Business taxation

Published on Mar 18, 2024 by LPG

Expenditures

In Bulgaria, entertainment and protocol expenses or similar expenses are taxed

Entertainment, protocol or similar expenses shall mean the following:

  •  Gifts, restaurants etc.;
  •  Expenses related to the use of company cars for personal needs.

It should be kept in mind that the expenses incurred by a vehicle as part of the Bulgarian company's customer-supplier cycle are not subject to this tax. On the other hand, private expenditure shall be subject to such taxation. So for example, if an employee uses the company vehicle to go to a customer, the expense incurred (gasoline, etc. ...) will not be taxed, whereas if the same vehicle is used by the same employee to go home in the evening or to go to the mountains on the weekend, the expense incurred will be taxed.

The tax rate is 10%

The tax on protocol expenses shall be declared in the annual tax statement. The due tax shall be paid within the same period.
It should be noted that this tax on expenses also affects in the same way and under the same conditions social benefits provided in kind to employees or managers in Bulgaria, for example :

  • Supplementary health insurance (up to a specific limit) ;
  • Food vouchers (over BGN 200 per month) ;
  • Transportation costs from home to work and back (other than bus cards)

Social benefits in kind, such as for example when the company offers an access card to a multi-sport center or a fitness center (a practice which, in fact, is quite widespread in Romania, particularly in large urban centers) can, under certain very strict conditions (provided in particular that this social benefit in kind benefits all employees of the company without exception) benefit from a slight tax advantage (provided that the corresponding 10% tax to the social benefit in kind provided is covered by the employer without being deducted from the employee's salary).

Social contributions

In case the employee’s monthly remuneration is lower than BGN 3.750 (the maximum salary amount on which social contributions are chargeable), it is necessary to add the “expenses/part of these expenses” to the remuneration and pay the social contributions related.

Business trip allowances

Employers can pay nevertheless business travel allowances, without these allowances being taxed with tax or social contributions, provided they are within the following limits:

For a business trip to Bulgaria (for example in the case of an employee who usually works in Sofia and who has to go meet a client in Plovdiv)

  • Travel without overnight stay on site: between BGN 20 and BGN 40 per day
  • Travel with overnight stay on site: between BGN 40 and BGN 80 per night

For a trip to Romania

  • Travel without overnight stay on site: 46 EUR / day
  • Travel with overnight stay on site: 170 EUR / night

For a business trip to France

  • Travel without overnight stay on site: 56 EUR / day
  • Travel with overnight stay on site: 207 EUR / night

For a trip to Switzerland

  • Travel without overnight stay on site: 87 EUR / day
  • Travel with overnight stay on site: 246 EUR / night

For a trip to Luxembourg

  • Travel without overnight stay on site: 56 EUR / day
  • Travel with overnight stay on site: 207 EUR / night

Contact us