I. Advance payments made by resident and non-resident individuals under PITA

Subject to taxation under the Bulgarian Personal Income Tax Act is the income of resident and non-resident individuals receiving income from a source in Bulgaria for the respective year. According to PITA, personal income is taxed on an annual basis, where for a specific type of income tax payers are required to declare and pay advance payments based on income acquired during the year from the following activities:

• employment
• other economic activity
• rent or other onerous provision for use of rights or property

1. Employment income advance tax payments
The advance tax payments for income from employment are on monthly basis. The taxable income of the person includes wages and all other payments in cash and / or in kind by the employer or at the expense of the employer, with the exception of certain income (referred to in Art. 24 (2) PITA). This income is reduced by the contributions withheld or paid in the country and abroad. This is equal to a monthly taxable base. The tax due for the respective month is equal to the taxable base multiplied by a 10% tax rate.

The tax is declared by the Employer by the 25th day of the month following the month to which it relates and is paid to the state budget to the account of the Territorial Directorate of the Bulgarian National Revenue Agency (TD of NRA) where the payer of the income is registered. The Employer declares the tax paid by filing a declaration in standard form.

Resident and non-resident individuals need not submit an annual tax return to declare income deriving from employment if they have no other income than that in employment / Art. 52 (1) PITA /.

2. Advance tax payments for income from another business activity (income of persons who are not traders under the Commerce Act)
Advance tax payments for income from other business activities are made on a quarterly basis. The taxable income of a person is determined as the income acquired reduced by the normative operating expenses as follows:

• 60% for income from the activity of natural persons, registered as agricultural producers, for the production of non-processed agricultural products, except for the income from production of decorative plants;
• 40% for:
  ○ income originating from the activity of natural persons for production of processed or unprocessed agricultural products (including from sale of manufactured decorative vegetation), from forestry industry (including from picking medicinal herbs, mushrooms and fruits), from game husbandry and fish industry;
  ○ author’s and license remuneration, including the income originating from the sale of inventions, works of science, culture and art, providing that the said sale has been carried out by the authors thereof, as well as income originating from the performance of actors-performers;
  ○ income originating from craftsmanship which is subject to a patent tax pursuant to the Local Taxes and Fees Act;
• 25% for the income originating from working as a freelance practitioner and for the income originating from legal relationships other than the employment ones.

Individuals and legal entities are obliged to make advance payments for the difference between the taxable income and compulsory social insurance contributions made for the respective quarter.

The tax due is equal to the difference multiplied by a 10% tax rate.

The tax is payable by the end of the month following the quarter in which the income was acquired, as for the fourth quarter of the tax year no advance tax is due, unless the person acquiring the income declares that it wishes to have an advance tax withheld (Art. 65 and Art. 66 PITA). In these cases, the withheld tax shall be paid by the payer of the income by January 31 of the following year to the state budget to the account of the National Revenue Agency where the payer of the income is registered.

The tax withheld shall be declared at the same TD of NRA by submitting a declaration under Art. 55 PITA by the end of the month following the quarter in which income was received.

Resident and non-resident individuals shall submit an annual tax return under Art. 50 PITA to declare income from other business activities with the exception of the cases referred to in Art. 52 (1) PITA. It shall be submitted by 30th April of the year following the year in which the income was acquired to the TD of NRA where the taxable individual has its permanent address. The total tax due by the person is effectively adjusted and, if the amount differs from the advance payments made, the taxable individual shall additionally pay the difference to the account of the same TD of NRA.

3. Income from rent or other onerous provision for the use of rights or property
Advance tax payments for rental income are made on quarterly basis. The taxable income of individuals is equal to the income received decreased by 10% legally admitted costs. Individuals are liable for advance payments on the difference between the taxable amount and the insurance contributions, which the person is obliged to make at their own expense. (Art. 44 (1) PITA). The tax due is equal to the difference multiplied by a 10% tax rate. The tax is payable by the end of the month following the quarter in which the income was acquired. No advance payments are withheld or remitted on income acquired during the fourth quarter of the tax year unless the person declares in writing that it wishes to have the tax withheld. In these cases, the tax is payable by January 31 of the following year to the state budget to the account of the Territorial Directorate of the National Revenue Agency where the payer of the income is registered.

The tax withheld shall be declared in the same the NRA by submitting a declaration under Art. 55 PITA by the end of the month following the quarter in which the income was received.

Resident and non-resident individuals shall submit an annual tax return under Art. 50 PITA to declare the rental income except for the cases referred to in Art. 52 (1) PITA. It shall be submitted by 30th April of the year following the year in which the income was acquired in the TD of the NRA where the taxable individual has its permanent address. The total tax due by the individual is effectively adjusted and, if the amount differs from advance payments made, the person must additionally pay the difference to the account of the same TD of the NRA.

II. Advance payments made by resident and non-resident legal entities under CITA

The scope of the Bulgarian Corporate Income Tax Act (CITA) includes resident legal entities, non-resident legal entities doing business in Bulgaria through a permanent establishment, carry out disposition of property of any such permanent establishment or receive income from a source inside Bulgaria, as well as sole proprietors and individuals registered as tobacco producers and farmers who determine their taxable income under Art. 26 PITA - for the purposes of withholding tax, as well as in the cases specified in PITA, plus individuals - entrepreneurs within the meaning of Art. 1 (3) of the Commerce Act in the cases specified in PITA.

The taxable persons under this Act are required to make monthly or quarterly advance corporate income tax payments based on estimated taxable profit for the current year. Where the net revenue of the taxable person for the year before the previous year is less than BGN 300 000, advance payments need not be made (Art. 83 (2) CITA). If sales revenue for the year before the previous year is between BGN 300 000 and BGN 3 000 000, taxable persons are required to make quarterly advance payments (Art. 85 CITA). In the event that the sales revenue exceeds BGN 3 million taxable persons must make monthly advance payments (Art. 84 CITA).

1. Monthly advance payments
Monthly advance payments are determined by multiplying corporate tax rate by the estimated taxable profit for the current year divided by the number of months in the year. These are declared by a standard declaration from the 01st of March until the 15th of April of the same year (art. 87a (1) CITA).

The monthly contributions are paid:

• for January, February and March - by 15th April of the current calendar year;
• for the months from April to November - by 15th of the month to which they relate.
• For December – by 01st December

At the end of the year a recalculation of the tax is made and the difference is additionally paid by the taxable persons by 30th June of the following year in the respective TD of the NRA.

Where the annual income tax significantly exceeds the amount of the monthly advance payments, interest is due on the excess over 25%. In this regard, taxable persons are entitled to increase or decrease their advance payments by submitting a declaration in a standard form (Art. 88 CITA) until the 01st December of the year.

2. Quarterly advance payments
Quarterly advance payments are determined by multiplying the corporate income tax rate by the estimated taxable profit for the current year divided by the number of quarters in the year.

For the first and second quarters they must be paid by the 15th day of the month following the quarter to which the income relates, and for the third quarter - by 01st December. No advance payments are made for the fourth quarter.

At the end of the year a recalculation of the tax is made and the difference additionally paid by the taxable persons by 30th June of the following year in the respective TD of the NRA.

Where the annual income tax significantly exceeds the amount of the monthly advance payments, interest is due on the excess over 25%. In this regard, taxable persons are entitled to increase or decrease their advance payments by submitting a declaration in a standard form (Art. 88 CITA) until the 01st December.