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USA - Bulgaria Tax Treaty

Updated on Thursday 26th November 2020

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USA - bulgaria double tax treaty.jpgBulgaria and USA signed a double taxation agreement in 2007 with the purpose of avoiding the taxation of incomes twice. The business collaboration between Bulgaria and the USA was bolstered with the help of this important arrangement signed at the right time. Our company formation agents in Bulgaria are here to offer support to foreign investors wanting to start a business in Bulgaria. Moreover, they can help entrepreneurs register for taxation in Bulgaria.
 

What are the taxes covered by the USA-Bulgaria double tax treaty?

 
The corporate income tax and the personal income tax are protected by the double taxation treaty signed between the two countries, with the mention that in the case of USA, the federal income tax enters the discussion. Here are important details to know about the double taxation agreements signed by USA and Bulgaria:
 
  1. Both natural persons and companies in Bulgaria and USA are protected by the agreement.
  2. Subsidiaries are permanent establishments. The incomes generated are protected against double taxation, whether in Bulgaria or in USA.
  3. Social security taxes do not enter the protection of this double taxation treaty.
  4. Specific tax rates apply to dividends, interests, and royalties.
 
The double taxation treaty signed by Bulgaria and USA comprises a series of important provisions under which companies and natural persons generating incomes in both states are protected against fiscal evasion and double taxation. One of our company formation specialists in Bulgaria can tell you more about taxation in this country. We are also at your disposal if you would like to register a company in Bulgaria.
 

Tax rates mentioned by DTT signed by Bulgaria and USA

 
There are specific tax rates that apply to dividends, interests, and royalties, as stipulated by the double taxation agreement signed by Bulgaria and USA. As such, the 5% rate applies to dividends in the case the owner holds at least 10% of the voting rights in the firms. Otherwise, the tax is set at a 10% rate. In the case of interests and royalties, these are levied at a maximum tax rate of 5%. 
 

Natural persons and taxation

 
US citizens working in Bulgaria and generating incomes in this country will be taxed only once on that income. The same goes for Bulgarian citizens working in USA. However, taxation applies to all revenues if the citizens generate incomes in both contracting states. The tax system can be complex for US nationals wanting to start a business in Bulgaria. This is where our specialists in taxation can intervene and explain all you need to know in this matter. We can help international entrepreneurs start a business in Bulgaria by handling all the formalities implicated.
 

Taxation in Bulgaria

 
The tax regime in Bulgaria is appealing to entrepreneurs from abroad looking for a business place that provides such advantages. For instance, the corporate income tax in Bulgaria is only a 10% rate, one of the lowest among European countries. This is quite beneficial for both local and international investors. The standard VAT rate is set at 20% (lower rates apply to different products), the real estate tax ranges between 0.15% and 0.30%, and sole proprietorships in Bulgaria are subject to a flat tax of 15% imposed on net incomes. This is in large lines the tax structure in Bulgaria, yet, one needs to fully understand the regime prior to any business development in this country. We have tax advisors that can help you understand better these aspects.
 

Why invest in Bulgaria

 
Bulgaria is an appealing country from a business point of view. The state offers unlimited business opportunities to both domestic and international investors, sustained by important governmental encouragements to attract foreign money. The key facts about Bulgaria are the macroeconomic stability, the appealing tax system, the ease of doing business, the developed relations with international markets plus a skilled and appreciated workforce. The tourism sector, manufacturing, IT, energy, and real estate are quite prolific in Bulgaria and a magnet to foreign investors. The 2020 Doing Business report ranks Bulgaria 61st out of 190 economies in the world. Here are some interesting facts and figures:
 
  • Approximately USD 52 billion was the total FDI stock for Bulgaria in 2019.
  • The Netherlands is one of the main investors in Bulgaria, around 17.3% of the total FDI coming from this country in 2019.
  • Bulgaria signed more than 60 double taxation treaties with countries worldwide.
 
More details about the double tax agreements signed between Bulgaria and the USA can be solicited from our team of specialists. Please contact our team and ask for guidance and support.
 

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Call us now at (+44) 203-287 0408 to set up an appointment with our specialists in company formation in Sofia, Bulgaria. Alternatively you can incorporate your company without traveling to Bulgaria.

As our client, you will benefit from the joint expertize of local lawyers and international consultants. Together we will be able to offer you the specialized help you require for your business start-up in Bulgaria.

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