Under Personal Income Tax Act tax liable persons are individuals – residents and non-residents, and corporates explicitly enumerated therein. Residents, irrespective of their citizenship, are considered those persons:
- Who have their permanent domicile in Bulgaria;
- Who reside in the country for more than 183 days in a 365-day period.
Non-residents are considered those individuals who do not fit the above criteria for residents. Residents are liable for their world-wide income. Non-residents are liable only for their income derived from Bulgarian sources. Foreign experts are taxed only on their Bulgarian-source income irrespective of the duration of their stay in the country. Any income derived by an individual from the conduct of business on the territory of Bulgaria or under an employment contract or derived from rendering services is considered to be from a Bulgarian source. Incomes derived from the use of real estate and capital gains from the sale of real estate located in the country, as well as incomes from transactions with quotas/shares in local companies and incomes from securities transactions with securities issued by the Bulgarian state and municipalities are also incomes from a Bulgarian source. The annual taxable base is the sum of all taxable incomes received during the calendar year, deducted by:
- incomes taxed with a final tax
- mandatory and voluntary national insurance, pension, health insurance, unemployment fund contributions, as well as the premiums paid in on account of the persons under “Life” insurance contracts and “Life” insurance, if connected with an investment fund
- statutory deductions applicable only to non-employment contracts (e.g. 35% of the gross income for services contracts; 10% for management fees)