Profit tax in Bulgaria

Profit tax in Bulgaria

The profit tax rate in Bulgaria is just 10%. The profit is the difference between the revenues and the expenses of the company. profit_tax
In Bulgaria the fiscal year coincides with the calendar year.
The profit tax for the year in which the company is established is paid at once until 31 march of the next year.
If the turnover (the total amount of the sales) of the company for the last year is less than 150000 euro, then the profit tax for the current year must be paid at once until 31 march of the next year.
If the turnover (the total amount of the sales) of the company for the last year is more than 150000 euro, then the company must make an estimation of the expected profit for the current year. The estimation must be done until 31 march of the current year and must be declared in the tax declaration. When making this estimation, a margin of error of 20% is allowed.
If the turnover (the total amount of the sales) of the company for the last year is between 150000 euro and 1.5 million euro, then the profit tax for the current year must be paid at quarterly installments, based on the estimation. The difference between the estimated tax and the tax on the actual profit must be paid until 31 march of the next year.
If the turnover (the total amount of the sales) of the company for the last year is over 1.5 million euro, then the profit tax for the current year must be paid at monthly installments, based on the estimation. The difference between the estimated tax and the tax on the actual profit must be paid until 31 march of the next year.

profit_tax If the company has paid less installments than it was obliged based on the actual profit (reduced by the margin of the allowed error of 20%), then the company pays an interest, a penalty of about 13% per year on the amount unpaid for the period from the date the payment was due until the date of the actual payment.
If the company pays larger installments than it is necessary according to the actual profit, then it may reduce the installments throughout the year. If the company has already paid more than the actual profit tax, the overpayment may be deducted from the future payments for profit tax or the company may solicit refund from the Bulgarian tax administration.

In Bulgaria the tax rate on dividends is 5%. The dividend is a part of the profit paid by the company to its shareholders as a reward for the capital invested in the company by its shareholders.
This tax is paid when the company distributes its profit to the shareholders of the company. The distribution of the profit to the shareholders may be done after the company closes the fiscal year (it means the calendar year). Dividends
The correct order for the distribution of the profit is:

  • The company closes the fiscal year which is the same as the calendar year;
  • The company submits to the tax administration the annual tax declaration (in which it also declares the estimated profit for the current fiscal year, if the total amount of the sales for the last year is over 150 000 euro);
  • The company pays the profit tax;
  • The shareholders of the company approve the annual report of the company;
  • The annual report is submitted to the Commercial Register;
  • The General Assembly of the shareholders of the company decides to distribute dividends to the shareholders;
  • The company declares the dividends to the tax administration and pays the 5% tax;
  • The company pays the dividends to the shareholders, preferably the company makes one or more bank transfers or the shareholders withdraw the money from the company's bank account.

 

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