Because freelancers are not our employees and we don't pay taxes on payouts, they must declare any income received via Solar Staff by themselves.
To carry on tax accounting in Bulgaria for your Solar Staff income, you need to:
Be a tax resident
Obtain a taxpayer ID number
Choose your tax status and regime
Tax residence
Bulgarian residents are taxed on their worldwide income, while non-residents are taxed only on their Bulgarian-sourced income.
Income received from activities within Bulgaria or from selling property in Bulgaria is treated as Bulgaria-sourced income, no matter the payer or their location.
An individual is considered a Bulgarian tax resident if:
Their center of vital interests is in Bulgaria (determined with regard to the individual's personal and economic ties to the country).
They have a permanent address in Bulgaria (but only if their center of vital interests is also in Bulgaria).
They reside in Bulgaria 183 or more days during a calendar year (an individual becomes a Bulgarian tax resident in the calendar year in which the 183rd day was exceeded).
Bulgaria has double taxation avoidance agreements with a number of countries (full list), the provisions of which may override the applicable tax residence rules and other provisions of national legislation.
Tax ID number
Identification numbers in Bulgaria:
Unified Civil Number (единен граждански номер, EGN) is a unique number assigned to each Bulgarian citizen at birth; foreign nationals obtain it along with their temporary (удостоверение за постоянно пребиваване) or long-term (удостоверение за долгосрочно пребиваване на чужденец) residence permit, which can be collected only in person at the Migration Directorate of the Bulgarian Ministry of Interior after filing an application. The number consists of ten digits and is printed on the reverse of the identity card or temporary/long-term residence permit.
Learn more about the two types of permits.Foreign Personal Number (личен номер на чужденец, LNCH) is assigned to foreign nationals who have a residence permit (вид на пребиваване) in Bulgaria. Obtaining a residence permit also requires filing an application and then collecting it at the Migration Directorate of the Bulgarian Ministry of the Interior. LNCH is the ID foreign nationals can use when getting employed, accessing healthcare, or benefiting from other public services in Bulgaria. The number consists of ten digits and is printed on the residence permit card.
Learn more about the residence permit.Unified Identification Code (единен идентификационен код, EIK, or BULSTAT Code) is the identifier assigned to entrepreneurs after completing registration as an individual entrepreneur or self-employed with the Registry Agency (Агенция по вписванията). The number consists of nine digits (when you fill out the documents, letters Z may be added until the length reaches 13 characters).
Learn more about EIK
Taxes and contributions
Tax liabilities in Bulgaria depend on the freelancer's status and/or fulfillment of certain conditions. To receive income via Solar Staff, freelancers from Bulgaria need to be registered as:
Self-employed (свободна професия)
Individual entrepreneur (единоличен търговец на дребно)
IMPORTANT! Solar Staff does not have the option to choose a tax status for freelancers based in Bulgaria, but you can fill in your tax ID in your account.
In Bulgaria, taxpayers' contacts with the National Revenue Agency (Национална агенция за приходите, NRA) are mostly done online, so to pay taxes and file returns, you need to obtain access to the NRA online services. This can be done with a digital signature or a Personal Identification Code (персонален идентификационен код, PIC), which you can then use to apply for various public services.
Read on for more details.
Self-employed individual
Self-employed individual (свободна професия) is a tax status in Bulgaria for certain types of activities (Clause 29 of Supplementary Provisions of the Income Taxes on Natural Persons Act). This status is available for Bulgarian citizens and foreign nationals holding a temporary/long-term residence permit. To apply for the status, you need to register with the Registry Agency (if you have a digital signature, you can do this online) within seven days after commencing your activities and provide:
Identity card
Proof of payment of a BGN 10 duty
Document confirming your right to engage in the activity you have chosen (diploma or license)
Next, you need to register with the NRA (Национална агенция за приходите) at the address you are staying at in Bulgaria as an individual.
A self-employed individual has several tax regimes to choose from:
General regime
The general tax regime does not require any additional registration on the part of the taxpayer and entails the following taxes:
Income tax (данък върху доходите на физическите лица) is paid at a rate of 10%. There is an option of a 25% deduction from total income (however, for freelancers who are journalists, lawyers, scientists, researchers, artists, or educators and hold a license, the deduction is 40%). These expenses are standard and do not need to be documented.
Reporting and payment. An annual tax return is filed online using a digital signature or a PIC or after completing a digital identification procedure before April 30 of the year following the reporting one. That said, income received via Solar Staff qualifies as income from other economic activities, which means that preliminary tax returns need to be filed quarterly and advance payments need to be made (for the first three quarters, due dates for returns and advance payments are April 30, July 31, and October 31 respectively, and for the fourth quarter, it is January 31 of the year following the reporting one).
You can also qualify for a 5% discount off the total tax liabilities, but no more than BGN 500, if you have filed your annual tax return electronically and paid the tax before March 31 and have no overdue taxes.
Useful links: Tax base calculator for personal income tax purposes; list of tax benefits; video guide on how to fill out your tax return.
VAT (данък върху добавената стойност) needs to be calculated at a rate of 20% (Article 66 of the Value-Added Tax Act). You must register as a VAT payer if your turnover is more than BGN 100,000 for the period not exceeding the last 12 consecutive months preceding the current one. Registration must be completed within seven days after the end of the tax period in which you exceeded the revenue threshold.
Reporting and payment. A VAT return is filed monthly before the 14th day of the month following the reporting one (for example, a return for March is due before April 14) either online or at your tax office. The same deadlines apply to VAT payment. Along with your tax return, you also need to file your sales ledger and purchase ledger (examples are shown in Appendices 10 and 11 to the Value-Added Tax Act).
Social security contributions (осигурителните вноски). To pay contributions, you need to register as a self-insured person by lodging an application with the NRA. For contributions, the following rates apply:
19.8% – pension contributions for those born before January 1, 1960.
14.8% – pension contributions for those born after December 31, 1959; 3.5% – contributions to the General Sickness and Maternity Fund.
5% – additional mandatory pension insurance for those born after December 31, 1959.
8% – health insurance.
Reporting and payment. A declaration of social security contributions is filed annually before the 25th day of the month following the reporting one. To learn more about calculating the base amount for your social security contributions, see here. A declaration for the year is filed before April 30 of the year following the reporting one.
Useful links: Table showing contribution breakdown by fund.
Patent regime
You can choose the patent regime (патентен данък) if your activity is on the list shown in Appendix 4 to the Local Taxes and Fees Act. To be eligible for this tax regime, freelancers, in addition to meeting the activity criterion, must make sure they are not registered as VAT payers and their turnover for the previous year is within BGN 50,000.
Under the patent regime, freelancers obtain a patent and pay the following taxes:
Patent tax of a fixed amount set out in Appendix 4 to the Local Taxes and Fees Act. It is payable separately on each activity. A tax return must be filed to the municipality at your place of registration before January 31 of the current year. If you commence activities after this date, your tax return must be filed immediately before that. The patent tax is paid in four equal instalments before January 31, April 30, July 31, and October 31 for the first, second, third, and fourth quarters respectively. There are also deductions that apply under the patent regime. Freelancers that have filed a patent tax return and have paid the full amount of the patent tax before January 31 of the current year get a 5% discount.
VAT does not apply under this regime.
Social security contributions are the same as under the general regime.
Individual entrepreneur
Individual entrepreneur (единоличен търговец на дребно) is a status you can apply for at the Registry Agency by filing an application and providing your ID (passport or temporary / long-term / permanent residence permit).
Freelancers in this status have two regimes to choose from:
General regime
The general tax regime does not require any additional registration on the part of the taxpayer and entails the following taxes:
Corporate income tax (корпоративното подоходно облагане) at a rate of 15%. For the purposes of this tax, advance payments towards the personal income tax are deductible, and there are also tax benefits described in Chapter 4 of Bulgaria's Income Taxes on Natural Persons Act.
Reporting and payment. Tax returns are filed online annually and taxes paid between March 1 and June 30 of the year following the reporting one. You must also make advance payments each month (if your net income from sales for the year preceding the previous one is over BGN 3 million) and each quarter (if said income is within the range of BGN 300,000.01 and BGN 3 million). Monthly advance payments for January, February, and March are paid before April 30; for April to November, before the 15th day of the current month; and for December, before December 1. Quarterly advance payments for the first and second quarters are due before the 15th day of the month following the quarter, and for the third quarter, payments are due before December 1. You make no advance payment for the fourth quarter. A tax return detailing the type and amount of your advance payments for the current year must be filed between March 1 and April 15 of the same year.
You don't need to make advance payments if:
Your net income as an individual entrepreneur from sales for the year preceding the previous one does not exceed BGN 300,000.
It is your first or second year of operating as an individual entrepreneur.
VAT and social security contributions are the same as for self-employed individuals under the general regime.
Additional reporting. All individual entrepreneurs in Bulgaria annually file their financial statements and activity report with the Registry Agency. Sample documents are available here.
Patent regime
Similar to the self-employed, individual entrepreneurs can opt for a patent tax regime (патентен данък) under the same conditions.
Additional info
Income received through Solar Staff is declared based on the Offer Agreement using data from certificates and invoices.
If you have any questions, get in touch via the chat in your Solar Staff account or email us at [email protected].