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EOOD vs Freelancer in Bulgaria: Which Structure Fits Your Work?
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If you plan to work independently in Bulgaria, one of the first decisions is whether to operate under the Bulgarian free profession regime or through an EOOD, a single-member limited liability company. The right choice depends on your activity, costs, social security position and plans for growth.
Does your activity qualify as a free profession?
Not every self-employed activity can be registered as a free profession. Bulgarian tax rules include consultants, translators, architects, engineers, medical professionals, auditors and other individuals who perform professional activity on their own account, are not sole traders, and are self-insured.
The word “freelancer” does not create a tax status by itself. Your actual activity must qualify, so eligibility should be checked before registration.
A person exercising a free profession normally registers with the BULSTAT Register and with the National Revenue Agency as a self-insured person. Current NRA guidance requires registration within seven days from the start of the activity.
How taxation differs?
For most free professions, personal income tax is 10% of the taxable base. In the general case, income from a free profession benefits from 25% statutory recognised expenses. Some categories have different rules, so the applicable percentage must be checked.
Social security and health insurance contributions are separate. A self-insured freelancer makes contributions during the year and performs the required annual reconciliation through the annual tax return.
An EOOD pays 10% corporate income tax on taxable profit. If after-tax profit is distributed to an individual owner as a dividend, the dividend is generally subject to 5% final tax.
Company funds are not automatically the owner’s personal funds. Payments to the owner need a valid legal and accounting basis, such as remuneration, reimbursement of documented expenses, repayment of a loan, or a lawful dividend.
Expenses can change the comparison
A freelancer generally uses statutory recognised expenses instead of deducting each ordinary business cost separately. An EOOD uses accounting profit adjusted under corporate tax rules. A business expense can reduce taxable profit when it is related to the activity, properly documented, and recognised for tax purposes.
- Limited real costs can make the free profession model simpler.
- Software, equipment, advertising, subcontractor, travel, office or employee costs make actual company expenses more important.
- Not every company expense is tax deductible. Documentation and business purpose matter.
EOOD and freelancer at a glance
| Area | Free profession | EOOD |
|---|---|---|
| Legal status | Individual professional activity | Separate legal entity |
| Main tax | 10% personal income tax on the taxable base | 10% corporate tax on taxable profit |
| Expenses | Usually statutory recognised expenses | Tax-recognised business expenses based on accounting records |
| Administration | Generally lighter | Company accounting and corporate compliance |
Liability and social security
An EOOD is a separate legal person, creating clearer separation between company obligations and the owner.
An EOOD should not be chosen simply to avoid social security. An owner who personally works in the company may still have social security obligations. The exact treatment depends on how the owner works for and is remunerated by the company.
VAT can apply to both
VAT does not depend only on the legal form. Both a freelancer and an EOOD can be taxable persons for VAT purposes.
Cross-border services need particular attention. Article 97a of the Bulgarian VAT Act can require registration in certain cases when you receive taxable services from foreign suppliers or provide B2B services to VAT-registered customers in another EU Member State. This can happen before the general domestic turnover threshold becomes relevant.
What should you compare before registering?
- Whether your activity qualifies as a free profession.
- Your expected income and real business expenses.
- Your social security position.
- Your need for employees or subcontractors.
- Your contractual and commercial risk.
- Your plans to reinvest profit.
- Your Bulgarian and cross-border VAT obligations.
A free profession can suit an individual professional with a qualifying activity, limited costs and straightforward operations. An EOOD can provide a clearer structure where there are larger expenses, employees, reinvestment plans or higher business risk.
The important point is to compare the full picture before registering. Tax rates alone rarely answer the question.
ASB Accounting Services Bulgaria can review the activity, expected expenses, social security position and VAT exposure before the structure is selected.
If you plan to work independently in Bulgaria, one of the first decisions is whether to operate under the Bulgarian free profession regime or through an EOOD company in Bulgaria, a single-member limited liability company.This article provides general information and does not constitute tax, accounting or legal advice. The correct treatment depends on the specific facts of each case.