Bg Corporate Income Tax

---
name: bg-corporate-income-tax
description: "Bulgarian corporate income tax (корпоративен данък) for tax year 2026 under the Corporate Income Tax Act (ZKPO). Covers who pays; the 10% rate; the tax result built from the accounting result with permanent and temporary differences; non-deductible expenses and hidden profit distribution; tax depreciation categories I to VII and their maximum rates; tax losses carried forward for five years; the 3:1 thin capitalisation rule (art. 43) and the 30% EBITDA interest limitation above EUR 3,000,000 (art. 43a); monthly and quarterly advance payments and their euro thresholds; the annual return (1 March to 30 June) and payment; penalties; and pointers to the expenses tax, alternative taxes, CFC rules and Pillar Two. All lev amounts are shown in euro at BGN 1.95583. Trigger phrases: Bulgaria corporate tax, ZKPO, ЗКПО, Bulgarian CIT return, авансови вноски, данъчна загуба Bulgaria. Out of scope: withholding tax, treaties and exit tax (bg-cross-border), transfer pricing (bg-transfer-pricing), indi"
license: "AGPL-3.0-or-later (code) / OpenAccountants Guide License v1.0 (content)"
metadata:
  source: openaccountants
  openaccountants_url: "https://www.openaccountants.com/skills/bg-corporate-income-tax"
  jurisdiction: "BG"
  tax_year: "2026"
  last_updated: "2026-10-24"
---

# Bulgaria corporate income tax (2026)

> **Source-cited draft.** Drafted from the consolidated Corporate Income Tax Act (Закон за корпоративното подоходно облагане, ZKPO, last amended ДВ бр. 55/2026), the Euro Introduction Act and the Law on Interest on Taxes, Fees and Other Similar State Receivables, all on lex.bg, read on 2026-10-23. No accountant has reviewed it. Do not file from it without review by a qualified Bulgarian professional.

Tax year: the calendar year (ZKPO art. 21). Authority: the National Revenue Agency (NRA, НАП, nra.bg). Currency: the euro from 1 January 2026. Many ZKPO amounts are still printed in leva. Under the Euro Introduction Act they are read as euro, converted at BGN 1.95583 per euro and rounded to the cent (arts. 11(2), 12, 13). Each converted figure below shows the lev amount next to it. For withholding tax, treaties, foreign tax credit, CFC detail and exit tax, see `bg-cross-border`. For arm's length pricing and documentation, see `bg-transfer-pricing`.

## Who this applies to

- **Resident companies** (ZKPO art. 3): legal entities incorporated under Bulgarian law, and SEs and SCEs with their seat in Bulgaria. They are taxed on profits from all sources. There is no place-of-management test.
- **Foreign companies** with a Bulgarian place of business (permanent establishment) are taxed on the profit of that establishment and file the same annual return (arts. 1(3), 2(1)(2)). Their other Bulgarian-source income is taxed by withholding (see `bg-cross-border`).
- **Sole traders** (ЕТ) and non-profit legal entities on their business profit are also ZKPO taxpayers (arts. 1(2), 2(1)(3)). This skill is written for companies.
- **Out of the corporate tax**: activities taxed by an alternative tax instead (gambling, budget enterprises' commercial income, shipping under the tonnage regime; ZKPO Part Five, art. 218). The company still pays corporate tax on its other activities (art. 218(2)).

## Rates, bands and thresholds

| Item | Rate or amount | Year | Source |
|---|---|---|---|
| Corporate income tax rate | 10% of taxable profit | 2026 | ZKPO arts. 19, 20, [lex.bg](https://lex.bg/laws/ldoc/2135540562) |
| Minimum value of a tax depreciable asset | Lower of the accounting policy threshold and BGN 700 (EUR 357.90) | 2026 | ZKPO arts. 50(1), 51(1); Euro Introduction Act arts. 12, 13 |
| Depreciation, category I: massive buildings, investment property, facilities, power and communication lines | Up to 4% a year | 2026 | ZKPO art. 55(1), (2) |
| Category II: machines, production equipment, apparatus | Up to 30% (50% if new and part of an initial investment) | 2026 | ZKPO art. 55(2), (3) |
| Category III: transport vehicles other than cars; road and runway surfaces | Up to 10% | 2026 | ZKPO art. 55(2) |
| Category IV: computers, peripherals, software and rights to use software, mobile phones | Up to 50% (100% for software on the list in VAT Act art. 118(16) and devices running it) | 2026 | ZKPO art. 55(2), (7) |
| Category V: cars | Up to 25%; up to 50% for electric cars (new from 1 January 2026) | 2026 | ZKPO art. 55(2), (8) as amended by ДВ 30/2026 |
| Category VI: assets with a contractual or legal limit on use | 100 / years of the limit, capped at 33 1/3% | 2026 | ZKPO art. 55(2) |
| Category VII: all other depreciable assets | Up to 15% | 2026 | ZKPO art. 55(2) |
| Tax loss carry-forward | Next 5 years, oldest first, up to the positive tax result | 2026 | ZKPO arts. 70, 71, 72 |
| R&D extra deduction | Further 25% of qualifying R&D costs | 2026 | ZKPO art. 69 as amended by ДВ 30/2026 |
| Thin capitalisation (art. 43) applies when | Average debt is more than 3 times average equity | 2026 | ZKPO art. 43(6) |
| Thin capitalisation allowance | Net interest above 75% of the accounting result before interest is disallowed, carried forward | 2026 | ZKPO art. 43(1), (2) |
| Interest limitation (art. 43a) applies when | Exceeding borrowing costs are more than EUR 3,000,000 | 2026 | ZKPO art. 43a(7), wording set by Euro Introduction Act § 36 |
| Interest limitation allowance | 30% of tax EBITDA; excess carried forward with no time limit | 2026 | ZKPO art. 43a(1), (5) |
| Donations | Deductible up to 10% of accounting profit (50% to the health fund for listed purposes, 15% patronage); overall cap 65% | 2026 | ZKPO art. 31 |
| No advance payments | Net sales in the year before the preceding year up to BGN 300,000 (EUR 153,387.56); and new companies in their first year and the next, except companies formed by a transformation | 2026 | ZKPO art. 83(2) |
| Monthly advance payments | Net sales in the year before the preceding year above BGN 3,000,000 (EUR 1,533,875.64) | 2026 | ZKPO art. 84 |
| Quarterly advance payments | Everyone else who must pay advances | 2026 | ZKPO art. 85 |
| Expenses tax on representation costs and social costs in kind | 10% | 2026 | ZKPO arts. 204(1)(1), (2), 216(1) |
| Expenses tax on assets given for personal use | 3% | 2026 | ZKPO arts. 204(1)(4), 216(2) |
| Tonnage tax (shipping, elective) | 10% of the tonnage-based base | 2026 | ZKPO arts. 254, 258 |
| Pillar Two minimum tax applies to groups with | Consolidated revenue of at least EUR 750,000,000 in two of the four preceding years | 2026 | ZKPO art. 260a(2) |

## The taxable base

**Start from the accounts.** The tax result (данъчен финансов резултат) is the accounting result adjusted by permanent differences, temporary differences and other amounts the ZKPO names (art. 22). A permanent difference changes the result once and never reverses (art. 23). A temporary difference is an item recognised for tax in a different year from the accounts; it is added back now and deducted when the condition is met, or the other way round (art. 24). Taxable profit is the positive tax result less tax losses carried forward (art. 19).

**Common add-backs (permanent).** ZKPO art. 26 disallows:
- expenses not connected with the business, and expenses without proper documents;
- fines, confiscations and other sanctions, and late-payment interest on public debts;
- donations beyond art. 31;
- withholding tax the payer bears itself;
- hidden profit distributions (item 11), and bribes.
Shortages and scrap of assets are disallowed except force majeure and normal technological loss (art. 28).

**Common deductions (permanent).** Dividends from Bulgarian companies and from companies resident in another EU or EEA state are taken out of the result (art. 27(1)(1)). The exclusion does not apply to hidden profit distributions or to amounts the payer deducted (art. 27(2)). Gains on financial instruments traded on a regulated market or growth market are taken out, and losses on them added back (art. 44).

**Hidden profit distribution** (§ 1, item 5 of the additional provisions). Amounts not connected with the business or above market levels paid in any form to shareholders, partners or their related parties; and interest on a shareholder-type loan meeting at least three of four tests (loan above the payer's equity, no fixed term, repayment or interest tied to profits, repayment subordinated to other creditors or to dividends). It is not deductible (art. 26(11)), it is not exempt as a dividend at the recipient (art. 27(2)(2)), and a company that does not declare it pays a sanction of 20% of the amount (art. 267). For prices between related parties, see `bg-transfer-pricing`.

**Temporary differences.** Impairments and revaluations of assets and liabilities, and write-offs of receivables, count for tax only when the asset is disposed of or the receivable is collected or time-barred (arts. 34, 35, 37). From 2026, revaluations of cash items in another currency at the BNB euro reference rate are recognised as they arise (art. 34(2), as amended by ДВ 30/2026). Accrued unused leave and unpaid amounts to individuals are deducted when paid (arts. 41, 42).

**Depreciation.** Accounting depreciation is always added back and tax depreciation deducted instead (art. 54). Every company keeps a tax depreciation plan listing each asset (art. 52). Annual tax depreciation = depreciable value x annual rate x months in use / 12, starting from the month the asset is put into use or the next month (art. 58). The company picks its rate once a year, up to the category maximum in the table (art. 55(2)). Goodwill from a business combination is not depreciable for tax (art. 49).

**Losses.** A tax loss is carried forward and set against positive tax results for the next five years, oldest first, until used (arts. 70 to 72). There is no carry-back and no cap other than the positive result for the year (art. 71(1)). Losses from a foreign source under a treaty exemption, or under the credit method, are set only against later profit from that same source (arts. 73, 74).

**Interest: two rules, one result.**
1. **Thin capitalisation** (art. 43). Applies only if average debt (1 January and 31 December) is more than three times average equity (art. 43(6)). Disallowed interest = interest costs - interest income - 75% x accounting result before all interest (art. 43(1)). Interest on bank loans and finance leases from unrelated parties is left out, unless a related party guarantees, secures or directs it (art. 43(4)). Disallowed interest is recognised in later years within the same formula (art. 43(2)).
2. **Interest limitation** (art. 43a, the ATAD rule). Exceeding borrowing costs = borrowing costs (interest and its economic equivalents, art. 43a(4)) less taxable interest income. Where they exceed EUR 3,000,000, the excess over 30% of tax EBITDA is disallowed (art. 43a(1), (7)). Tax EBITDA = tax result before losses and before arts. 43 and 43a, plus tax depreciation, less interest income, plus borrowing costs (art. 43a(3)). The disallowed excess carries forward with no time limit (art. 43a(5)).
Where both rules bite, the larger disallowance applies (art. 43a(9)). Banks are outside both rules (arts. 43(7), 43a(10)).

**CFC.** The undistributed profit of a controlled foreign company (over 50% control and low actual foreign tax) is added to the Bulgarian company's result, unless the CFC has substantive economic activity (arts. 47в, 47г). Detail is in `bg-cross-border`.

**Expenses tax** (pointer). Representation costs, social benefits in kind and assets given to staff for personal use are deductible in full (art. 206(1)) but bear a separate final expenses tax of 10% or 3% (art. 216), declared in the annual return and paid by 30 June (art. 217). Exemptions apply to voluntary insurance up to BGN 60 (EUR 30.68) a month per employee (art. 208) and electronic food vouchers up to BGN 200 (EUR 102.26) a month per employee (art. 209a), on conditions.

**Alternative taxes** (pointer). Gambling (arts. 219 to 247), budget enterprises' commercial income at 3% (arts. 248 to 253) and shipping under the elective tonnage tax (arts. 254 to 259) replace corporate tax for those activities only.

**Pillar Two** (pointer). Groups at or above EUR 750,000,000 of consolidated revenue in two of the four preceding years fall under ZKPO Part Five "a" (arts. 260a onwards): the income inclusion rule, the undertaxed profits rule and the Bulgarian domestic top-up tax. Treat any in-scope group as a separate engagement.

## Deadlines and filing

| Obligation | When | Source |
|---|---|---|
| Declare the 2026 advance payments (forecast profit) | 1 March to 15 April 2026 | ZKPO art. 87a(1) |
| Monthly advances, January to March | By 15 April 2026 | ZKPO art. 90(1)(1) |
| Monthly advances, April to November | By the 15th of each month | ZKPO art. 90(1)(2) |
| Monthly advance for December | By 1 December 2026 | ZKPO art. 90(1)(3) |
| Quarterly advances, Q1 and Q2 | By 15 April and 15 July 2026 | ZKPO art. 90(2) |
| Quarterly advance, Q3 | By 1 December 2026; no Q4 advance | ZKPO art. 90(2) |
| Change the advances up or down | Declaration by 15 November 2026 | ZKPO art. 88(1) |
| Annual return for 2026, with the annual activity report | 1 March to 30 June 2027, to the NRA directorate where the company is registered | ZKPO art. 92(1) to (3) |
| Payment of 2026 corporate tax, less advances paid | By 30 June 2027 | ZKPO art. 93(1) |
| Payment of the 2026 expenses tax | By 30 June 2027 | ZKPO art. 217(2) |

Monthly advance = forecast tax profit / 12 x 10% (art. 86). Quarterly advance = forecast tax profit / 4 x 10% (art. 87). A company with no activity in the year under the Accountancy Act files no annual return, unless it owes corporate or expenses tax for the year (art. 92(4)). Evidence of foreign tax paid goes with the return (art. 92(6)).

## Penalties and interest

| Failure | Penalty | Source |
|---|---|---|
| Return not filed, filed late, or data understating the tax | BGN 500 to 3,000 (EUR 255.65 to 1,533.88); repeat BGN 1,000 to 6,000 (EUR 511.29 to 3,067.75) | ZKPO art. 261 |
| Annex to the annual return missing or wrong | BGN 100 to 1,000 (EUR 51.13 to 511.29); repeat BGN 200 to 2,000 (EUR 102.26 to 1,022.58) | ZKPO art. 262 |
| Transaction booked against the accounting policy, distorting the result | BGN 100 to 1,000 (EUR 51.13 to 511.29) per breach; repeat BGN 200 to 2,000 (EUR 102.26 to 1,022.58) | ZKPO art. 263 |
| The company's representative who allowed a breach of arts. 261 to 263 | BGN 200 to 1,000 (EUR 102.26 to 511.29); repeat BGN 400 to 2,000 (EUR 204.52 to 1,022.58) | ZKPO art. 264 |
| Hidden profit distribution not declared in the return | 20% of the hidden distribution | ZKPO art. 267 |
| Advances too low: the annual tax exceeds the monthly advances by more than 25%, or 75% of the annual tax exceeds the quarterly advances (Q1 to Q3) by more than 25% | Interest on the excess over 125% of the advances, from 16 April to 31 December, under the Law on Interest on Taxes | ZKPO art. 89 |
| Late payment of the tax | Statutory interest (законна лихва) | Law on Interest on Taxes, Fees and Other Similar State Receivables, art. 1 |

The euro figures above are the lev amounts still written in the ZKPO, converted at BGN 1.95583 and rounded to the cent as Euro Introduction Act arts. 12 and 13 require.

## Cross-border points

- **Dividends paid out.** Dividends paid to foreign companies bear 5% final withholding. Dividends to a company resident in another EU or EEA state are exempt, **except hidden profit distributions** (ZKPO art. 194(3)(3)). The older version of this skill said the EU/EEA exemption had no exception; that was wrong. Withholding detail, treaty relief and the DOPK procedure are in `bg-cross-border`.
- **Dividends received.** Dividends from EU or EEA resident companies are taken out of the result (art. 27(1)(1)). Dividends from other foreign companies are taxable, with a foreign tax credit (art. 14; see `bg-cross-border`).
- **Interest to related non-residents.** The thin capitalisation and interest limitation rules above apply on top of the 10% withholding and the arm's length rule.
- **Foreign permanent establishment of a Bulgarian company.** Its profit is in the Bulgarian result; relief is by treaty exemption or credit. Foreign-source losses are ring-fenced (arts. 73, 74).
- **Moving assets or residence out of Bulgaria.** Exit tax at 10% on market value less tax value, with a five-year deferral inside the EU or EEA (arts. 155 to 155г): see `bg-cross-border`.

## Worked examples

### Example 1: trading company, ordinary year with a loss brought forward

Struma Trade OOD has an accounting profit for 2026 of EUR 200,000. Its accounts include EUR 30,000 of accounting depreciation and a EUR 2,000 traffic fine. Its tax depreciation plan gives EUR 45,000 for 2026. It has a EUR 50,000 tax loss from 2023, still within five years. It spent EUR 10,000 on representation (client entertainment).

The fine is added back (art. 26(6)); accounting depreciation is replaced by tax depreciation (art. 54). The tax result is EUR 187,000. After the 2023 loss, taxable profit is EUR 137,000 and corporate tax is EUR 13,700. Representation costs stay deductible but bear 10% expenses tax, EUR 1,000.

Its 2024 net sales were BGN 1,800,000, which is EUR 920,325.39: above EUR 153,387.56 and below EUR 1,533,875.64, so it pays quarterly advances. It declared a forecast profit of EUR 120,000 by 15 April 2026, so each of the three quarterly advances is EUR 3,000 (EUR 9,000 in all). The balance of EUR 4,700 is due by 30 June 2027 with the expenses tax. No interest under art. 89: 75% of the annual tax is EUR 10,275, below 125% of the advances (EUR 11,250).

```oa-check
name: Bulgarian OOD, 2026 CIT with loss, quarterly advances, expenses tax
inputs:
  accounting_profit: 200000
  accounting_depreciation: 30000
  fine: 2000
  tax_depreciation: 45000
  loss_2023: 50000
  representation: 10000
  net_sales_2024_bgn: 1800000
  forecast_profit: 120000
steps:
  - tax_result: accounting_profit + accounting_depreciation + fine - tax_depreciation
  - loss_used: min(loss_2023, tax_result)
  - taxable_profit: tax_result - loss_used
  - cit: taxable_profit * 0.10
  - expenses_tax: representation * 0.10
  - net_sales_2024_eur: round(net_sales_2024_bgn / 1.95583, 2)
  - quarterly_advance: forecast_profit / 4 * 0.10
  - advances_paid: quarterly_advance * 3
  - balance_due: cit - advances_paid
  - interest_base: max(0, 0.75 * cit - advances_paid * 1.25)
expected:
  tax_result: 187000
  loss_used: 50000
  taxable_profit: 137000
  cit: 13700
  expenses_tax: 1000
  net_sales_2024_eur: 920325.39
  quarterly_advance: 3000
  advances_paid: 9000
  balance_due: 4700
  interest_base: 0
```

### Example 2: holding company with a large shareholder loan, both interest rules tested

Balkan Holding EAD is financed by a EUR 60,000,000 loan from its foreign parent; its equity averages EUR 10,000,000. In 2026 it books EUR 6,000,000 of interest to the parent and EUR 200,000 of interest income. Its accounting profit is EUR 3,500,000. Its tax result under the general rules, before losses and before arts. 43 and 43a, is EUR 4,000,000, and its tax depreciation is EUR 1,000,000.

Debt is six times equity, so thin capitalisation is tested. The accounting result before interest is EUR 9,300,000; 75% of that is EUR 6,975,000, which exceeds net interest of EUR 5,800,000, so art. 43 disallows nothing. Exceeding borrowing costs of EUR 5,800,000 are above EUR 3,000,000, so art. 43a applies. Tax EBITDA is EUR 10,800,000; 30% is EUR 3,240,000. EUR 2,560,000 is disallowed this year and carried forward. Because the art. 43a amount is the larger, only it applies (art. 43a(9)(1)). Taxable profit is EUR 6,560,000 and corporate tax EUR 656,000.

```oa-check
name: Bulgarian holding, thin cap and 30% EBITDA interest limitation, 2026
inputs:
  debt_avg: 60000000
  equity_avg: 10000000
  interest_cost: 6000000
  interest_income: 200000
  accounting_profit: 3500000
  tax_result_before_rules: 4000000
  tax_depreciation: 1000000
  threshold: 3000000
steps:
  - debt_equity_ratio: debt_avg / equity_avg
  - result_before_interest: accounting_profit + interest_cost - interest_income
  - thin_cap_disallowed: max(0, interest_cost - interest_income - 0.75 * result_before_interest)
  - exceeding_costs: interest_cost - interest_income
  - tax_ebitda: tax_result_before_rules + tax_depreciation - interest_income + interest_cost
  - atad_disallowed: max(0, exceeding_costs - 0.30 * tax_ebitda)
  - disallowed: max(thin_cap_disallowed, atad_disallowed)
  - taxable_profit: tax_result_before_rules + disallowed
  - cit: taxable_profit * 0.10
expected:
  debt_equity_ratio: 6
  result_before_interest: 9300000
  thin_cap_disallowed: 0
  exceeding_costs: 5800000
  tax_ebitda: 10800000
  atad_disallowed: 2560000
  disallowed: 2560000
  taxable_profit: 6560000
  cit: 656000
```

## Ask the client first

1. **Net sales for 2024 (and 2025 for next year), and the year the company was formed.** They decide no advances, quarterly or monthly (arts. 83, 84).
2. **Tax losses by year since 2021.** Only the last five years can be used, oldest first (arts. 70 to 72).
3. **The fixed asset register and the tax depreciation plan.** Category and rate chosen for each asset, and any electric cars bought from 2026 (art. 55).
4. **Loans: lender, relation to the company, guarantees, interest, and opening and closing debt and equity.** They decide whether thin capitalisation or the EUR 3,000,000 interest limitation bites (arts. 43, 43a).
5. **Payments to shareholders or their related parties beyond salary and declared dividends.** Possible hidden profit distribution (§ 1, item 5; arts. 26(11), 267).
6. **Representation costs, staff benefits in kind and assets used privately.** Expenses tax base (art. 204).

## Sources

| Source | URL | Read on |
|---|---|---|
| Corporate Income Tax Act (ZKPO), consolidated to ДВ бр. 55/2026: arts. 1 to 4, 19 to 37, 41 to 44, 47в, 47г, 49 to 58, 69 to 74, 83 to 93, 194, 204 to 218, 248 to 260a, 261 to 267, § 1 item 5 | https://lex.bg/laws/ldoc/2135540562 | 2026-10-23 |
| Euro Introduction Act (Закон за въвеждане на еврото в Република България): arts. 11, 12, 13; § 36 amending the ZKPO | https://lex.bg/bg/laws/ldoc/2137244903 | 2026-10-23 |
| Law on Interest on Taxes, Fees and Other Similar State Receivables, art. 1 | https://lex.bg/bg/laws/ldoc/2123675140 | 2026-10-23 |

Not yet confirmed: the NRA's own 2026 guidance on the annual return form and on advance payments (nra.bg served a human check to this session, so only the statute was read); the current statutory late-payment interest rate after the euro changeover (set outside the interest law); the gambling tax rates after the ДВ 30/2026 amendment (this skill gives no gambling rate); whether the NRA rounds the converted lev thresholds in arts. 83(2) and 84 differently from the Euro Introduction Act rule used here.

> Contributed by Michael Cutajar.

## Today's figures and who stands behind this skill

This file is an AI skill (tax rules your AI follows) from OpenAccountants, copied on 2026-10-24. Rates, thresholds and deadlines change. For the current version of this skill, its official sources and the named accountant (if any) who stands behind it, call `get_skill` with slug `bg-corporate-income-tax` on the OpenAccountants connector (https://www.openaccountants.com/connect), or read https://www.openaccountants.com/skills/bg-corporate-income-tax. If neither is available, confirm every figure against the official source pages cited above before relying on it.