Without no doubt, Bulgaria has turned out to be the hottest tax optimisation spot on the European map. The factors which contribute to this event are multiple, but maybe the most distinguished are the considerably lower tax rates, the high level of economic and government stability, the highly skilled employers, the strategic geographic location.
The attractiveness of the Bulgarian tax incentives contributes greatly to businesses of all kind to effectively and legally reduce their tax burden and respectively it empowers them to generate greater profit and improve their financial situation. The corporate income tax in Bulgaria is at the flat rate of 10% which is the lowest rate in the entire EU where the average rate is between 15% and 36% and it respectively leads to a considerable decrease the tax burden of the local entities. Good think to know is that there is possibility of 100% off the corporate tax provided that the business is situated in a region with higher than the average for the country unemployment.
With regard to the personal income tax it is also at the flat rate of 10% and the dividend tax is at the amount of 0% should the dividend is distributed between EU member residents.
The good example set by many SMEs and big corporation which establish their headquarters in Bulgaria and apart from the tax optimization opportunities, is thanks to the very fast and hassle-free company registration procedure, the flexible and modern corporate law system, the financial, fiscal and banking stability, the reassurance of the EU membership, the big pool of skilled workers available and the lowest costs of labor in the EU.
In addition to that and with regard to the needed precautions when deciding to optimize expenses from tax point of view abroad, it is essential to be considered the stability of a certain location from a financial, fiscal, banking and government point of view. In contrast with the bigger part of the EU and the world in general, Bulgaria is more and more often referred to one of the outstanding performer in this area. The recently implemented Financial Stability Pact, securing a long-term preservation of the current tax rates together with the high levels of liquidity of the local banks and the political and government stability reconfirmed by the recently held president and mayor elections, are additional guarantee for a high level of security for the foreign direct investments.
There is no doubt that in times of recession, companies which have a long-term vision, tend to plan ahead in financial terms and have the ability to timely adapt to the dynamics of the economy, are more likely to save money on their operations and at the same time, not lose their competitive edge. In that sense, one of the most strategically right moves that a business can undertake today is to start exploring Bulgaria and see what competitive advantages it has to offer to foreign businessmen.