If you want to work for yourself in Bulgaria, there are three legal forms to choose from. They differ on four things: who may use them, how far your personal assets are exposed, how the income is taxed and insured, and how much administration they bring. For foreigners, the first question often decides the answer.
Side by side
| Freelancer | Sole trader (ET) | EOOD | |
|---|---|---|---|
| What it is | An individual doing professional work in their own name | An individual registered as a trader | A separate legal person with one owner |
| Open to foreigners? | With the right to work here — EU citizens yes; others only with a status that allows self-employment | Only if you live in Bulgaria, as the Commerce Act requires | Yes — owner and manager can live anywhere |
| Your liability | Unlimited, with everything you own | Unlimited, with everything you own | Limited to the company’s assets |
| Income tax | 10% after a 25% statutory expense allowance | 15% on profit | 10% corporate tax, then 5% on dividends |
| Social security | Self-insured: about 28% on an income you choose between the legal minimum and maximum | Self-insured on the same basis | Only if you are paid or insured as manager — see paying yourself as owner-manager |
| Bookkeeping | Light: income records and quarterly advance tax | Full accounting | Full accounting; annual accounts published |
| Start-up cost | Very low | Low | Low — minimal capital and a modest registration fee |
Freelancer
A freelancer — in Bulgarian law, a person practising a “free profession” — registers in the BULSTAT register and invoices in their own name: consultants, IT specialists, designers, translators and the like. It is the simplest and cheapest form, and the tax is low: by law 25% of the income counts as expenses, and the rest is taxed at 10%. The trade-offs are unlimited personal liability and social security contributions of about 28% on the insurable income you choose.
For non-EU nationals, the question is the right to work: you need a residence status that allows self-employment. The digital nomad permit, for example, covers only work for clients outside Bulgaria.
Sole trader (ET)
The ET is a trader without a company: the business and the person are one, so its debts are yours. It is taxed at 15% on profit and keeps full accounts. Under the Commerce Act a sole trader must live in Bulgaria, so a foreigner living abroad cannot use it. For most people choosing today, an EOOD gives more for a similar effort.
EOOD
The company is a separate legal person: it signs contracts, owns assets and carries its own debts, and you risk only what you put in. Profit is taxed at 10% and dividends paid to you at 5% — about 14.5% in total on profit you take out. It is the only form that works when you live abroad, want to hire staff or may bring in partners later. See registering a Bulgarian company and taking profits out.
Which one fits
- Freelancer — you sell your own time and expertise, you live in Bulgaria and your business risk is low.
- EOOD — you live abroad; or your business has staff, stock, leases or larger contracts; or you plan to grow or bring in partners.
- Sole trader — rarely the best choice now; mainly for residents who want a registered trading name without a company.
All three register for VAT on the same terms — compulsory once taxable turnover passes the legal threshold, and earlier for some cross-border services. See VAT registration.
Questions clients ask
Can I switch from freelancer to an EOOD later?
Yes. You register the company and close the freelance registration; clients and contracts then move to the company. Timing the switch around the tax year keeps the paperwork simple.
Which form pays the least tax?
It depends on your income and on social security. A freelancer pays 10% on 75% of the income plus contributions; an EOOD pays 10% on profit and 5% on dividends, with contributions only on what you are paid as manager. For profitable businesses whose owner is insured elsewhere, the EOOD often comes out ahead; for modest professional incomes, freelancing is simpler.
I live abroad. Can I work as a Bulgarian freelancer?
It is rarely the right form: freelancing ties you to Bulgarian tax and social security as an individual. For owners abroad, an EOOD is the usual choice — see running a Bulgarian company from abroad.
This guide is general information about Bulgarian law as it stood on the date of publication. It is not legal advice for your specific case. Unfamiliar terms are explained in our glossary.
