This is for founders of a Bulgarian company deciding how to draw profit — salary, dividends or both — and wanting the rates, timing and pitfalls set out plainly.
A Bulgarian EOOD or OOD pays 10% corporate income tax on taxable profit. Once profit is available for distribution, a dividend to an individual shareholder is generally subject to 5% withholding tax. The combined Bulgarian company-and-dividend charge is therefore 14.5% of pre-tax profit, before considering the shareholder's tax residence outside Bulgaria.
How do founders take profit from a Bulgarian company?
A Bulgarian EOOD or OOD pays 10% corporate income tax on taxable profit. Once profit is available for distribution, a dividend to an individual shareholder is generally subject to 5% withholding tax. The combined Bulgarian company-and-dividend charge is therefore 14.5% of pre-tax profit, before considering the shareholder's tax residence outside Bulgaria.
Salary or dividend?
| Method | When it is paid | Tax and contribution profile | What it is for |
|---|---|---|---|
| Salary / management remuneration | Monthly or as agreed | 10% personal income tax plus social-security and health contributions | Regular personal income; social-insurance record. |
| Dividend | Only from distributable, after-tax profit | 5% withholding after 10% corporate tax | Return on ownership, not payment for work. |
| Expense reimbursement | When a genuine business cost is incurred | Usually not personal income if properly documented | Repaying legitimate company expenses. |
What does the 14.5% effective rate mean?
| Pre-tax profit | Corporate tax (10%) | Post-tax profit | Dividend tax (5%) | Net to individual | Total Bulgarian tax |
|---|---|---|---|---|---|
| €10,000 | €1,000 | €9,000 | €450 | €8,550 | €1,450 |
| €50,000 | €5,000 | €45,000 | €2,250 | €42,750 | €7,250 |
| €100,000 | €10,000 | €90,000 | €4,500 | €85,500 | €14,500 |
These examples assume all post-tax profit is legally available and distributed to an individual shareholder. They do not include accounting costs, salary, social security, foreign tax, treaty relief or the tax rules of a shareholder resident in another country.
When can a dividend be paid?
Dividends can only be paid from distributable profit and require a proper shareholder decision. A company must have sufficient accumulated profit after losses and statutory reserves, where relevant. Interim dividends need particular care because they cannot be based on expected future profit alone.
How and when is the 5% tax paid?
The company withholds the 5% tax when the dividend is paid or made available. It generally files the required declaration and remits the tax by the end of the month following the quarter in which the distribution decision was made. A decision in May is therefore normally declared and paid by 31 July.
Where salary still matters
Dividends are not a substitute for salary in every situation. A founder may need documented employment or management income for a residence basis, mortgage application, visa, social-insurance record or day-to-day living costs. An active owner-manager should not re-label payment for work as a dividend merely to reduce tax.
Common mistakes
- Paying dividends before there is distributable profit.
- Treating company cash as personal cash without a formal distribution.
- Missing the quarterly withholding-tax filing and payment deadline.
- Ignoring the shareholder's tax residence and possible further tax abroad.
- Taking no salary where a residence, banking or insurance record requires one.
Thinking Bulgaria?
Sovereignty Global helps founders structure the salary-and-dividend mix around real operations — company formation, accounting, payroll, banking and the tax analysis for your own residence country. Explore Tax Strategy and Bulgaria, or Book a Consultation. Related: the Bulgarian EOOD explained and when you must register for VAT.
Sources
- Bulgarian Corporate Income Tax Act, including Articles 20 and 194.
- Personal Income Tax Act.
- National Revenue Agency guidance on withholding-tax declarations and payments. Confirm individual facts before distribution.