Bulgaria · Guide
Bulgaria sells itself in three lines: 10% corporate tax, the lowest headline rate in the European Union alongside Hungary; 5% on dividends; and, since 1 January 2026, the euro. All three are true.
None of them answers the question a founder should ask first. What does a Bulgarian company give you that a company in your own country, or outside the EU, would not? For some founders the answer is a great deal. For others it is a second set of filings and a tax audit waiting to happen at home.
This page answers that question, flags what changed in 2025 and 2026, and says who should look elsewhere.
The short answer, by profile
Bulgaria is an EU operating jurisdiction with a low rate. It rewards a business that will genuinely run from Bulgaria and sell into the single market. It gives much less to a founder who wants the rate without the presence.
| Your situation | Verdict | Why |
|---|---|---|
| EU-facing service or software business with a real team or founder in Bulgaria | Strong case | 10% inside the EU, euro, single market, EU VAT number |
| Founder relocating to Sofia or Plovdiv | Good case | Low rate on company profit, EU residence routes depend on nationality |
| Owner in another EU state who will run the company from home | Weak case | Home-country tax residence and CFC rules can claim the profit |
| Non-EU founder who only needs an offshore-style vehicle | Wrong answer | Banks and EU rules expect substance |
| Regulated business: payments, crypto, gaming | Case by case | Licensing and bank appetite decide |
If you are choosing between legal forms, read company types in Bulgaria next.
What a Bulgarian company actually gives you
Strip out the marketing and four advantages remain.
- A low rate inside the EU. 10% on company profit, with an EU VAT number and full access to the single market. Rates and the base are covered in the corporate tax guide.
- A cheap, light company. A single-member limited liability company (EOOD) needs only nominal capital and one director, who can be foreign. Steps are in how to register a company in Bulgaria.
- The euro. Since 1 January 2026 there is no lev exchange risk for euro clients and suppliers.
- EU treatment. Directives on dividends, interest and royalties between EU companies, and EU-wide recognition of the company.
What it does not give you is protection from your own country's rules. A company managed from Berlin or Paris may be German or French for tax, whatever its registered office.
3 questions
Which jurisdiction fits you?Answer three questions and get the three jurisdictions that match your situation.
The euro since 1 January 2026
The Council of the European Union approved Bulgaria's accession to the euro area on 8 July 2025 and fixed the conversion rate at 1.95583 lev per euro. The euro became legal tender on 1 January 2026, with no phasing-out period, making Bulgaria the 21st EU state to use it.
- 8 Jul 2025Council approves accession, fixes 1.95583
- 1 Jan 2026Euro adopted, cash changeover
- January 2026About one month of dual circulation
- 2026 to 2028Existing companies redenominate capital, deadline extended to 31 Dec 2028
Two practical consequences.
- Thresholds and fees quoted in lev are out of date unless converted at 1.95583. That includes many guides on capital, VAT registration and fees.
- Existing companies redenominated their capital. If you buy an older Bulgarian company, check that its register entries were updated.
The context since 2025: a rate that was nearly raised
Bulgaria's low rates are not set in stone, and 2025 showed it.
- The draft 2026 budget proposed doubling dividend tax from 5% to 10%.
- Mass protests in December 2025 led to the proposal being withdrawn and the government resigning.
- Early elections followed in April 2026.
- The 5% rate stayed. Local advisers report no change adopted to the dividend tax for 2026.
| What the episode shows | What it does not change |
|---|---|
| Low rates can come under budget pressure | The 10% corporate rate and 5% dividend tax in force |
| Political instability is part of the risk | EU membership and the euro |
| Rates should be modelled with a margin | Company law and registration |
10% inside the EU is not 10% offshore
This is the point most guides leave out.
- For an EU founder, your home country's controlled foreign company rules come from the EU Anti-Tax Avoidance Directive. A Bulgarian company with real staff and premises can usually rely on the substance defence that EU law provides.
- For a founder outside the EU, your own country's rules apply, and many treat 10% as low taxation.
- For everyone, a company managed from abroad may be resident where it is managed.
- 1Where is the company really managed?If from your home country, it may be resident there
- 2Does your home country have CFC rules?Most EU and many non-EU countries do
- 3Does the company have real substance in Bulgaria?Staff, premises, decisions taken there
- 4If yes10% plus 5% on dividends is likely to hold
The country-specific detail is in the origin guides, for example Germany, France and Russia.
Where the case breaks down
- Banks. Bulgarian banks expect a real business and documented funds; a shell owned from abroad struggles.
- Substance. An empty office and a nominee director do not survive a foreign tax audit.
- Home-country rules. Residence of the company and CFC rules can undo the rate.
- Labour costs and compliance. Social security, payroll and EU reporting apply from the first hire.
- Political risk. The 2025 budget episode shows rates can be challenged.
Who Bulgaria is wrong for
- A founder who will run everything from another EU country.
- A holding or invoicing company with no Bulgarian activity.
- A non-EU business that does not sell into the EU and only wants a low rate.
- A licensed business without a licensing plan.
Who it suits
- A service or software company with people in Bulgaria selling across the EU.
- A founder relocating to Bulgaria with clients in the single market.
- A group that needs an EU entity with a low rate and real operations, such as a support or development centre.
The bottom line
A Bulgarian company is a low-tax EU company with the euro, and that combination is rare. It works when the business really runs from Bulgaria. It does not work as a letterbox for profit earned and managed elsewhere, inside or outside the EU.
corpsec registers Bulgarian companies and provides the registered address. See what the Bulgaria formation service covers, or continue with what it costs to set up a company in Bulgaria.
Frequently asked questions
Is Bulgaria a good place to set up a company in 2026?
It is a good place for a business that will run from Bulgaria and sell in the EU: 10% corporate tax, 5% on dividends and the euro. It is a weak choice for a company managed from another country or with no Bulgarian activity.
Does Bulgaria use the euro?
Yes. Bulgaria adopted the euro on 1 January 2026 at a fixed rate of 1.95583 lev per euro. Figures in lev in older guides should be converted or treated as out of date.
Was the Bulgarian dividend tax raised in 2026?
No. The draft 2026 budget proposed raising it from 5% to 10%, but the proposal was withdrawn after mass protests in December 2025. Advisers report the 5% rate still applies.
Can a foreigner own 100% of a Bulgarian company?
Yes. A single-member limited liability company can be wholly owned and managed by a foreign person or company.
Will a Bulgarian company reduce my tax if I live in another EU country?
Only if the company genuinely operates and is managed in Bulgaria. Otherwise your home country can treat it as resident there or apply its controlled foreign company rules.
Is Bulgaria better than Estonia or Cyprus?
They differ. Bulgaria has the lowest headline rate of the three; Estonia taxes only distributed profit; Cyprus has a broad holding regime. The right choice depends on where the business runs and where profit goes.
Sources
- European Central Bank, 8 July 2025: the Council approved Bulgaria's accession to the euro area on 1 January 2026 at a conversion rate of 1.95583 lev per euro
- Council Regulation (EU) 2025/1408 of 8 July 2025: euro adoption and cash changeover in Bulgaria on 1 January 2026, with no phasing-out period
- European Central Bank, 1 January 2026: the euro enters circulation in Bulgaria, the 21st EU member state to use it
- Innovires, Withholding tax and dividend tax in Bulgaria (2026): the draft 2026 budget proposal to raise dividend tax to 10%, withdrawn after the December 2025 protests, and the 5% rate still in force
Official, read on 26 October 2026: the European Central Bank releases of 8 July 2025 and 1 January 2026 and Council Regulation (EU) 2025/1408 on the euro changeover. Secondary and covered with their legal references in the tax guides of this series: the 10% corporate tax rate and the 5% dividend tax. Political context reported by Bulgarian advisers and media, not by an official source read for this page: the withdrawn proposal to double dividend tax, the December 2025 protests and the government's resignation, the early elections of 19 April 2026, and the legal route of the 2026 budget, on which sources differ. This is not legal or tax advice.