A look at any changes in taxation in Bulgaria for 2009. This information is not only important to expat residents in Bulgaria but also to those with a property in Bulgaria who are fiscally resident elsewhere. Corporate Tax - Corporate Tax (corporation or profit tax) will remain at 10%, one of the lowest in Europe.

Major investors, investing 50 million leva upwards will be exempt from corporate tax for five years.

A 10% flat rate will remain. The 2008 revenue incomes of Bulgarians will be taxed in 2009 on their 2008 revenue with a 10% flat income tax rate. Personal tax returns are to be filed by 30 April. Tax can be paid in up to 4 instalments.

VAT

VAT will remain at 20% for 2009

From 1 January 20009, property tax valuation will increase by 50%. Although the rate of taxation may be reduced, so property tax bills will increase only marginally.

In 2008 the annual property tax rate for individuals was 0.15% of the tax valuation price for a property (or regulated land). There is no property tax to pay for unregulated land. If the property / land is owned by a Bulgarian company, then the 0.15% tax is payable on the price declared for the asset in the company’s balance sheet. Garbage tax varies according to the local municipality in which the property is situated. Typically between 0.15% - 0.7%.

For 2009 revenue from trading with public company shares on European stock exchanges will be tax exempt. Previously only trading on the Bulgarian Stock Exchange was exempt.

Higher excise duty will increase the price of a packet of cigarettes. Prices from Bugartabac will increase by about 26%. The most popular Victory brand will cost 3.45 leva as opposed to the current price of 2.75. Sredets will go up from 2.50 leva to 3.15 leva. 

Corporate excise duties on electricity are going up this year, as well as excise rates on coke and coal, which will of itself push up prices of manufactured products at the end of the day.

Health insurance contributions for individuals will increase, with the rate going up from 6% to 8% from January 2009. Total national health insurance is paid : 12% by the state, 10% by the employer and 8% by the employee.

The price of a 'vignette' remains unchanged for 2009 and is 67 leva for a car.

Families with mortgages will receive a tax break in 2009. The amount of annual tax they pay will be calculated on the basis of the interest on their monthly mortgage payments on the first 50,000 euros of the mortgage. Conditions are: the couple must be married, one spouse over 35 years of age and the property must be the only one owned by the family. 

Those with property in Bulgaria but fiscally resident elsewhere

If you are a non-resident then you are liable to pay a 10 per cent withholding tax on any rental income you receive on your Bulgarian property. If you are a resident of the United Kingdom, for example, you must also consider the fact that there may be additional tax to pay to the UK government. Talk to an accountant or take advice from the UK government websites. Any tax you pay in Bulgaria as a withholding tax will be offset against any potential additional taxation in the UK as the two countries have a reciprocal taxation agreement.