Bulgaria's tax system luring new businesses

Bulgaria is among the top ten countries in the world with the lowest effective tax rates and is preceded only by Hong Kong, tax havens like the Bahamas Islands and petro-states like Saudi Arabia. It's no surprise then that in times of crisis, when the whole business world is shaking and struggling with financial problems, Bulgaria has seen a very distinct increase in new business startups as well as a considerable increase in the number of newly registered businesses from abroad. Local and international reports show more and more evidence of the fact that international businesses tend to establish their headquarters in Bulgaria in order to optimise their overall tax burden since Bulgarian's tax environment is by far the most favourable within the EU.

The tax environment, the rates and multiple incentives contribute greatly to international businesses allowing them to effectively and legally reduce their tax burden. The corporate income tax in Bulgaria is at a flat rate of 10% of the net income for the respective year. For a comparison the corporate tax burden in the rest of the European member states is dramatically heavier - in the UK it varies between 20-28%, in the Netherlands it's at 25%, in Italy at 31.4%, in Germany it varies between 14% and 17.5% and in Greece at 25%. At 10% corporation tax is well below the range of 15% to 36% witnessed in other EU countries.  Moreover it's also possible to get a rebate up to 100% in tax in case the business is situated in a region of high unemployment.

In regards to personal tax, Bulgaria is also at an advantage when compared to other countries. The personal income tax rate is a flat 10% with a cap at 2,000 BGN/month (ie, €1,000/month). As for the the dividend tax it is at 0% when the dividend is being distributed between EU member residents.

Not surprisingly the example set by many SMEs and big international corporations locating in Bulgaria has driven others to do the same. And knowing that in addition to the lowest tax burden from all EU countries there is also a very fast and hassle-free company registration procedure, a flexible and modern corporate law system; financial, fiscal and banking stability, the reassurance of the EU membership, a big pool of skilled workers available and the lowest costs of labor in the EU, it's easy to understand why Bulgaria is fast becoming an incorporation destination of choice.

Source newbusiness.co.uk