2025 Year-End Closing — Complete Checklist

The year-end closing is the most important process in any company’s accounting calendar. For the 2025 fiscal year, the deadlines for filing annual reports and tax returns fall in 2026—and errors or delays can result in significant fines. In this article, you’ll find a comprehensive checklist, clear deadlines, and practical tips to help you close out the year correctly and stress-free.

What is the annual financial closing?

The annual closing is the process by which a company summarizes, reviews, and finalizes all accounting records for the past fiscal year. The ultimate goal is to prepare:

• Annual Financial Report (AFR) — includes the balance sheet, income statement, cash flow statement, statement of changes in equity, and notes
• Annual Tax Return — Return under Article 92 of the Corporate Income Tax Act (Form 1010) for corporate income tax
• Declaration of Dividends and Liquidation Shares — Upon Distribution of Profits

These documents are filed with the National Revenue Agency (NRA) and published in the Commercial Register maintained by the Registry Agency.

Key deadlines for 2025 (submission in 2026)

Important: The deadline of June 30, 2026, applies uniformly to the filing of the annual tax return under the Corporate Income Tax Act, the annual activity report, and the publication of the financial statements.

Advance corporate tax payments

Not all businesses are required to make advance payments. The rules depend on the previous year’s net sales revenue:

• Over EUR 1,500,000 — mandatory monthly advance payments
• From EUR 150,000 to 1,500,000 — mandatory quarterly advance payments
• Under EUR 150,000 — no advance payments are due
• Newly established companies — are not required to make advance payments for their first year

If there is a significant discrepancy between the estimated payments and the actual tax liability, interest is due; therefore, it is important that the estimates be realistic.

Types of Financial Statements

Annual Financial Report (AFR) in accordance with the National Accounting Standards

Most companies in Bulgaria follow the National Accounting Standards (NAS). Financial statements prepared in accordance with NAS include:

• Balance Sheet
• Statement of Income and Expenses
• Cash Flow Statement
• Statement of Equity
• Appendices (accounting policies, notes)

Microenterprises (as defined by the Accounting Act) may prepare abbreviated financial statements—consisting solely of a balance sheet and a condensed income statement.

Financial Statements in accordance with International Financial Reporting Standards (IFRS)

The following IFRSs are mandatory:

• Public-interest entities (banks, insurers, public companies)
• Large enterprises that meet certain criteria
• Companies that have voluntarily chosen to adopt IFRS

IFRS financial statements are more comprehensive and require additional disclosures.

Consolidated Financial Statements

Parent companies that control subsidiaries are required to prepare consolidated financial statements, unless they qualify for the exemptions under the Accounting Act (e.g., small groups).

Corporate Income Tax and Withholding Tax

• Corporate income tax: 10% of taxable income (one of the lowest rates in the EU)
• Withholding tax (dividends): 5% on the gross amount of dividends distributed to local individuals
• Withholding tax for foreign individuals: the rate depends on the type of income and the applicable double taxation treaties (DTTs)

When distributing dividends, the company withholds a 5% tax and remits it to the government by the end of the month following the quarter in which the dividends were declared. A tax return must be filed in accordance with Article 55(1) of the Personal Income Tax Act and Article 201(1) of the Corporate Income Tax Act.

Checklist: Step by Step

Follow these steps in order to ensure a smooth year-end closing:

Step 1: Inventory of Assets and Inventory

• Conduct a physical inventory of fixed assets, inventory, and supplies
• Compare the actual inventory with the accounting records
• Report shortages, surpluses, and defective items
• Document the results in an inventory report

Step 2: Review and Calculation of Depreciation

• Calculate the accounting depreciation for all fixed assets
• Calculate tax depreciation in accordance with the tax depreciation schedule (TDS)
• Compare the differences between accounting and tax depreciation—they affect the taxable income

Step 3: Accrual of Expenses and Revenues for Future Periods

• Classify expenses and revenues by period (accruals)
• Record prepaid expenses (rent, insurance, subscriptions)
• Accrue unpaid expenses for 2025 (December salaries, interest, utilities)

Step 4: Provisions and Impairments

• Assess receivables based on their age and collectability
• Record allowances for doubtful and uncollectible accounts receivable
• Perform an impairment test on fixed assets if there are indications of a loss in value
• Record provisions for liabilities (vacation pay, warranties, lawsuits)

Step 5: Tax temporary differences and deferred taxes

• Identify temporary tax differences (differences between the accounting and tax bases)
• Calculate deferred tax assets and liabilities
• Assess whether a deferred tax asset should be recognized (only if a future taxable profit is expected)

Step 6: Reconciliation of balances and mutual confirmations

• Reconcile bank balances with bank statements
• Send confirmation letters to key suppliers and customers
• Settle your debts with the National Revenue Agency, the National Social Security Institute, and local governments
• Check the cash register and the cash report

Step 7: Revaluation of Foreign Exchange Positions

• Revalue foreign currency receivables and payables at the Bulgarian National Bank’s closing exchange rate as of December 31, 2025.
• Report exchange rate differences in the income statement

Step 8: Calculating the taxable income

• Convert the accounting profit to taxable income
• Apply the tax increases and decreases in accordance with the Corporate Income Tax Act (permanent and temporary differences)
• Calculate the corporate income tax due (10%)
• Deduct any advance payments you have made

Step 9: Preparing the financial statements and the annual tax return

• Prepare the complete set of financial statements (balance sheet, income statement, cash flow statement, statement of changes in equity, notes)
• Complete the annual tax return under Article 92 of the Corporate Income Tax Act (Form 1010)
• Complete the Annual Activity Report (AAR) for the NSI
• Sign the financial statements—by the preparer (accountant) and the company’s manager

Step 10: Submission and Publication

• File a return under Article 92 of the Corporate Income Tax Act and the Annual Tax Return with the National Revenue Agency (electronically using a qualified electronic signature)
• Pay the corporate income tax due (after deducting advance payments)
• Publish your annual financial statements in the Commercial Register (by June 30, 2026)

Who is required to file financial statements and a tax return?

Note: Companies that are not conducting business must file a declaration of inactivity with the Commercial Register (once) and are not required to pay a fee.

Penalties for failure to file or late filing

Bulgarian law provides for the following fines and penalties:

• Failure to publish financial statements in the Commercial Register: a fine of EUR 250 to 1,500 for a natural person (manager); a financial penalty of EUR 250 to 2,500 for a legal entity
• Failure to file an annual tax return by the deadline: a financial penalty of between EUR 250 and 2,500
• False tax return: a financial penalty of between EUR 250 and 1,500
• Failure to submit the Annual Statistical Report to the National Statistical Institute: a fine of EUR 100 to 1,000
• In the event of a repeat violation: the penalties are doubled

In addition to fines, late payment of corporate income tax results in the accrual of late payment interest.

Don’t risk fines and interest. Year-end closing is a complex process that requires a professional approach. The ConsultPlus team has over 30 years of experience in preparing financial statements, tax returns, and representing clients before the National Revenue Agency. Trust the experts— contact us today.

Frequently Asked Questions

Q: When is the deadline for filing the 2025 annual tax return?
A: The deadline is June 30, 2026. The return under Article 92 of the Corporate Income Tax Act (Form 1010) must be filed with the National Revenue Agency—either electronically using a qualified electronic signature or on paper.

Q: Do I need to publish financial statements if my company has not conducted any business activity?
A: No. Companies that have not conducted any business activity must file a one-time declaration of inactivity with the Commercial Register and are exempt from publishing financial statements. There is no fee for filing this declaration.

Q: What is the difference between NAS and IFRS?
A: National Accounting Standards (NAS) are simpler and are applied by most companies in Bulgaria. International Financial Reporting Standards (IFRS) are mandatory for public-interest entities (banks, insurers, public companies) and for large enterprises. IFRS require more extensive disclosures.

Q: What is the corporate tax rate in Bulgaria?
A: The corporate tax rate is 10% of taxable income—one of the lowest rates in the European Union. When dividends are distributed to local individuals, an additional 5% withholding tax is applied.

Q: Can I change my accountant during the year-end closing?
A: Yes, but it is recommended that the change take place either before the year-end closing begins or after it has been completed. If a change occurs during the process, a complete handover of documentation is required. ConsultPlus ensures a smooth transition and assumes all responsibilities.

Do you need professional assistance with your 2025 year-end closing? The ConsultPlus team has completed thousands of fiscal years for companies in Plovdiv and Sofia. We offer a full-service solution—from preparing financial statements and tax returns to filing with the Commercial Register and representing you before the National Revenue Agency. Call +359 897 953365 or email office@consultplus.bg for a free consultation.