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Bulgaria is a country undergoing strong economic and commercial expansion within Europe, with a particular role as a strategic bridge to Russia and China.
The greatest impetus to economic growth came from Bulgaria joining the European Union in 2007.
The Bulgarian Government encourages investment through specific legislation protecting foreign investors and stimulates the domestic market by keeping taxation low and using European funds to support structural investment and private enterprise.
Bulgaria is one of the few countries in the world to adopt a flat tax system, rather than one that rises with the income generated. First conceived by US economist Milton Friedman (the father of contemporary neoliberalism) in 1956, the flat tax is a non-progressive tax system in which a single rate applies, although it may also be combined with tax credits or deductions: in the latter case, everyone has the same statutory rate (constant), while the average effective rate rises as income increases. This rate generally applies to household income, although in other cases it can also apply to business income.
In Bulgaria, the flat tax applies to both individuals and legal entities, and there is no tax-free threshold.
The introduction of the 10% flat tax in Bulgaria makes a significant contribution to the country’s growth.
The 10% FLAT TAX was also introduced for the taxation of corporate profits.
Within the European Community, a 10% rate represents the lowest possible tax burden for individuals, while for companies it is among the very lowest.
Pensions are not subject to taxation.
The tax system is thus geared towards simplification and does not penalise higher incomes. There is therefore no disincentive linked to remaining within particular income brackets, and the system does not penalise those who achieve greater success in their work.
De Amicis & Petrova Law Firm provides legal and corporate advice to investors and entrepreneurs interested in operating in the Republic of Bulgaria.