Withholding Tax in Bulgaria

The most widespread type of withholding taxes is colloquially referred to as “dividend tax”. The withholding tax on dividends and liquidation proceeds which were distributed in favor of foreign or national legal persons from a local company are subject to taxation in Bulgaria. Foreign legal entities’ profits originating either from business activity performed through a certain location of business activity inside the territory of the Republic of Bulgaria or from disposal of the property of such a location of business activity are to be considered income from a source within the country – Article 12 of the Law on corporate income taxation. The withholding tax is final. The tax rate on dividends and liquidation proceeds is 5%. If the incomes have been received from other non-commercial revenues, such as rent, author rights, etc., the tax rate is 10%.