: salaries, fees and other personal income are also taxed at 10%, without progressive scales or surcharges. The exception is dividends for which the flat tax rate is 5%.
Unlike in Italy, where the corporate tax (IRES) is 24% plus a regional tax (IRAP) of around 3.9% and the personal income tax can reach up to 43%, in Bulgaria the approach is as simplified as possible.
There are no complicated tax brackets, exemptions or regional surcharges, making financial planning easy and predictable.
What does this mean for you?
With a 10% flat tax, you can keep more of your profits, giving you more money to reinvest in the business, hire employees or expand into new markets.
How does it work in practice?
For companies:
Let’s say your company’s annual profit in Bulgaria is €100 000.
Under the Bulgarian tax system, you will only pay €10 000 in corporate tax.
In Italy, the same profit would be taxed at around €27,900 (24% IRES + 3.9% IRAP).
This saves you over 60% in corporate tax alone – money that could instead be reinvested in new products, marketing or expanding production.
In addition, Bulgaria offers additional tax advantages, such as:
- Exemption from tax on reinvested earnings in certain cases, such as investments in new assets.
- Simplified depreciation procedures that allow faster deduction of equipment and technology costs.
For individuals:
If you are a business owner or employee in Bulgaria, your personal income – whether from salary or other sources – is taxed at a flat rate of 10%.
For example, on an annual income of €50,000, you will only pay €5,000 tax.
In Italy, the same income can be taxed at €21,500 or more at the highest tax rates.
This difference allows entrepreneurs and their teams to keep more of their income.
Additional advantages of the flat tax
- Transparency and simplicity: the flat tax eliminates complex calculations and multiple tax brackets, saving time and accounting costs. This is particularly useful for Italian entrepreneurs used to more complex systems.
- Predictability: a flat tax makes financial planning easier. You know exactly what percentage of your profits you’ll be paying, allowing for a long-term strategy with no surprises.
- Competitive advantage: Lower taxes mean you can offer more competitive prices for your products or services – crucial when entering new markets.
How can we help you?
At SAAD Consulting, we understand that the transition to a new tax system can seem challenging. That is why our team offers full support for Italian entrepreneurs who want to take advantage of the Bulgarian flat tax.
Our services include:
- Company registration: quick and easy incorporation in Bulgaria.
- Tax planning: optimising your tax liabilities to save as much as possible.
- Accounting services: full management of accounting, payroll and VAT in accordance with Bulgarian and European regulations.
- Consultations in Italian: seamless communication to feel confident at every step.
Why choose Bulgaria?
The flat tax of 10% is just one of the reasons why Bulgaria is a preferred destination for Italian companies.
Combined with low operating costs, the strategic location and stable economic environment within the EU, makes the country ideal for entrepreneurs looking for financial efficiency and growth.
Are you ready to reduce your taxes and unleash the potential of your business?
Contact SAAD Consulting to find out how we can help you take full advantage of the benefits of flat tax in Bulgaria.