Low tax is one of the main reasons founders choose Bulgaria, but the money still has to leave the company the right way. A dividend paid without a proper decision, or a company card used for personal spending, can turn a 5% tax into a much larger bill. The rules are simple once the order of steps is clear.
The standard route: an annual dividend
Annual accounts
The company closes its year and prepares its financial statements, which show the profit after the 10% corporate tax.
Decision
The general meeting — or the sole owner — adopts the accounts and decides how much of the profit, including retained profit from earlier years, to distribute.
Withholding
The company withholds 5% dividend tax from each owner's share.
Payment
The net dividend is paid by bank transfer.
Reporting
The withheld tax is paid and declared by the end of the month following the quarter in which the dividend was distributed.
Dividends can only come out of profit shown in the adopted accounts. Paying more than the company has earned is not a dividend at all, and is treated accordingly.
Interim dividends during the year
Owners often want money before the year ends. Since 2022 the tax authority has accepted advance dividends under three conditions: a reasoned forecast that the year will end with sufficient profit, a formal decision of the owners, and a clear accounting trail. If the year's actual profit turns out lower than what was paid, the difference is treated as a hidden distribution — so advance dividends should stay well within the forecast.
Salary or dividend?
| Route | How it is taxed | When it fits |
|---|---|---|
| Dividend | 10% corporate tax, then 5% dividend tax | Owners who do not need Bulgarian social insurance, or who are insured elsewhere |
| Salary or manager's pay | 10% personal income tax plus social and health contributions, capped at the maximum insurable income (EUR 2,300 a month from August 2026) | Owners who live in Bulgaria and want health insurance and pension rights here |
Many owner-managers combine the two: a modest salary for insurance cover and dividends for the rest. The right split depends on where the owner lives and pays tax — see becoming tax resident in Bulgaria.
Paying dividends to owners abroad
- EU and EEA parent companies are generally exempt from the 5% tax under Bulgarian rules implementing the EU Parent-Subsidiary Directive, provided the conditions are met.
- Other foreign owners may pay a lower rate, or none, under a double tax treaty — supported by a certificate of tax residence and the procedure the treaty requires.
- Individuals living abroad may also owe tax in their country of residence, usually with credit for the Bulgarian 5%.
The hidden-distribution trap
Personal expenses paid by the company, cars and flats used privately, interest-free loans to owners and payments without a business reason can all be reclassified as hidden profit distributions. These are taxed far more heavily than a dividend. Keeping company money and personal money separate is the cheapest tax planning there is.
Questions clients ask
I own an EOOD. Can I take money out every month?
Not as an informal withdrawal. You can pay yourself a salary or manager's fee, or decide advance dividends that meet the conditions above. Money taken without one of these bases is a loan to you — or a hidden distribution.
Do we have to distribute all the profit?
No. The owners decide how much to distribute and how much to keep in the company. Retained profit can be distributed in later years.
Our parent company is outside the EU. Which rate applies?
The 5% Bulgarian rate, unless a double tax treaty with the parent's country gives a lower one. We check the treaty and prepare the documents before the payment, because relief is easier to obtain in advance than to recover afterwards.
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.
