Bulgaria Self employed vs EOOD

[callicea22]

Hello

I don't understand which one of these 2 solutions is the most efficient
For a 150K income, that will growth in time year after year, and for a bulgarian resident,

What is better between Selfemployed or EOOD

1/ Self-Employed : The tax rate is 10% out of 25% deduction so 7.5% + Social taxes capped at 28% of 1800 € per month > 6048 € yearly
The total cost is 17 298 € Annualy > 11,5%

2/ EOOD : The tax rate is CIT 10% + WTH Dividend 5% + Minimum wage
The total cost is above 15%

Both are expenses deductible and on net income not gross income

I can't find out in which case EOOD is better

 

[Mr Gus]

It isn't tax wise

 

[algotrader]

Depends also on the nature of your activity. For certain types of activity you will be considered a sole trader and pay 15%.

 

[callicea22]

My activity will be 100% Consulting

 

[algotrader]

I think consulting doesn't fall into the sole trader category, although I'm not 100% sure. It should apply only to merchant/trading activities.
"According to the Bulgarian Commercial Code, the sole proprietor is a person that by occupation effects one of the commercial transactions listed in Article 1 (1) of the Commercial Code or that establishes a business that regarding its nature and extent corresponds to a commercially established business."

 

[thedirtyteller]

Hello

I don't understand which one of these 2 solutions is the most efficient
For a 150K income, that will growth in time year after year, and for a bulgarian resident,

What is better between Selfemployed or EOOD

1/ Self-Employed : The tax rate is 10% out of 25% deduction so 7.5% + Social taxes capped at 28% of 1800 € per month > 6048 € yearly
The total cost is 17 298 € Annualy > 11,5%

2/ EOOD : The tax rate is CIT 10% + WTH Dividend 5% + Minimum wage
The total cost is above 15%

Both are expenses deductible and on net income not gross income

I can't find out in which case EOOD is better

If you register as a freelancer in Bulgaria will you have to pay social taxes?

 

[Mr Gus]

If you register as a freelancer in Bulgaria will you have to pay social taxes?

Yes

 

[thedirtyteller]

Yes

Is it capped at 28% of the income?

 

[Mr Gus]

Is it capped at 28% of the income?

1/ Self-Employed : The tax rate is 10% out of 25% deduction so 7.5% + Social taxes capped at 28% of 1800 € per month > 6048 € yearly
The total cost is 17 298 € Annualy > 11,5%

 

[freegeek]

I think for ICT consultants the Bulgaria freelance route is a good deal, yes it is not uber super low taxes but as an EU IT consultant myself this looks like the most hassle free way to do business in the EU as an IT consultant. It is especially interesting because social contributions are capped so your effective tax rate goes down the more you make.

 

[ADROCK123]

bulgaria freelance requires you to speak bulgarian, it's a requirement for the permit

 

[freegeek]

I have not read anything about that language requirement and that would be in violation with EU law that says that EU citizens are free to move from one EU country to another with the same rights as the locals. I think there is some confusion between freelance and being self employed (sole proprietorship)

 

[algotrader]

bulgaria freelance requires you to speak bulgarian, it's a requirement for the permit

No, lots of my friends here have a normal freelancer setup without any bulgarian language skills. Can also be done via umbrella company of service provider billing clients abroad. Only higher education diploma in the field of practice was necessary. Check out websites of service providers in Bulgaria.

 

[freegeek]

bulgaria freelance requires you to speak bulgarian, it's a requirement for the permit

looks to me the language requirement is for obtaining a residence permit based on the freelance status

 

[algotrader]

looks to me the language requirement is for obtaining a residence permit based on the freelance status

Neither, Just had a friend here getting a residence permit with freelancer status without any Bulgarian language skills.

 

[ADROCK123]

Neither, Just had a friend here getting a residence permit with freelancer status without any Bulgarian language skills.

Immigration visa D for self-employed - Posolstvo.eu

Bulgaria - Self-employed worker

Are you a non-EU citizen wishing to work as a self-employed/freelance person in Bulgaria? You can find information below on the conditions to fulfil a...

immigration-portal.ec.europa.eu

As far as I can tell you need a freelancing permit which require b1 language

 

[algotrader]

Immigration visa D for self-employed - Posolstvo.eu

Bulgaria - Self-employed worker

Are you a non-EU citizen wishing to work as a self-employed/freelance person in Bulgaria? You can find information below on the conditions to fulfil a...

immigration-portal.ec.europa.eu

As far as I can tell you need a freelancing permit which require b1 language

This is for "non-EU citizen". In that case, it's much more complicated anyway. Best way to obtain a D visa for non EU nationals in Bulgaria is to have a company setup abroad and register a trade representative office in BG.

 

[nov111]

Registering as a freelancer is not a good idea. Realistically, you can't deduct expenses, you can reduce the taxable base by 25%, you can't include expense invoices. It is better to register a company, self-insure at minimum wage (insurance is about 200 BGN per month), then pay 10% corporate tax, and if you distribute a dividend - another 5%.

 

[freegeek]

Registering as a freelancer is not a good idea. Realistically, you can't deduct expenses, you can reduce the taxable base by 25%, you can't include expense invoices. It is better to register a company, self-insure at minimum wage (insurance is about 200 BGN per month), then pay 10% corporate tax, and if you distribute a dividend - another 5%.

depends how much expenses you have. A lot of IT consultants are hard pressed to have more than 25% of company expenses of their revenue because there is simply not a lot of expenses to make for us. I gladly take the 25% no questions asked expenses and also have a much simpler accounting. To me this setup is very attractive, it really depends which kind of business you are running.

 

[oldtimer2]

This is for "non-EU citizen". In that case, it's much more complicated anyway. Best way to obtain a D visa for non EU nationals in Bulgaria is to have a company setup abroad and register a trade representative office in BG.

I read this path only gives residency for maybe 6 months or 1 year and maybe renewable for another year - so for shorter term its a good option - and providing the overseas company meets the requirements (2 years old etc etc).
But if you are non-EU citizen and want to stay for 4 years or more in Bulgaria and when the TRO residency cannot be renewed again, then what to do? What residency permit option to shift across to? Will they accept changing from TRO to say a freelancer permit? Normally they might expect the foreign company to open its branch or subsidiary office in Bulgaria by then… but if it does that then the residency permit for non-eu might have the need for 10 local employees.