Bulgaria Cross-Border Tax Guide 2026
Bulgaria applies 5% WHT on dividends, 10% on interest and royalties, with reliefs under EU directives and over 70 double tax treaties. Transfer pricing and CFC rules align with EU standards.
Withholding Taxes
Bulgaria imposes withholding taxes on payments to non-residents:
- Dividends: 5% (0% for EU parent companies under Parent-Subsidiary Directive)
- Interest: 10% (0% for EU residents under Interest & Royalties Directive)
- Royalties: 10% (0% for EU residents under Interest & Royalties Directive)
Rates may be further reduced under applicable double tax treaties.
Double Tax Treaties (DTTs)
Bulgaria has over 70 DTTs, including with: all EU Member States, USA (0% dividends, 5% interest), Canada, China, India, UAE, Turkey, Switzerland, Norway, Russia, and many others. Most treaties follow the OECD Model and provide reduced WHT rates and a permanent establishment threshold of 6–12 months.
Transfer Pricing
Bulgaria follows the OECD Transfer Pricing Guidelines and EU standards. Related-party transactions must be at arm's length. Documentation requirements include:
- Master file and local file for large taxpayers
- Country-by-country reporting (CbCR) for groups > EUR 750M revenue
- Benchmarking studies for cross-border intercompany transactions
Controlled Foreign Company (CFC) Rules
Bulgaria has CFC rules aligned with the EU Anti-Tax Avoidance Directive (ATAD). A foreign entity is treated as a CFC if a Bulgarian taxpayer holds >50% and the entity is subject to effective tax below 50% of Bulgaria's CIT (i.e., below 5%). Passive income may be attributed to the Bulgarian shareholder.
EU Directives
As an EU member state, Bulgaria applies:
- Parent-Subsidiary Directive: 0% WHT on dividends to EU parents
- Interest & Royalties Directive: 0% WHT on interest/royalties to EU associated companies
- Merger Directive: tax-neutral reorganisations within the EU
- ATAD: CFC rules, interest limitation (30% EBITDA), exit taxation, GAAR