Bulgaria, a member state of the European Union, is an attractive residency option, a decent business jurisdiction and one of the easiest countries in which to open a bank account as a non-resident. This guide covers the best residency options as well as how taxation works and more.
Residency options
Bulgaria has been a popular residency option for EU citizens ever since it implemented full freedom of movement in 2015. It has also become a popular residency option for non-EU citizens thanks to its fairly affordable fast-track residency program. While most migrants choose Bulgaria for its low cost of living and reasonable tax rates, lifestyle and community have also become factors as the expat population and the quality of the services serving it continues to increase.
EU citizens
As per EU rules, EU citizens have the right to live and work in Bulgaria indefinitely, with few conditions. Registration after three months is mandatory and certain documents must be supplied such as proof of health care cover and proof of financial means (if no employment has been secured). As for permanent residency, it can be achieved after five years of uninterrupted residency. Provided that certain conditions are met, naturalization is also possible.
Non-EU citizens
For non-EU nationals with at least a million BGN burning a hole through their pockets, getting a Bulgarian passport is a relatively easy, straightforward process. It also is, in my opinion, a must-do. Why? Because getting the right of abode for nearly an entire continent is a no-brainer not to mention a smart diversification move. It can also be a good tax move considering the flat 10% rate for both individuals and businesses.
To qualify, you need to have a clean criminal record and at least one million BGN of capital (around half a million EUR). More capital may be needed depending on the qualification route chosen. At least two visits to Bulgaria are required, one to submit the permanent residency application and one to get the PR card. I do recommend spending more time though as some local knowledge will help when travelling with the Bulgarian passport (pretty suspicious at a border if you do not know anything about your “home country”) and besides, Bulgaria is a beautiful, interesting country to visit.
It is important to understand that the capital is not a fee or donation (unlike in many Caribean and Pacific countries). It is invested in Bulgaria and can be recuperated after citizenship is secured. Is it safe? That will depend on the qualification route you choose but yes, it likely is.
What is the timeline? First of all, you will need to prepare your documents and make the investment. An investment certificate will then be issued to you within the following three months allowing you to apply for a visa (category D). Approval for the visa will be granted within a few weeks and you will then need to visit the country for the first time to deposit your application for permanent residency. That application should be approved within three months. You will then need to visit the country for a second time to apply for a PR card. The card will be delivered to you within three days. Depending on your situation, you will become eligible for naturalization a year later (if you qualify for the accelerated route) or five years later if using the regular route. There is no need to spend any time in-country once you have received your PR card and you are exempted from the requirement of learning the Bulgarian language.
Interestingly, as a permanent resident, you will have the right to live anywhere within the EU, subject to certain conditions.
Tourist entry
Non-EU citizens are limited to spending a maximum of 90 days for every rolling period of 180 days. Because Bulgaria is not a full member of the Schengen area, time spent in other Schengen countries does not count towards the 90 days limit. Time spent in Bulgaria under a resident visa also does not count.
Taxation
Bulgaria’s main strength is its taxation system, one of the European Union’s least burdensome. The rate for both personal and business income is a flat 10%.
For personal income, however, you need to add a social security contribution of up to 33.4% (employer and employee sides combined). With that said, the contribution only applies to the first 2600 BGN in income, any income above that is exempt. European citizens can also get around having to pay social security in Bulgaria by electing to continue paying for it in their home country (for up to two years, see EU form A1).
A 5% withholding tax may apply when distributing business profits via dividends. This is the case when the recipient is a private individual, a non-profit organization or a non-resident (except if a treaty says otherwise). This is not usually the case, however, when the recipient is a legal entity established in Bulgaria or another EU country.
Like every other EU countries, Bulgaria has implement the Anti Tax Avoidance Directive (ATAD) in 2019. ATAD is a comprehensive set of CFC / anti-avoidance rules, you can learn more about them here. Bulgaria is also a CRS-compliant country.
Compliance
A tax resident of Bulgaria is an individual who is either deemed to be domiciled (ties) in the country or who spends at least 183 days in-country in any twelve months period.
Individual residents are liable for taxation on their worldwide income. Non-residents are only liable for their Bulgarian-sourced income. The fiscal year is the calendar year and individual returns must be filed by the 30th of April.
Powerful tax strategies
You can find powerful tax strategies in The Freedom Surfer course, especially in module two and three.
Banking
Bulgaria is certainly no banking center. Even the international banks with a local presence tend to only focus their products on the local market. There is also the issue of the BGN, a fairly impractical currency. Some banks do offer EUR accounts but then you may as well open an account in a Eurozone country and save yourself the trouble. Fees also tend to be on the high side.
If you do need a Bulgarian account, however, the good news is that opening one is fairly easy even as a non-resident. I recommend Raiffeisenbank and Postbank as they have the best branch and ATM coverage.
Opening an account
To open a Bulgarian bank account, simply show up at a branch of your favourite bank with your passport or ID card. While you will need to provide an address, there is usually no need to present a proof of address. Bring along some cash as you will likely need to make an initial deposit (a few hundred BGN should suffice). You should also prepare to explain why you need the account (and documentation to support it). In most cases, your debit card will be mailed to the address you provided and will arrive within a week or two.
International transfers
Bulgaria uses the IBAN system for all local accounts and is a member of SEPA. In most cases, it is possible to initiate transfers online but it rarely makes sense to do so due to fees. Wise is a better option in most cases. Both debit cards and local transfers are supported and you will struggle to find a better rate especially when changing to the USD, EUR and GBP.
