Creating handmade jewelry often starts as a hobby but can quickly turn into a profitable business. When sales on Instagram, Facebook, or Etsy start to grow, the inevitable question arises: “How do I legalize my activity without giving all my money to taxes and accountants?”.
In Bulgaria, you have two main paths – to register as a craftsman (a type of freelance profession) or to open a company (EOOD). Here is what is more profitable for you in 2026.
Option 1: Registration as a Craftsman (Patent Tax)
If you make the jewelry yourself with your own hands, the state gives you a great opportunity to register as a craftsman with the Regional Chamber of Crafts.
How is the income taxed? As a craftsman, you switch to the so-called patent tax. This is a fixed amount that you pay to the municipality once a year (or in installments), regardless of how much jewelry you have sold.
- The amount depends on the municipality where you work (for example, in Sofia it is different from Varna) and is usually very affordable.
- You do not pay the standard personal income tax percentage on your revenue. You only pay the patent and your mandatory social security contributions every month.
- The revenue limit to remain on the patent tax is 100,000 BGN per year.
Who is it best for? This option is perfect for starting creators and people who work alone. There is no need to collect invoices for every bead, wire, or box, because the state is not interested in your expenses – you have already paid your fixed tax.
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Option 2: Opening an EOOD (Ltd.)
Opening an EOOD (Single-member limited liability company) turns you into a classic merchant.
How is the income taxed? Here you pay a 10% corporate tax on your actual profit (Revenue minus Expenses). To withdraw the money to yourself (as an individual), you pay an additional 5% dividend tax.
Who is it best for? An EOOD becomes the better choice when:
- You start hiring people to make the jewelry for you.
- You buy very expensive materials (gold, precious stones, specialized engraving machines) and want to deduct these expenses to reduce your profit.
- You open a physical store or gallery (where you are now a pure merchant).
- If you are hesitating whether the time for a company has come, read our detailed comparison in Advantages and Disadvantages of an EOOD (Ltd.) and Freelancing.
Do you need a cash register?
This is the biggest fear of every creator.
- If you are an EOOD, a cash register is almost always mandatory, unless you receive all payments strictly via bank transfer or postal money order.
- If you are a craftsman, you are also exempt from a cash register, as long as you sell entirely online and send your jewelry with couriers (Econt, Speedy) using the “Postal Money Order” (PMO) service. In this case, the courier issues the receipt to the client instead of you.
- Important note: even if you do not have a cash register, the money from cash on delivery automatically enters your tax file in the NRA and must be declared. See more about the rules in Freelancing and cash registers.
Conclusion
For 90% of handmade jewelry creators at the beginning of their journey, registering as a craftsman on a patent tax is much cheaper, easier, and stress-free. It allows you to create in peace, knowing in advance exactly how much tax you owe for the year. The EOOD is the logical next step when your brand grows exponentially, you start buying equipment worth thousands, or you decide to open your own boutique on the main street.
Remember that no matter which path you choose, filing annual reports is mandatory. If you are unsure about the deadlines, check out When and who must file an annual tax return?.
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