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Bulgaria Freelance Taxes: Detailed Breakdown

88 points by dimonomid 5y ago

gcbirzan 5y ago
I am 100% sure long term residents also pay health insurance. Are you an EU citizen?
- dimonomid 5y ago
  I'm not an EU citizen, no. And while I was living there as a long-term resident, I didn't pay 8% health insurance. Perhaps it's indeed different for EU citizens, I'm not sure. I should probably mention it there.
  - tchalla 5y ago
    The question is - Do you have to? You may have not paid it but that doesn’t tell if one has to.
    - dimonomid 5y ago
      This was confirmed by at least two reputable accountants, so yeah, I'm 100% sure I didn't have to pay 8% health insurance while being a long term resident (and not an EU citizen). Actually, I _did_ pay some health insurance, but it had nothing to do with the business and it wasn't 8% or anything like that. It's like the same kind of health insurance that even tourists have to get.
      - gcbirzan 5y ago
        Ah, I see where the confusion comes from. I assumed you meant you don't have to pay any. Though, I'm curious, how much is it? I went to check in the "Ordinance on the General Terms and Conditions, the Minimum Insurance Amount, the Minimum Insurance Premium and the Procedure for the conclusion of the mandatory medical insurance of foreigners who reside shortly or prolonged in the Republic of Bulgaria or transit through the country" (such a title), it says the price of the premium is determined according to article 65 of the insurance code, but that one is referring to something else. Oh, well.
        dimonomid 5y ago
        > Though, I'm curious, how much is it? I was buying just some bare minimum required insurance, and it was very low, less than 200 BGN per year.
  - charlesdm 5y ago
    It seems weird you are forced to distribute the dividend in BGN. Pay the withholding tax, yes. But the dividend itself? Most accountants can calculate the corresponding currency equivalent for the dividend being declared on the payout day. Worth looking into. Also, does Bulgaria support interim dividends? The loan set-up, while not an issue, can perhaps be avoided by use of interim dividends.
jakozaur 5y ago
Similar as in Poland: 1. Long-term remote contracting as software engineers is legal. No need to worry about being forced into being employee. 2. Regressive taxation at very low level (e.g. recently in Poland you can opt-in for 12.5% taxation of revenue).
- cromka 5y ago
  Just moved back to Poland after 6 years in US, looking to work remotely for US-based contractors. Dare to elaborate, please? First time I hear of this.
  - lukasm 5y ago
    If you are a "creative" person (software engineer, designer etc.) you can just pay a flat rate for all taxes and insurance. For example: 100k revenue will equal to 12k in income tax + medical insurance + social security. In total, it would be less than 20k (17-20% depending on a few factors). Another option would be to use IP BOX relief. If you are producing IP your tax will be 5%. If you fly to a customer, have a company car, you need a lot of equipment, your tax can be even lower. https://www.gov.pl/web/poland-businessharbour-en/tax-reliefs-in-poland-for-research-development-and-innovation https://www.gov.pl/web/poland-businessharbour-en/tax-reliefs...
    - cromka 5y ago
      Thanks, much appreciated!
      - lukasm 5y ago
        you have to decide what kind of taxation scheme you have to you after your first invoice. It's for the whole year. You can change it next year.
  - michalmj 5y ago
    Google "ryczałt dla programisty". If you play your cards right in Poland you can get legally around ~10% tax total (this includes national insurance ~5% and IP Box 5% for programmers).
firechickenbird 5y ago
Considering moving in Bulgaria after this, thanks! My Freelance taxes/social sec/retirement tax in Italy is on average 76% on a total of 80k eur average gross annual income (98th income percentile).
- jakub_jo 5y ago
  Do you mean you'll only make 19.2k net from 80k gross? That sounds like an awful amount of taxes. I'm from Austria and here it's ~27% for social security and income tax is ranging from 0% to 55%. From 80k gross you would make around 42k net (Calculated without any tax benefits).
  - charlesdm 5y ago
    He is probably adding VAT to his income tax rates, which imo is not correct.
    - sfe22 5y ago
      Is vat not a tax? I think every government cost that is a percentage of income or spending should be calculated as your expense for the government. I think inflation also should be kept in mind as it is a hidden tax. Maybe harder to calculate.
      - charlesdm 5y ago
        VAT is a tax on consumption. But it is only levied when you take a certain action with your funds -- i.e. consume it. You could also (re)invest and let your capital compound. So yes, if you spend all your money to the last penny, that would be your tax rate. But many (higher income) people do not.
        sfe22 5y ago
        But all your income is meant to be spent. All people invest so they get to buy more in the future, not for the sake of it. If you don’t pay VAT today, you will in the future.
phoronixrly 5y ago
Keep in mind that Bulgaria has just elected a reformist parliament for the first time in more than 10 years. Maybe wait a year or two before buying a one-way ticket as the government may raise taxes, especially on the unaffected by the anti-COVID measures. Or they could lower taxes even more if they manage to get on top of the rampant tax evasion and grey economy (one can hope). Also there are other small things to consider: * Healthcare in Bulgaria is severely underfunded and understaffed. Not only that, but the incentive system for hospitals is currently IMO completely broken, as they get paid per patient i.e. more sick people = more pay, not more healthy people. My current belief is that you need to live in a large city if you want to have a chance to survive an incident or a heart attack/stroke. Source: trust me, I live here, have lost several family members due to poor healthcare, and have had one receiving incompetent treatment so the hospital can receive more money from health insurance. * Same goes for childcare/education. * * There is currently a severe deficit of kindergartens in the large cities -- Sofia (~10k children left out), Plovdiv, Varna and Burgas. * * Bulgarian public education has been in a freefall for the last 10 years as evidenced by dropping results in state exams and international studies (https://gpseducation.oecd.org/CountryProfile?primaryCountry=BGR&treshold=10&topic=PI https://gpseducation.oecd.org/CountryProfile?primaryCountry=...). Private schooling is available in large cities and unsurprisingly is limited. Take into account potential need of home-schooling if you plan to start a family here. * The public institutions are (currently) not working or corrupt. There are issues with the judicial system, the prosecution, the police, etc. Tl; dr: better hope you won't have to deal with those before major reforms and definitely don't rely on having your rights protected by them. You are on your own here. Do not be under the illusion that Bulgaria is just like $western_european_country but with less taxes and cheaper housing. Everything comes at a price. You will not find many things you take for granted in your home country here.
- gcbirzan 5y ago
  If by those unaffected by COVID you mean self-employed people, not sure that's really the case, as taxes for people that are employed by a Bulgarian company are not THAT much higher. Using the 10k BGN example, your net salary is 8627.94, and the employer (of course, excluding accounting and all that stuff) pays 10567.60. I don't remember exactly the numbers for self employed, but if his are correct (and they seem a bit off, maybe because of the missing health insurance), the difference is basically 5-600 BGN, so 5-6pp.
otar 5y ago
I am a big believer in Flag Theory and stuff… I currently pay about 2,5% on my gross income ($100k+) as a software developer, which is more than most of EU/US developers are left after tax… In a short, if you’re willing to make some trade-offs and optimize your taxes, you’ll be legally retaining your hard earned $$$. Among the trade-offs, tax residency is the most important. Things are a bit complicated for US citizens as the government taxes their income regardless of their tax residency, citizenship-based. P.S. That 2,5% includes all the fees like accounting, legal consultations and banking fees (account maintenance, transfers…)
- bobcostas55 5y ago
  Go on...
- charlesdm 5y ago
  Unless you're actually living in a tax haven or a third world country with no CFC laws, you're almost certainly breaking the law with this. The conversations I have had with people who have found the gold wheel is mind boggling, and they almost all get in trouble at some point.
  - PaywallBuster 5y ago
    US citizens can move to Puerto Rico and pay 5% tax, very legally
  - lowpro 5y ago
    Plenty of first/second world country have more friendly tax laws. Many don’t tax foreign income, and if you live outside the US for 300 days per year, you get a $100k tax write off up front. There are many legal ways to live in nice places and pay low tax.
  - refurb 5y ago
    Based on my limited knowledge it seems possible. The US allows you to exclude $106k USD in foreign income if you’re not a US resident. You can also add some housing costs to bump it up. Many countries won’t tax you if you work there and a) all your income and work is outside the country, b) you do t spend enough time there to become a tax resident (I’ve seen 180 days for some). So if you’re willing (and able) to split your time between 3 countries, not go back to the US and get all of your income from outside those 4 countries, you could effectively pay little to no income tax and it would be legal. But please hire a CPA.
jstx1 5y ago
> And if your income is smaller than 710 BGN, even if it's straight zero, then you'll have to pay social security as if your income was 710 BGN Is this really how it works? They're taxing people with 0 income? I guess it isn't relevant to the target audience of the article but it must suck for the unemployed. > Accountant fees: about 150 - 200 BGN per month independently of the income. This seems really high. Why do you need an accountant every month instead of once a year?
- phoronixrly 5y ago
  > In either case (company or individual), due to our line of business, most likely you'll also need to do the VAT registration. It's something like 150 - 200 BGN. The VAT registration requires monthly declarations of VAT. Tracking your VAT takes time for the accountants as they need to summarize all your invoices, expenses, and other paperwork. Links (conveniently only available in Bulgarian): * VAT form: https://nra.bg/wps/portal/nra/documents/taxes/zdds/35c5ece4-a1d9-4c15-92a8-04db8c158a0e https://nra.bg/wps/portal/nra/documents/taxes/zdds/35c5ece4-... * VAT law overview: https://nra.bg/wps/portal/nra/taxes/dds-v-balgariya https://nra.bg/wps/portal/nra/taxes/dds-v-balgariya
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- WJW 5y ago
  Not sure how it works in Bulgaria, but over here in the Netherlands if your income is lower than some level you can (with some conditions) apply for unemployment benefits that will include enough money for the social security taxes. This is a bit roundabout (why not just withhold the social security money from the benefits in the first place?), but such are the joys of a complex tax system evolved over multiple centuries.
- Hokusai 5y ago
  In Spain for self employed workers there is also a minimum. If you do not want to pay it you need to unregister. This does not apply for employees. It's just for self employed workers as it's more of a fee for the paperwork that you generate for the government than a tax on income.
mdrachuk 5y ago
Simplified taxation for contractors in Ukraine (pe simplified system) is basically 5% + ~$500. You are allowed to make up to around $250,000 per year this way.
atxbcp 5y ago
The numbers in this article are wrong, especially the company vs individual chart: you'd only pay 16% tax with a company if you paid yourself in dividends. Past a certain threshold, with a company, the best option is to pay yourself a salary every month. Then your tax rate will be in the 11 - 15% range depending on your income. source: I've got a company in Bulgaria conclusion: coming to Bulgaria to pay less taxes can definitely be done, but hire a local accountant and get professional advice.
- dimonomid 5y ago
  Could you elaborate? Of course I do have a local accountant, and if what you're saying is true, I am disappointed she didn't mention that; they just said, paying salary will end up being more expensive than dividends.
  - saberdancer 5y ago
    I'm not from Bulgaria but I think what was said is that you depending on profitability of your company you can pay out a part of the profit as a dividend (using the lower tax rate until the cutoff) and then the rest as a salary. It's not one or the other. As a company owner you can use both the dividend and pay yourself a salary.
    - dimonomid 5y ago
      While I def agree that those are not mutually exclusive and I considered paying myself a salary, but paying a salary still involves a bunch of extra taxes, which end up being more than the dividend's 5%. At least that's what I had from my accountant, but I'd be happy to know details of how to make the combination of salary+dividends to require less taxes than just dividends.
  - atxbcp 5y ago
    By paying yourself with a salary via your company, you'd pay 10% revenue tax + health insurance (ЗО) + social insurance (ДЗПО, ДОО)... except the insurance part is capped on a maximum revenue of 3000 BGN or something like that... so as you make more money, your total tax rate converges to 10%. Take these numbers with a grain of salt because I'm no accountant, but I know for sure your accountant is wrong, because I know how much tax I pay, and that's close to 11.5% total.
SantiagoElf 5y ago
Bulgarian here. :) We like to be hush-hush about the benefits of living in Bulgaria. Nothing at the moment beats the taxes, location and potential of Bulgaria in Eastern Europe :) You can ask me any questions related to living cost, places, customs, etc or anything related to Bulgaria.
- Oron7 5y ago
  In which cities do you think there is the most work in the IT sector? Also, how do you rent a place? With agencies, do they want a lot of documents and stuff? Thanks!
  - SantiagoElf 5y ago
    Sofia, without a doubt - the capital. Not much documents are needed in order to start working with an agency due to the fact that the market is starved for IT specialists. It's not uncommon a person with 0 experience to start at 2K BGN which is around 1K eur. Ranges are ( these are NET salaries after tax): - Super Jr -> 1k - 1.5k EUR - Juniour -> 1.5k - 2.5k EUR - Mid-Level -> 2.5k - 3.5k EUR - Sr. Dev -> 3.5k -> ~4-5k EUR without being a people manager It's full of collocation workspaces like: https://betahaus.bg/en/ https://betahaus.bg/en/ http://soho.bg/index-en.php http://soho.bg/index-en.php https://cosmos.camp/ https://cosmos.camp/ http://cosharehive.com/ http://cosharehive.com/ https://trevorworkspaces.com/ https://trevorworkspaces.com/ etc. etc.
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    - overfl0w 5y ago
      The ranges mentioned are in BGN. Nobody will pay 1.5k - 2.5k EUR to a junior. source: I work there Also this: https://noblehire.io/salary-survey-2021/ https://noblehire.io/salary-survey-2021/
      - SantiagoElf 5y ago
nkmnz 5y ago
> Bulgarian national currency is BGN, and as of now, its value is pegged to EUR with the fixed ratio of 1.95583. So, 1 EUR is 1.95583 BGN, and it doesn't change over time, at least not yet. 1.95583 is EXACTLY the exchange rate between Euro and Deutsche Mark that I still remember from the switch in 2002. Indeed, after some research I've just learned that the Bulgarian Lev has been pegged to the DM since 1997.
- dimonomid 5y ago
  Oh wow, I actually didn't know that about Deutsche Mark!
- sbacic 5y ago
  Not all that unusual really. Before the EURO replaced the DM, many things in Croatia, such as cars and real estate were denominated in DM. This was due to rampant inflation (especially in the 80s and 90s) causing people to lose faith in the local currency.
  - avrionov 5y ago
    The big difference is that Bulgaria has a currency board, which was agreed to with the International Monetary Fund and the World Bank. This was done to stabilize the exchange rate and the economy in 1997. The exchange rate has been fixed for the last 24 years.
- secondaryacct 5y ago
  Yes dont you dare complain of your x2 rate, ours in France was 6.55957 (rmb it fondly, didnt even need to google it), so right in the middle of an integer multiplier, and go multiply everything by 6 and 7 and cut in the middle. We had lots of anti-german grievances due to that mismatch between x2 for the DM and 6.5 for the Frcs :D Some were saying we all got to see who our masters were, but I dismiss it as the simplistic german mind which saw an efficiency somewhere and forgot the price everyone else had to grudgingly pay hehe (and why not pull the rug to yourself when there s no global optimum after all)
svilen_dobrev 5y ago
and you can compare some cultural stuff and see if you like it. https://www.hofstede-insights.com/product/compare-countries/ https://www.hofstede-insights.com/product/compare-countries/ .bg is pretty middle ground (culturally and societaly) between (very) east and (very) west, with all the pros/cons of that. A bit more towards the west.. as situated in south-east Evropa (the original Greek word of Europe) after all, but it depends. A little bit of south as well.. As said elsewhere, Quite some things might be missing or not working but then.. you might not really need them. After being around the world, i am back here, for.. the vitality and variety of life that happens. Not that it is easy, but it is interesting. YMMV
mch0lic1 5y ago
Getting an accountant is really one of the best decisions you can make especially if you make above average income or income from multiple streams no matter the place you live in. I've done my taxes for individual business for 8 years myself, but when I've moved abroad I needed help with setting up business as I was unfamiliar with local laws and regulations. I hired a great accountant who helped me with setting up both individual business and limited company. I'm getting schooled on how I should do things to take advantage of different opportunities and tax breaks - things I never though or did before.
eloff 5y ago
I just want to throw out there that this is nice, but it's zero in Panama on foreign source income. The country uses the US dollar and is quite stable and modern. I used to live there, and I want to go back to that tax system as soon as I can.
- dimonomid 5y ago
  Thanks for that info! Yeah taxes in Bulgaria are lower than the average, but not lowest for sure. Good to know about Panama. What about social security though?
  - eloff 5y ago
    No social security to speak of. Health care is excellent and reasonably priced, so not too big a deal. Set aside some savings and get some basic insurance / critical illness insurance. No pension either, so plan for your own retirement. With what you save on taxes you can do that and take three months of awesome vacation a year anywhere you want and still save money over most countries.
    - dimonomid 5y ago
      So they literally don't take any tax for foreign income and don't require any social security payments? That's seriously awesome. Actually I specifically like it because, while I'm paying here those social security contributions for pension etc, I've no idea if I'm gonna be able to use them for the retirement, since I'm not a citizen, and not sure if I'm ever going to be one. By paying those I'm helping other people though, which is not a bad thing I guess. But I'd definitely prefer this to be more of a donation and less of a tax. Anyway, thanks again. You got me researching about Panama this evening.
      - eloff 5y ago
        Yeah, it's pretty awesome. Panama has its problems too mind you, and one really should learn Spanish if you're going to live there. But all of that seems small in comparison to the tax break that you get. You could spend the whole summer in Europe or North America if you wanted and it would be free, including food and entertainment, and you'd still have plenty left for a medical and retirement savings account for yourself.

88 points by dimonomid 5y ago

gcbirzan 5y ago

I am 100% sure long term residents also pay health insurance. Are you an EU citizen?

dimonomid 5y ago
I'm not an EU citizen, no. And while I was living there as a long-term resident, I didn't pay 8% health insurance. Perhaps it's indeed different for EU citizens, I'm not sure. I should probably mention it there.
- tchalla 5y ago
  The question is - Do you have to? You may have not paid it but that doesn’t tell if one has to.
  - dimonomid 5y ago
    This was confirmed by at least two reputable accountants, so yeah, I'm 100% sure I didn't have to pay 8% health insurance while being a long term resident (and not an EU citizen). Actually, I _did_ pay some health insurance, but it had nothing to do with the business and it wasn't 8% or anything like that. It's like the same kind of health insurance that even tourists have to get.
    - gcbirzan 5y ago
      Ah, I see where the confusion comes from. I assumed you meant you don't have to pay any. Though, I'm curious, how much is it? I went to check in the "Ordinance on the General Terms and Conditions, the Minimum Insurance Amount, the Minimum Insurance Premium and the Procedure for the conclusion of the mandatory medical insurance of foreigners who reside shortly or prolonged in the Republic of Bulgaria or transit through the country" (such a title), it says the price of the premium is determined according to article 65 of the insurance code, but that one is referring to something else. Oh, well.
      - dimonomid 5y ago
        > Though, I'm curious, how much is it? I was buying just some bare minimum required insurance, and it was very low, less than 200 BGN per year.
- charlesdm 5y ago
  It seems weird you are forced to distribute the dividend in BGN. Pay the withholding tax, yes. But the dividend itself? Most accountants can calculate the corresponding currency equivalent for the dividend being declared on the payout day. Worth looking into. Also, does Bulgaria support interim dividends? The loan set-up, while not an issue, can perhaps be avoided by use of interim dividends.

jakozaur 5y ago

Similar as in Poland: 1. Long-term remote contracting as software engineers is legal. No need to worry about being forced into being employee. 2. Regressive taxation at very low level (e.g. recently in Poland you can opt-in for 12.5% taxation of revenue).

cromka 5y ago
Just moved back to Poland after 6 years in US, looking to work remotely for US-based contractors. Dare to elaborate, please? First time I hear of this.
- lukasm 5y ago
  If you are a "creative" person (software engineer, designer etc.) you can just pay a flat rate for all taxes and insurance. For example: 100k revenue will equal to 12k in income tax + medical insurance + social security. In total, it would be less than 20k (17-20% depending on a few factors). Another option would be to use IP BOX relief. If you are producing IP your tax will be 5%. If you fly to a customer, have a company car, you need a lot of equipment, your tax can be even lower. https://www.gov.pl/web/poland-businessharbour-en/tax-reliefs-in-poland-for-research-development-and-innovation https://www.gov.pl/web/poland-businessharbour-en/tax-reliefs...
  - cromka 5y ago
    Thanks, much appreciated!
    - lukasm 5y ago
      you have to decide what kind of taxation scheme you have to you after your first invoice. It's for the whole year. You can change it next year.
- michalmj 5y ago
  Google "ryczałt dla programisty". If you play your cards right in Poland you can get legally around ~10% tax total (this includes national insurance ~5% and IP Box 5% for programmers).

firechickenbird 5y ago

Considering moving in Bulgaria after this, thanks! My Freelance taxes/social sec/retirement tax in Italy is on average 76% on a total of 80k eur average gross annual income (98th income percentile).

jakub_jo 5y ago
Do you mean you'll only make 19.2k net from 80k gross? That sounds like an awful amount of taxes. I'm from Austria and here it's ~27% for social security and income tax is ranging from 0% to 55%. From 80k gross you would make around 42k net (Calculated without any tax benefits).
- charlesdm 5y ago
  He is probably adding VAT to his income tax rates, which imo is not correct.
  - sfe22 5y ago
    Is vat not a tax? I think every government cost that is a percentage of income or spending should be calculated as your expense for the government. I think inflation also should be kept in mind as it is a hidden tax. Maybe harder to calculate.
    - charlesdm 5y ago
      VAT is a tax on consumption. But it is only levied when you take a certain action with your funds -- i.e. consume it. You could also (re)invest and let your capital compound. So yes, if you spend all your money to the last penny, that would be your tax rate. But many (higher income) people do not.
      - sfe22 5y ago
        But all your income is meant to be spent. All people invest so they get to buy more in the future, not for the sake of it. If you don’t pay VAT today, you will in the future.

phoronixrly 5y ago

Keep in mind that Bulgaria has just elected a reformist parliament for the first time in more than 10 years. Maybe wait a year or two before buying a one-way ticket as the government may raise taxes, especially on the unaffected by the anti-COVID measures. Or they could lower taxes even more if they manage to get on top of the rampant tax evasion and grey economy (one can hope). Also there are other small things to consider: * Healthcare in Bulgaria is severely underfunded and understaffed. Not only that, but the incentive system for hospitals is currently IMO completely broken, as they get paid per patient i.e. more sick people = more pay, not more healthy people. My current belief is that you need to live in a large city if you want to have a chance to survive an incident or a heart attack/stroke. Source: trust me, I live here, have lost several family members due to poor healthcare, and have had one receiving incompetent treatment so the hospital can receive more money from health insurance. * Same goes for childcare/education. * * There is currently a severe deficit of kindergartens in the large cities -- Sofia (~10k children left out), Plovdiv, Varna and Burgas. * * Bulgarian public education has been in a freefall for the last 10 years as evidenced by dropping results in state exams and international studies (https://gpseducation.oecd.org/CountryProfile?primaryCountry=BGR&treshold=10&topic=PI https://gpseducation.oecd.org/CountryProfile?primaryCountry=...). Private schooling is available in large cities and unsurprisingly is limited. Take into account potential need of home-schooling if you plan to start a family here. * The public institutions are (currently) not working or corrupt. There are issues with the judicial system, the prosecution, the police, etc. Tl; dr: better hope you won't have to deal with those before major reforms and definitely don't rely on having your rights protected by them. You are on your own here. Do not be under the illusion that Bulgaria is just like $western_european_country but with less taxes and cheaper housing. Everything comes at a price. You will not find many things you take for granted in your home country here.

gcbirzan 5y ago
If by those unaffected by COVID you mean self-employed people, not sure that's really the case, as taxes for people that are employed by a Bulgarian company are not THAT much higher. Using the 10k BGN example, your net salary is 8627.94, and the employer (of course, excluding accounting and all that stuff) pays 10567.60. I don't remember exactly the numbers for self employed, but if his are correct (and they seem a bit off, maybe because of the missing health insurance), the difference is basically 5-600 BGN, so 5-6pp.

otar 5y ago

I am a big believer in Flag Theory and stuff… I currently pay about 2,5% on my gross income ($100k+) as a software developer, which is more than most of EU/US developers are left after tax… In a short, if you’re willing to make some trade-offs and optimize your taxes, you’ll be legally retaining your hard earned $$$. Among the trade-offs, tax residency is the most important. Things are a bit complicated for US citizens as the government taxes their income regardless of their tax residency, citizenship-based. P.S. That 2,5% includes all the fees like accounting, legal consultations and banking fees (account maintenance, transfers…)

bobcostas55 5y ago
Go on...
charlesdm 5y ago
Unless you're actually living in a tax haven or a third world country with no CFC laws, you're almost certainly breaking the law with this. The conversations I have had with people who have found the gold wheel is mind boggling, and they almost all get in trouble at some point.
- PaywallBuster 5y ago
  US citizens can move to Puerto Rico and pay 5% tax, very legally
- lowpro 5y ago
  Plenty of first/second world country have more friendly tax laws. Many don’t tax foreign income, and if you live outside the US for 300 days per year, you get a $100k tax write off up front. There are many legal ways to live in nice places and pay low tax.
- refurb 5y ago
  Based on my limited knowledge it seems possible. The US allows you to exclude $106k USD in foreign income if you’re not a US resident. You can also add some housing costs to bump it up. Many countries won’t tax you if you work there and a) all your income and work is outside the country, b) you do t spend enough time there to become a tax resident (I’ve seen 180 days for some). So if you’re willing (and able) to split your time between 3 countries, not go back to the US and get all of your income from outside those 4 countries, you could effectively pay little to no income tax and it would be legal. But please hire a CPA.

jstx1 5y ago

> And if your income is smaller than 710 BGN, even if it's straight zero, then you'll have to pay social security as if your income was 710 BGN Is this really how it works? They're taxing people with 0 income? I guess it isn't relevant to the target audience of the article but it must suck for the unemployed. > Accountant fees: about 150 - 200 BGN per month independently of the income. This seems really high. Why do you need an accountant every month instead of once a year?

phoronixrly 5y ago
> In either case (company or individual), due to our line of business, most likely you'll also need to do the VAT registration. It's something like 150 - 200 BGN. The VAT registration requires monthly declarations of VAT. Tracking your VAT takes time for the accountants as they need to summarize all your invoices, expenses, and other paperwork. Links (conveniently only available in Bulgarian): * VAT form: https://nra.bg/wps/portal/nra/documents/taxes/zdds/35c5ece4-a1d9-4c15-92a8-04db8c158a0e https://nra.bg/wps/portal/nra/documents/taxes/zdds/35c5ece4-... * VAT law overview: https://nra.bg/wps/portal/nra/taxes/dds-v-balgariya https://nra.bg/wps/portal/nra/taxes/dds-v-balgariya
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WJW 5y ago
Not sure how it works in Bulgaria, but over here in the Netherlands if your income is lower than some level you can (with some conditions) apply for unemployment benefits that will include enough money for the social security taxes. This is a bit roundabout (why not just withhold the social security money from the benefits in the first place?), but such are the joys of a complex tax system evolved over multiple centuries.
Hokusai 5y ago
In Spain for self employed workers there is also a minimum. If you do not want to pay it you need to unregister. This does not apply for employees. It's just for self employed workers as it's more of a fee for the paperwork that you generate for the government than a tax on income.

mdrachuk 5y ago

Simplified taxation for contractors in Ukraine (pe simplified system) is basically 5% + ~$500. You are allowed to make up to around $250,000 per year this way.

atxbcp 5y ago

The numbers in this article are wrong, especially the company vs individual chart: you'd only pay 16% tax with a company if you paid yourself in dividends. Past a certain threshold, with a company, the best option is to pay yourself a salary every month. Then your tax rate will be in the 11 - 15% range depending on your income. source: I've got a company in Bulgaria conclusion: coming to Bulgaria to pay less taxes can definitely be done, but hire a local accountant and get professional advice.

dimonomid 5y ago
Could you elaborate? Of course I do have a local accountant, and if what you're saying is true, I am disappointed she didn't mention that; they just said, paying salary will end up being more expensive than dividends.
- saberdancer 5y ago
  I'm not from Bulgaria but I think what was said is that you depending on profitability of your company you can pay out a part of the profit as a dividend (using the lower tax rate until the cutoff) and then the rest as a salary. It's not one or the other. As a company owner you can use both the dividend and pay yourself a salary.
  - dimonomid 5y ago
    While I def agree that those are not mutually exclusive and I considered paying myself a salary, but paying a salary still involves a bunch of extra taxes, which end up being more than the dividend's 5%. At least that's what I had from my accountant, but I'd be happy to know details of how to make the combination of salary+dividends to require less taxes than just dividends.
- atxbcp 5y ago
  By paying yourself with a salary via your company, you'd pay 10% revenue tax + health insurance (ЗО) + social insurance (ДЗПО, ДОО)... except the insurance part is capped on a maximum revenue of 3000 BGN or something like that... so as you make more money, your total tax rate converges to 10%. Take these numbers with a grain of salt because I'm no accountant, but I know for sure your accountant is wrong, because I know how much tax I pay, and that's close to 11.5% total.

SantiagoElf 5y ago

Bulgarian here. :) We like to be hush-hush about the benefits of living in Bulgaria. Nothing at the moment beats the taxes, location and potential of Bulgaria in Eastern Europe :) You can ask me any questions related to living cost, places, customs, etc or anything related to Bulgaria.

Oron7 5y ago
In which cities do you think there is the most work in the IT sector? Also, how do you rent a place? With agencies, do they want a lot of documents and stuff? Thanks!
- SantiagoElf 5y ago
  Sofia, without a doubt - the capital. Not much documents are needed in order to start working with an agency due to the fact that the market is starved for IT specialists. It's not uncommon a person with 0 experience to start at 2K BGN which is around 1K eur. Ranges are ( these are NET salaries after tax): - Super Jr -> 1k - 1.5k EUR - Juniour -> 1.5k - 2.5k EUR - Mid-Level -> 2.5k - 3.5k EUR - Sr. Dev -> 3.5k -> ~4-5k EUR without being a people manager It's full of collocation workspaces like: https://betahaus.bg/en/ https://betahaus.bg/en/ http://soho.bg/index-en.php http://soho.bg/index-en.php https://cosmos.camp/ https://cosmos.camp/ http://cosharehive.com/ http://cosharehive.com/ https://trevorworkspaces.com/ https://trevorworkspaces.com/ etc. etc.
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  - overfl0w 5y ago
    The ranges mentioned are in BGN. Nobody will pay 1.5k - 2.5k EUR to a junior. source: I work there Also this: https://noblehire.io/salary-survey-2021/ https://noblehire.io/salary-survey-2021/
    - SantiagoElf 5y ago

nkmnz 5y ago

> Bulgarian national currency is BGN, and as of now, its value is pegged to EUR with the fixed ratio of 1.95583. So, 1 EUR is 1.95583 BGN, and it doesn't change over time, at least not yet. 1.95583 is EXACTLY the exchange rate between Euro and Deutsche Mark that I still remember from the switch in 2002. Indeed, after some research I've just learned that the Bulgarian Lev has been pegged to the DM since 1997.

dimonomid 5y ago
Oh wow, I actually didn't know that about Deutsche Mark!
sbacic 5y ago
Not all that unusual really. Before the EURO replaced the DM, many things in Croatia, such as cars and real estate were denominated in DM. This was due to rampant inflation (especially in the 80s and 90s) causing people to lose faith in the local currency.
- avrionov 5y ago
  The big difference is that Bulgaria has a currency board, which was agreed to with the International Monetary Fund and the World Bank. This was done to stabilize the exchange rate and the economy in 1997. The exchange rate has been fixed for the last 24 years.
secondaryacct 5y ago
Yes dont you dare complain of your x2 rate, ours in France was 6.55957 (rmb it fondly, didnt even need to google it), so right in the middle of an integer multiplier, and go multiply everything by 6 and 7 and cut in the middle. We had lots of anti-german grievances due to that mismatch between x2 for the DM and 6.5 for the Frcs :D Some were saying we all got to see who our masters were, but I dismiss it as the simplistic german mind which saw an efficiency somewhere and forgot the price everyone else had to grudgingly pay hehe (and why not pull the rug to yourself when there s no global optimum after all)

svilen_dobrev 5y ago

and you can compare some cultural stuff and see if you like it. https://www.hofstede-insights.com/product/compare-countries/ https://www.hofstede-insights.com/product/compare-countries/ .bg is pretty middle ground (culturally and societaly) between (very) east and (very) west, with all the pros/cons of that. A bit more towards the west.. as situated in south-east Evropa (the original Greek word of Europe) after all, but it depends. A little bit of south as well.. As said elsewhere, Quite some things might be missing or not working but then.. you might not really need them. After being around the world, i am back here, for.. the vitality and variety of life that happens. Not that it is easy, but it is interesting. YMMV

mch0lic1 5y ago

Getting an accountant is really one of the best decisions you can make especially if you make above average income or income from multiple streams no matter the place you live in. I've done my taxes for individual business for 8 years myself, but when I've moved abroad I needed help with setting up business as I was unfamiliar with local laws and regulations. I hired a great accountant who helped me with setting up both individual business and limited company. I'm getting schooled on how I should do things to take advantage of different opportunities and tax breaks - things I never though or did before.

eloff 5y ago

I just want to throw out there that this is nice, but it's zero in Panama on foreign source income. The country uses the US dollar and is quite stable and modern. I used to live there, and I want to go back to that tax system as soon as I can.

dimonomid 5y ago
Thanks for that info! Yeah taxes in Bulgaria are lower than the average, but not lowest for sure. Good to know about Panama. What about social security though?
- eloff 5y ago
  No social security to speak of. Health care is excellent and reasonably priced, so not too big a deal. Set aside some savings and get some basic insurance / critical illness insurance. No pension either, so plan for your own retirement. With what you save on taxes you can do that and take three months of awesome vacation a year anywhere you want and still save money over most countries.
  - dimonomid 5y ago
    So they literally don't take any tax for foreign income and don't require any social security payments? That's seriously awesome. Actually I specifically like it because, while I'm paying here those social security contributions for pension etc, I've no idea if I'm gonna be able to use them for the retirement, since I'm not a citizen, and not sure if I'm ever going to be one. By paying those I'm helping other people though, which is not a bad thing I guess. But I'd definitely prefer this to be more of a donation and less of a tax. Anyway, thanks again. You got me researching about Panama this evening.
    - eloff 5y ago
      Yeah, it's pretty awesome. Panama has its problems too mind you, and one really should learn Spanish if you're going to live there. But all of that seems small in comparison to the tax break that you get. You could spend the whole summer in Europe or North America if you wanted and it would be free, including food and entertainment, and you'd still have plenty left for a medical and retirement savings account for yourself.