The hardest thing in the world to understand is the income tax.Albert Einstein
Taxes in Bulgaria – what to do when you get the taxman knocking on your door
Everyone knows already that Bulgaria applies the lowest EU tax rate – 10% only. Both companies and individuals pay the same flat rate. And it remains the same no matter what profit/turnover you make. Not a bad destination for doing business you will think. And you will be right.
Bulgaria became a hub for many international companies that transferred their businesses in to the country. But the fiscal legislation becomes more and more comprehensive and applying it correctly is now a challenge. A challenge one should tackle professionally rather than playing Russian roulette with the authorities.
Try to keep your bookkeeping fully compliant and transparent
In Bulgaria private individuals and companies alike enjoy maximum flexibility in terms of declaring their taxes. Basically, if one has flawless accountancy, the taxman may never make any checks on the company or the individual. As a rule of thumb – the more transparent and flawless the tax declarations, the less the chance of tax inspection. And let’s be honest, nobody likes tax inspections. Tax inspection requires resources from the inspected, it is time consuming and often, the company may put its business to a hold during the procedure. On top of that, if there are irregularities, the tax authorities will fine the audited entity.
Complying to all regulation – mission impossible
But even the best accountancy practices will be challenged during an official tax inspection. The tax legislation in Bulgaria is complicated and is amended literally every month. No accountant in Bulgaria will be able to cover all areas of the tax legislation. No accountant or even large accountancy firm will be able to successfully represent you during a tax inspection. Likewise, no lawyer in the country will be capable to solve all your issues during the inspection. Basically, the inspected has to deal with a team of tax inspectors. The inspectors are extremely well prepared with practically unlimited legal rights during the inspections.
On top of all that, the time doesn’t play in your favor. During the procedure, your bank accounts may be blocked, which which may be a big headache. This is what we call “social death” as the inspected entity or person can’t even pay for his daily needs. Neither can he receive payments from the clients.
The best solution for your peace of mind
If you run a small company with annual turnover of less than 50-100 hundred thousand Euro, you can basically hire any reputable accountancy office in Bulgaria. Most probably, the office will be able to solve most of your issues with the tax authorities. This is of course only if you have kept your books in order. If not, you should consider the option below.
Large or established companies and wealthy private individuals
In case that you have an established business in Bulgaria with high revenues, trusted business partners, company assets, etc., then you should be proactive. Tax inspections in Bulgaria are serious administrative proceedings that may lead to huge penalties and even penal actions against the inspected persons.
Our support during tax inspections in Bulgaria
We believe that every tax inspection must be tackled professionally by a co-working team of experienced accountants and lawyers. We have therefore created the VD&A Premium Accountancy with Legal Support services.