Gambling winnings in Bulgaria are subject to a different tax regime depending on whether they are won by licensed or unlicensed operators, and only the latter are taxable and reportable. Failure to comply with tax requirements can result in fines, interest and inspections by the National Revenue Agency (NAP), so it is important that players are aware of their obligations.
With the growing popularity of online gambling and sports betting in Bulgaria, more and more people are confronted with the question of whether and how the process of declaring gambling income is done. Legislation in the country provides for different tax regimes depending on the source of income, which requires a clear understanding of when tax is due and how to make the declaration.
In this article, we will look at the legal framework, reporting obligations and the potential consequences of non-compliance.
Legal framework for gambling in Bulgaria
Gambling in Bulgaria is regulated by the Gambling Act. This legislation defines which games are considered gambling, the conditions for organising them and the rules for taxing winnings.
According to the law, games of chance are all games in which the winnings depend wholly or partly on chance. This includes:
- Lotto and lotteries
- Casino games
- Online and offline sports betting
- Poker and other card games organised for commercial purposes
In order for an operator to offer such services to Bulgarian citizens, it must hold a license from the National Revenue Agency (NAP) or another authorized institution within the European Union. Obtaining a licence entails a number of regulatory requirements, including ensuring transparency in the management of funds, consumer protection and compliance with tax obligations.
Additionally, the law imposes stringent measures to prevent abuse by obliging gambling operators to comply with money laundering and terrorist financing control requirements.
Each licensed operator is required to identify its customers and report suspicious transactions to the competent authorities. In addition, gambling advertising is also strictly regulated to minimise the impact on vulnerable groups, such as minors and addicts.
Control over gambling activities is exercised by the State Gambling Commission, which monitors compliance with requirements, imposes sanctions for violations and has the power to block unlicensed operators.
In recent years, increased measures have been taken to monitor online gambling activity, which includes monitoring transactions and cooperating with banks and payment institutions to prevent illegal transactions.
Tax treatment of gambling winnings
Non-taxable income
One of the key features of taxation in Bulgaria is that winnings from gambling organised by licensed operators in Bulgaria and the European Economic Area (EEA) are exempt from taxation. This means that you will have no obligation to declare and pay tax on winnings if you win from:
- A bookmaker licensed in Bulgaria (e.g. the National Lottery or international operators licensed in Bulgaria);
- Online casinos licensed within the EU;
- State lottery and lotto games
Taxable income
If profits come from unlicensed operators or from outside the EU, they are subject to a 10% income tax under the Personal Income Tax Act (PITA). This includes:
- Profits from bookmakers and casinos registered in non-EU countries;
- Gambling organised by unlicensed individuals;
- Poker winnings from unlicensed tournaments.
Declaring gambling income
When is declaration required?
The obligation to declare arises in cases where the winnings are taxable, i.e. received from operators who are not licensed in Bulgaria or the EU. Declaration is made through the Annual Tax Return (ATR) under Article 50 of the Income Tax Act.
It is important to note that in the case of significant winnings arising from regular gambling activities, the National Revenue Agency (NAP) may require additional information on the source of the funds. This is particularly important for persons who regularly place bets and may come under scrutiny for undeclared income.
Declaration procedure
- Deadlines:
The return is to be submitted by 30 April of the year following the year in which the income was earned. Late filing may result in penalties and additional administrative measures. Find out what the procedure is if you file after the deadline – Filing an annual tax return after the deadline. - Ways to file:
– Online via the National Revenue Agency (NAP) electronic portal with a personal identification code (PIC) or electronic signature;
– At an National Revenue Agency (NAP) office;
– By post with return receipt. - Documents required:
– Bank statements of the profits received;
– Confirmation from the gambling operator of the amount paid;
– Other documents proving the origin of the funds.
If gambling income is received in foreign currency, it must be declared in lev equivalent at the BNB exchange rate on the date of acquisition. In the absence of official documents on the origin of the funds, the tax authorities may request additional evidence and, in the event of discrepancies, impose penalties.
In the case of persons who play professionally, the profits may be considered as a business activity, which implies additional tax obligations and registration under the Corporate Income Tax Act (CITA) or the VAT Act. Find out more in the article What is VAT and when do we need to register under the VAT Act?
Consequences of not declaring taxable income
If you do not declare your taxable income, you risk:
- A fine or a financial penalty – according to the Administrative Offences and Penalties Act, the fines for not filing a tax return or not filling it in correctly range between BGN 500 and BGN 3,000 for individuals, and the penalties can go up to BGN 6,000 for a repeat offence;
- Charging interest – interest is charged for unpaid taxes at the basic interest rate set by the BNB, increased by 10 percentage points. This means that the longer the payment of the taxes due is delayed, the higher the amount to be repaid becomes;
- Checks and audits by the National Revenue Agency (NAP), which can lead to more serious penalties, including seizure of bank accounts and other assets. Administrative measures such as attachment of income and judicial enforcement may be imposed in case of systematic non-compliance.
The National Revenue Agency (NAP) already has mechanisms in place to monitor transactions, especially those related to gambling, and actively monitors the financial flows of individuals who gamble regularly and earn amounts above BGN 5,000. This includes automated systems to analyse bank transactions and control payments to and from gambling operators. In cases of significant discrepancies between the declared income and the funds available in the player’s accounts, the tax authorities may initiate further checks and audits.
In addition to administrative penalties, the National Revenue Agency (NAP) may impose enforcement measures such as seizing assets and requiring additional documents certifying the origin of the funds.
In more serious cases of tax evasion, it is possible to initiate criminal proceedings under the Criminal Code, which may lead to more severe consequences, including court sanctions and even imprisonment.
Also, frequent and large transactions related to gambling winnings may lead to increased interest from other institutions, such as the SANS, which investigate cases of possible money laundering. As a result, gamblers need to be particularly careful and ensure that they strictly comply with tax requirements to avoid future problems with the law.
Conclusion
Declaring gambling income is an important element of tax compliance in Bulgaria. If you gamble and win, you need to know when your winnings are taxable and what the reporting procedures are. If in doubt, you can always consult a tax professional or the National Revenue Agency (NAP) to avoid potential penalties.
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