Questions and answers

1. What are the taxes for corporate entities in Bulgaria and Romania?

BULGARIA
The corporate income tax in Bulgaria is 10% of the registered profit. The annual tax declaration and payment of the corporate tax is due until March 31st on the following year. Value added tax (VAT) in Bulgaria is fixed at 20% no matter the type of product, but tourist services use a lowered 9% VAT. Another type of tax – dividend tax- in the amount of 5% is applicable to shares payed by corporation to their shareholders.

ROMANIA
The corporate tax in Romania is 16%.
For newly created companies (under 1 year) and for micro-companies the so called revenue tax is applied. It can be 1% or 3% of the annual turnover.

The condition for companies to qualify as micro companies is to have a smaller than 1 million EUR revenue for the passed tax year. The taxes applicable are:

• 1% for micro-companies with at least 1 employee
• 3% for companies without employees

Micro-companies can apply for the regular corporate tax of 16% if the fullfill both of the following conditions:

• Have a capital of at least 45 000 lei
• Have at least 2 employees
 

2. When is it mandatory to make a VAT registration in Bulgaria and Romania?

BULGARIA
VAT registration is mandatory for companies with a taxable turnover of more than 50,000 BGN, voluntary registration is also possible, before this date.

When distance selling performed by a foreign supplier in Bulgaria exceeds the threshold of BGN 70 000, the supplier must register under VAT in Bulgaria and then charge their buyers with 20% VAT.

ROMANIA
The VAT registration threshold is 300 000 lei and when it comes to distance sales it is 118 000 lei.
 

3. How much does it cost to register a company in Bulgaria and Romania?

BULGARIA
The minimum capital to register a limited liability company in Bulgaria is 2 BGN (1 EUR), and it usually takes up to 2 weeks to register the company.

The minimum share capital for a joint stock company is BGN 50,000 (approx. €25,000), of which at least 25% or €6,250 must be initially paid up, the remainder to be paid up within 2 years of incorporation.

The applicable state tax is around 55 EUR but is reduced in half if the documents are filed online. In order to do this however, one must have an electronic signature with a digital certificate.

ROMANIA
The state taxes to register a company in Romania are around 26 euro. The minimum required capital is 42 euro. In case you do not speak Romanian and cannot prepare and apply yourself you might need to hire a lawyers, who will also require a fee.
 

4. What taxes are applicable to physical persons?

BULGARIA
Income tax for private individuals amounts to 10%.

The social security contributions are generally calculated as follows:

• Basic social security (unemployment insurance etc.): 17,3 % of the gross salary;
• Pension insurance: 5 % of the gross salary;
• Health insurance: 8 % of the gross salary.

The employer must pay 60 % of the insurance contributions, the employee the remaining 40 %.

Further, the employer must bear the costs of the occupation accident insurance that amounts between 0,4 % and 1,1 % of the gross salary, depending on the job.

ROMANIA
The social security and health insurance in Romania are very different from those in Bulgaria. The employees pays a total of 45% in taxes on their gross salary, while the employer only covers 2.25%. The employee contributions include: 10% income tax, 10% health insurance tax and 25% pension fund contributions. The 2.25% that the employer covers are related to work hazard and safety provisions.
 

5. How long does it take to pass through the Bulgarian-Romanian borders?

Traffic for both trucks and cars between Bulgaria and Romania is very heavy and often long lines form on both bridges – between Ruse and Giurgiu and between Vidin and Kalafat. This is why the Romanian border police have developed an online tool for estimating the waiting times for passing through each border point. You can find it here: https://www.politiadefrontiera.ro/ro/traficonline