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Advance Corporate Tax in Bulgaria – Key Insights for Business Owners
In this article, we will explain what advance corporate tax is, who pays it, how payments are calculated, and why it matters for both local and foreign companies.
What Is Advance Corporate Tax?
This is a prepayment of your annual corporate income tax. Instead of settling the full amount at the end of the financial year, certain companies in Bulgaria are required to make periodic payments throughout the year. These installments are based on expected profits, calculated with reference to the previous year’s results.
Who Needs to Pay It?
Not all businesses fall under the obligation to pay advance corporate tax. The rule depends primarily on the company’s net revenue from the previous year. Below is a simplified overview:
| Company Revenue (Previous Year) | Obligation |
|---|---|
| Below 300,000 BGN | No advance corporate tax – only final tax at year-end |
| Over 300,000 BGN | Advance corporate tax required (monthly or quarterly) |
How Are Payments Calculated?
The calculation is linked to your company’s financial performance:
- Payments are based on expected profit for the current year, with reference to last year’s results.
- Depending on your revenue level, the installments may be quarterly or monthly.
- At year-end, the advance payments are reconciled with the actual tax liability:
- If you overpaid – the excess is refunded or offset.
- If you underpaid – the difference must be settled with your final return.
Why Is It Important for Foreign Businesses?
Foreign investors and expat entrepreneurs often overlook advance tax obligations until they receive a notice from the Bulgarian tax authorities. Understanding this system early helps you:
- Ensure compliance and avoid penalties.
- Plan cash flow more effectively, since tax installments can affect liquidity.
- Maintain transparent financial management, which is essential when expanding in Bulgaria.
How We Can Help
This tax in Bulgaria can feel complex at first, but with proper planning, it becomes straightforward. At ASB Accounting Services Bulgaria, we guide businesses step by step through all corporate tax requirements. Our team ensures that your company remains compliant while optimizing cash flow and reducing risks of penalties.
Contact us today to get expert advice and reliable support for managing your taxes and business obligations in Bulgaria.