You work as a freelancer, take on projects for clients from all over the world, and value your flexibility. But when it comes to taxes, social security, and accounting, things can quickly get complicated. If you’re a freelancer in Bulgaria—an IT specialist, designer, translator, marketer, or consultant—this guide is for you. Here you’ll find practical information on legal structures, tax obligations, and ways to legally optimize your finances.
Legal Structures for Freelancers in Bulgaria
Before you take on your first paid project, you need to decide how you’ll operate legally. In Bulgaria, there are three main options:
1. Self-employment (Registration under Article 1, paragraph 5 of the Social Security Code)
- What is it: Registration as a self-employed individual without forming a legal entity
- Suitable for: Freelancers with low expenses and low revenue
- Taxation: 10% income tax after deducting 25% of statutorily recognized expenses (i.e., an effective rate of ~7.5% on revenue)
- Advantages: The simplest registration process, minimal administrative work
- Disadvantages: Unlimited personal liability, limited opportunities to deduct actual expenses
2. Sole Proprietorship
- What is it: Registration of a business in the Commercial Register
- Suitable for: Freelancers with higher revenue and significant expenses
- Taxation: Actual expenses are deductible (not standard deductions). Taxable income is subject to a 15% tax under the Income Tax Act (Article 48, paragraph 2). For certain licensed activities (taxi services, hairdressing services, etc.), a separate patent tax is applied under the Local Taxes and Fees Act—a fixed annual amount based on the municipality’s tariff, not a percentage.
- Advantages: Deduction of actual business expenses; higher turnover is manageable
- Disadvantages: Unlimited personal liability, more complex administration
3. LLC (Limited Liability Company)
- What is it: A limited liability company
- Suitable for: Freelancers with high turnover (over EUR 25,000–30,000 per year) or a desire to protect their personal assets
- Taxation: 10% corporate tax + 5% dividend tax = effective rate of ~14.5% upon full distribution
- Advantages: Limited liability, flexible tax planning, a more professional image
- Disadvantages: Higher administrative costs, mandatory double-entry bookkeeping
Which shape should you choose?
| Criterion | Freelance | Sole Proprietorship | LLC |
|---|---|---|---|
| Annual revenue | Up to ~EUR 15,000 | EUR 15,000–30,000 | Over EUR 25,000–30,000 |
| Actual business expenses | Low | Significant | Significant |
| Need for asset protection | No | No | Yes |
| Working with corporate clients | Rarely | Sometimes | Often |
| Administrative complexity | Minimum | Average | Higher |
Not sure which legal structure is right for you? The ConsultPlus team offers a free consultation to help you choose the right legal structure— contact us.
Tax Obligations and Deadlines
Annual Tax Return
- What: Annual tax return under Article 50 of the Income Tax Act (for self-employed individuals and sole proprietors) or under Article 92 of the Corporate Income Tax Act (for limited liability companies)
- Deadline: April 30 of the following year (for income earned in 2025 — by April 30, 2026)
- Discount: 5% for online submissions by March 31
Advance payments (for self-employed professionals and sole proprietors)
- Quarterly advance tax payments
- They are calculated based on your projected annual income
- They must be submitted by the 15th of the month following the quarter
VAT
- Mandatory registration: For turnover exceeding EUR 51,130 per calendar year (effective April 1, 2026); 7-day deadline for submitting an application
- Voluntary registration: Available at any time
- When is the payment made: If most of your customers are in the EU or abroad (you do not charge VAT under Article 21, paragraph 2, but you deduct input VAT on your expenses)
- When it is NOT paid: If you work primarily with Bulgarian individuals
Insurance — how much and for what
Self-employed individuals are required to pay social security contributions based on a taxable income of their choosing (between EUR 620.20 (≈ BGN 933) and EUR 2,111.64 (≈ BGN 3,750) for 2026; the amounts have been recalculated at the official exchange rate of 1.95583 BGN = 1 EUR).
| Type of insurance | Percentage |
|---|---|
| Social Security Administration (SSA) | 19.8% |
| SMPP (Supplementary Mandatory Pension Insurance) | 5.0% (for those born after 1959) |
| Health Insurance | 8.0% |
| Total | 32.8% |
Example: With a minimum insured income of EUR 620.20, monthly social security contributions amount to approximately EUR 156. With a maximum insured income (EUR 2,111.64), they amount to approximately EUR 629.
Important: Choosing your contribution base is a strategic decision. A lower contribution base saves you money now, but reduces your future pension. Consult a professional to find the right balance.
What expenses can you deduct?
For self-employed professionals (legally recognized expenses)
- 25% of turnover automatically (no need to provide proof of expenses)
- You cannot claim actual expenses as an additional deduction
For sole proprietorships and limited liability companies (actual expenses)
All documented expenses related to the activity are deductible:
- Equipment: Computers, monitors, software, licenses
- Rentals: Office space or part of a residence (for home office arrangements)
- Communications: Internet, telephone (proportional to business use)
- Transportation: Fuel, public transportation, business travel
- Training and courses: Professional development, conferences
- Professional Services: Accounting, Legal Consulting, Insurance
- Subscriptions: Cloud services, productivity tools, platforms
Digital tools for invoice management
The modern freelancer works with digital tools. Here are the most useful ones for the Bulgarian market:
- NULA — a Bulgarian digital accounting platform and partner of ConsultPlus
- Inv.bg — Free Online Invoicing
- InvoiceNinja / Hiveage — international invoicing tools
- Banking: DSK, UniCredit, Revolut Business — with API integration for automatic import of bank statements
ConsultPlus is a partner of NULA —a digital accounting platform that lets you issue invoices, upload expense receipts, and track your finances in real time. Ask us about digital accounting for freelancers.
Why Freelancers Need Professional Accounting Services
Many freelancers try to handle their own accounting—and that might work at first. But as the business grows, so do the complications:
- Tax optimization — a professional knows when to change your legal structure and how to legally reduce your tax burden.
- Peace of mind during audits — if the National Revenue Agency conducts an audit, you have someone who understands your situation and can represent you.
- Time saved — hours spent on administrative tasks are hours not spent on paid work.
- Timely filing — missed deadlines = fines. The accountant keeps track of deadlines and files on time.
- Strategic Planning — When to Register for VAT, When to Switch to a Limited Liability Company, How to Optimize Social Security Contributions.
Frequently Asked Questions
Q: Can I work as a freelancer without registering?
A: No. If you earn regular income from freelance work, you are required to register as a self-employed person and pay taxes and social security contributions. Unreported income results in fines and penalties from the National Revenue Agency (NRA).
Q: How much will accounting cost me as a freelancer?
A: For a freelance business with a low volume of work — from EUR 40 to 100 per month. For sole proprietorships or limited liability companies—from EUR 75 to 180 per month. It depends on the number of documents and VAT registration. See our detailed guide to accounting service prices.
Q: When should I switch from being a freelancer to a limited liability company (LLC)?
A: As a general rule of thumb—when your annual turnover exceeds EUR 25,000–30,000 or when you have significant business expenses that you want to deduct. The transition is on a case-by-case basis— please consult with us for an accurate calculation.
Q: Do I need to issue invoices to customers abroad?
A: Yes. You should issue an invoice without VAT (if you are not registered under the VAT Act) or using the reverse charge mechanism for customers in the EU. It is important to follow the correct procedure—errors on international invoices are among the most common issues.
Q: What is a self-insured person?
A: A person who pays their own social security contributions (unlike an employee, whose employer pays part of the contributions). All freelancers, sole proprietors, and managers of limited liability companies are self-insured persons.
Do you need accounting services tailored for freelancers? ConsultPlus offers specialized digital accounting for freelancers and IT professionals—from registration and tax optimization to monthly support, all online. Call +359 897 953365 or email office@consultplus.bg.
