💰Dividends and taxation in Bulgaria
For Italian entrepreneurs considering starting or expanding their business in Bulgaria, one of the key questions is how the profits they want to distribute as dividends will be taxed. In this article, we will look at how dividend taxation works in Bulgaria, what the advantages are for Italian investors and how SAAD Consulting can help you streamline the process.
📌What are dividends?
A “dividend” is a financial and legal instrument showing the cash distribution of a company’s profits to its owners/shareholders. Any payment by a company to its owners or shareholders can also be called a ‘dividend’. The partners, shareholders and owners of the firm distribute the profits among themselves according to the shares they hold in the firm. “Dividends” can also be viewed as:
- income from shares;
- income from shareholdings in a company but classified as income from shares;
- undisclosed profit distributions (amounts unrelated to a company’s business or amounts in excess of normal market levels but accrued and paid in any form to individual shareholders).
They are a way for owners to get a return on their investment once the company has paid its corporation tax.
📊How are dividends taxed in Bulgaria?
In Bulgaria, income received on the basis of dividend distributions is taxed at 5%. That is why dividends are distributed when the amount of profit is known, but only after the corporate tax is paid. The withholding tax should be paid to the NRA by the end of the month following the quarter of the income accrual. Within the same period, the company should file a tax return with the NRA.
A company can distribute its dividends in 2025 if they were accrued in 2024, 2023, as well as from older periods. Firms that have distributed a dividend during the year are required to submit, by 30 April of the following year, details of dividend payments.
- Corporation tax: 10% on profits before distribution;
- Flat tax: 5% on dividends;
- Transparent process: the tax is withheld by the company and declared to the NRA.
Example:
Profit: €100,000 → corporate tax 10% → €90,000 left → dividend tax 5% → net €85,500.
The overall tax burden is significantly lower than in Italy, where it can exceed 30%.
🇧🇬 Comparison with Italy
In Italy:
Corporate tax (IRES 24% + IRAP 3.9%) increases the burden.
Dividend tax for individuals: 26%;
Progressive income tax up to 43% for other cases;
Example:
Profit €100,000 in Italy → after corporation tax and dividend tax → net amount under €55,000.
The same profit in Bulgaria → 85 500 euros net, or about 55% more in your pocket.
This makes Bulgaria extremely attractive for Italian investors.
🌍Tax treaties
If you are a foreign individual and you have received dividends from a source in Bulgaria, you have no obligation to declare the income to the NRA. The dividend payer has declared and paid the tax.
Bulgaria and Italy have a double tax treaty, which is beneficial for Italian investors. This treaty ensures that dividends paid by a Bulgarian company will not be additionally taxed in Italy.
It is up to you to request that the procedure for implementing the agreement be applied.
Our accounting firm can help you avoid unnecessary double taxation.
🤝How can we help you?
At SAAD Consulting, we understand that dividend management and taxation can be complex, especially for foreign entrepreneurs. That’s why we offer comprehensive support specifically for Italian businesses, including:
- Accounting services in Italian: Complete accounting support for your company.
- Tax advice: strategies for maximizing Bulgarian tax advantages.
Are you ready to increase your return on investment in Bulgaria?
📞Contact SAAD Consulting for a personalized consultation.