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How to Declare Business Expenses in Bulgaria to Reduce Your Taxes
If you’re running a business in Bulgaria, properly declaring your business expenses can significantly reduce your taxable income. Here is some essential info for you.
What Are Deductible Business Expenses?
Deductible expenses are costs directly related to your business operations. Some of the most common deductible expenses in Bulgaria include:
- Office rent and utilities – If you rent an office, the rent, electricity, and internet bills can be deducted.
- Employee salaries and social security contributions – Payroll expenses, including mandatory social security payments, are deductible.
- Professional services – Fees paid to accountants, lawyers, and consultants related to your business.
- Marketing and advertising – Online ads, website costs, and promotional materials are deductible.
- Business travel and transport – If you travel for business, costs like fuel, plane tickets, and accommodation may be deductible.
- Depreciation of assets – Equipment, machinery, and company cars depreciate over time, and their cost can be deducted gradually.
Keep Proper Documentation:
- To claim deductions, you must have proper documentation:
- Invoices and receipts – Always request an invoice with your company details.
- Bank statements – Payments should ideally be made via bank transfers.
- Contracts – If you hire freelancers or service providers, ensure you have contracts in place.
- Expense reports – Maintain a structured system to track expenses regularly.
How to Declare Expenses in Your Tax Return
- All expenses must be recorded in your company’s accounting books.
- When filing your annual corporate tax return , expenses should be properly categorized.
- Some expenses might be subject to VAT deductions, so ensure they are properly recorded in your VAT declaration if applicable.
Common Mistakes to Avoid:
- Personal expenses listed as business expenses – If an expense is not strictly business-related, the tax authorities may reject it.
- Missing invoices – Verbal agreements or receipts without proper invoicing details may not be accepted.
- Late submissions – Ensure your tax filings and VAT returns are submitted on time to avoid penalties.
Maximize Your Deductions with Professional Accounting
Bulgaria has strict tax regulations, and tax audits can happen at any time. To maximize your deductions and stay compliant, working with a professional accounting firm like ASB Accounting Services Bulgaria can save you time, stress, and money.