Frequently Asked Questions
When should I register for VAT?
If you provide services in Bulgaria, registration under the VAT Act is made when the turnover reaches BGN 166 000 for the last 12 months. When this amount is reached, registration must be made within seven days of the date on which the turnover is reached.
If you provide or receive services from other countries, you also need to register under Article 97a of the VAT Act.
It is also possible to make a voluntary VAT registration if the customer wishes.
For more information, contact us or visit the website of the National Revenue Agency.
Is social security insurance mandatory?
If you work as a self-employed person or as a company, you must take out insurance. The minimum amount on which you can pay social security contributions is 1077 BGN and the maximum - 3750 BGN. It is your monthly obligation to pay the national insurance contributions, regardless of whether you have earned any income in that month.
Examples for social security insurance sums
Contributions are a percentage of insurable income, namely:
- Social Security (DOO) - 18.30% or 23.30% for those born before 01.01.1960
- National Insurance (DZPO) - 5%
- Health - 8%
If you are insured on the minimum amount of 1077 BGN, the following contributions are due:
- Social Security - BGN 197.11.
- National insurance - BGN 53.85
- Health - BGN 86.16
If you are insured on the maximum amount of 3750 BGN, the following social security contributions are due:
- Social Security - BGN 738.75
- Social Insurance - BGN 187,50
- Health insurance - BGN 300
Remember that the amount you are insured on should be close to your expected income for the year, as these amounts should be equalised when completing your annual tax return.
Please, get in touch with us for more information.
How much taxes do I pay?
The annual tax payable by self-employed persons is 10% of the income for the calendar year, after deduction of 25% of statutory expenses and the amount of social security contributions paid during the year.
In case you carry out patent activity, please follow this link: Patent taxes
Cash receipts & bank accounts
If you are a freelancer you are not obliged to issue receipts. However, it is necessary to issue a document showing the amount of income received. This document should contain details of the date, the business and the payer of the income.
You do not need to open a new bank account. You can use your existing personal one.
Patent tax
In the case of certain activities, such as hairdressing/beauty services, property rental, taxi transport, the law allows income to be taxed with the patent tax. The Local Taxes and Fees Act (LTFA) applies in this case..
The requirements here are that the turnover for the previous year does not exceed BGN 166,000 and that you are not registered under the VAT Act (except in cases of partial registration). The Municipal Council also determines the amount of the patent tax.
The patent tax is payable in advance four times a year in four equal instalments.
For more information, contact us or visit the National Revenue Agency website.
Working with clients outside of Bulgaria
If you are a freelancer and your clients are outside Bulgaria, there are some other things you need to know. Still, it is best to consider your case individually. Contact us and take advantage of the 30-minute free consultation, кwe offer to all new clients.
When working with clients from the European Union:
If you are working with clients from the European Union it is compulsory to register for VAT. You can check the status of your client (whether they are registered in the European VIES system here.
You then issue an invoice for the agreed value without charging VAT. In the reason for not charging VAT you write the following text: article 21 paragraph 2 of the VAT Act.
When dealing with non-EU customers:
If you work with customers who are outside the European Union, you are not obliged to register for VAT. Again, the invoices you issue must be exclusive of VAT. The reason for not charging VAT should read as follows: article 21(5) of the VAT Act.
Working with US clients
If you have chosen to work with US clients, there are a few important things to know. U.S. law requires that you fill out a certain form before you receive U.S. revenue.
If you are a self-employed freelancer, the form you need to fill out is the W-8BEN aka Department of the Treasury Internal Revenue Service Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting (Individuals)
If you are registered as a corporation, then you must complete a Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities) /W-8BEN-E/. Once completed, you must submit this document to the payer of the income, or submit it to the platform from which you will receive your income, e.g. UPWORK or FIVERR.
You can read a little more about working for US clients with non-US counterparties at the following links:
What is the advance payment of social security contributions by freelancers?
Advance Social Security Contributions for Self-Employed Individuals
Every self-employed individual is required to make advance social security contributions each month, with the minimum based on the minimum social security income (1,077 BGN for 2025).
At the end of the year, after calculating the actual annual income, an adjustment is made – if the profit exceeds the insured income, additional contributions are due on the difference.
Example:
- If a freelancer chooses to contribute based on the minimum (1,077 BGN per month) but declares an annual profit of 15,000 BGN, they will need to pay additional contributions on the difference.
- If they contribute based on a higher amount (e.g., 1,200 BGN), the amount to be topped up will be smaller.
This system applies to all self-employed individuals – lawyers, consultants, IT specialists, designers, and others.
Are freelancers obliged to register for VAT when receiving services from abroad?
Yes, they are obliged. According to an NRA opinion:
"Bulgarian citizens in their capacity as taxable persons or companies that receive consulting, advertising, expert, engineering and other services from a person established in an EU Member State are obliged to register under Article 97a of the VAT Act. Persons registered under this special regime shall not be entitled to a tax credit for the VAT charged on the supplies received by them."
How are monthly contributions declared?
Monthly social security contributions are declared by the 25th of the following month by submitting a declaration form 1 to the NRA.
If I have no income this month, do I have to pay social security?
National insurance contributions are payable in advance by self-employed persons. If, for any reason, the freelancer has not been active for a certain period of time, a declaration of suspension of insurance may be submitted and no contributions are due for that period.
When should I register for VAT?
If you provide services in Bulgaria, registration under the VAT Act is made when the turnover reaches BGN 166 000 for the last 12 months. When this amount is reached, registration must be made within seven days of the date on which the turnover is reached.
If you provide or receive services from other countries, you also need to register under Article 97a of the VAT Act.
It is also possible to make a voluntary VAT registration if the customer wishes.
For more information, contact us or visit the website of the National Revenue Agency.
Are freelancers obliged to register for VAT when receiving services from abroad?
Yes, they are obliged. According to an NRA opinion:
"Bulgarian citizens in their capacity as taxable persons or companies that receive consulting, advertising, expert, engineering and other services from a person established in an EU Member State are obliged to register under Article 97a of the VAT Act. Persons registered under this special regime shall not be entitled to a tax credit for the VAT charged on the supplies received by them."
Is Social Security Insurance Mandatory?
If you work as a self-employed person or as a company, you must take out insurance. The minimum amount on which you can pay social security contributions is 1077 BGN and the maximum - 3750 BGN. It is your monthly obligation to pay the national insurance contributions, regardless of whether you have earned any income in that month.
Examples for social security insurance sums
Contributions are a percentage of insurable income, namely:
- Social Security (DOO) - 18.30% or 23.30% for those born before 01.01.1960
- National Insurance (DZPO) - 5%
- Health - 8%
If you are insured on the minimum amount of 1077 BGN, the following contributions are due:
- Social Security - BGN 197.11.
- National insurance - BGN 53.85
- Health - BGN 86.16
If you are insured on the maximum amount of 3750 BGN, the following social security contributions are due:
- Social Security - BGN 738.75
- Social Insurance - BGN 187,50
- Health insurance - BGN 300
Remember that the amount you are insured on should be close to your expected income for the year, as these amounts should be equalised when completing your annual tax return.
Please, get in touch with us for more information.
What is the advance payment of social security contributions by freelancers?
Advance Social Security Contributions for Self-Employed Individuals
Every self-employed individual is required to make advance social security contributions each month, with the minimum based on the minimum social security income (1,077 BGN for 2025).
At the end of the year, after calculating the actual annual income, an adjustment is made – if the profit exceeds the insured income, additional contributions are due on the difference.
Example:
- If a freelancer chooses to contribute based on the minimum (1,077 BGN per month) but declares an annual profit of 15,000 BGN, they will need to pay additional contributions on the difference.
- If they contribute based on a higher amount (e.g., 1,200 BGN), the amount to be topped up will be smaller.
This system applies to all self-employed individuals – lawyers, consultants, IT specialists, designers, and others.
How are the monthly contributions declared?
Monthly social security contributions are declared by the 25th of the following month by submitting a declaration form 1 to the NRA.
If I have no income this month, do I have to pay social security?
National insurance contributions are payable in advance by self-employed persons. If, for any reason, the freelancer has not been active for a certain period of time, a declaration of suspension of insurance may be submitted and no contributions are due for that period.
How much taxes do I pay?
The annual tax payable by self-employed persons is 10% of the income for the calendar year, after deduction of 25% of statutory expenses and the amount of social security contributions paid during the year.
In case you carry out patent activity, please follow this link: Patent taxes
Cash receipts & bank accounts
If you are a freelancer you are not obliged to issue receipts. However, it is necessary to issue a document showing the amount of income received. This document should contain details of the date, the business and the payer of the income.
You do not need to open a new bank account. You can use your existing personal one.
Patent tax
In the case of certain activities, such as hairdressing/beauty services, property rental, taxi transport, the law allows income to be taxed with the patent tax. The Local Taxes and Fees Act (LTFA) applies in this case..
The requirements here are that the turnover for the previous year does not exceed BGN 166,000 and that you are not registered under the VAT Act (except in cases of partial registration). The Municipal Council also determines the amount of the patent tax.
The patent tax is payable in advance four times a year in four equal instalments.
For more information, contact us or visit the National Revenue Agency website.