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Bulgaria Freelance Taxes: Detailed Breakdown

dmitryfrank.com

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Re: Bulgaria Freelance Taxes: Detailed Breakdown

#11

Post by otar »

I am a big believer in Flag Theory and stuff…

I currently pay about 2,5% on my gross income ($100k+) as a software developer, which is more than most of EU/US developers are left after tax…

In a short, if you’re willing to make some trade-offs and optimize your taxes, you’ll be legally retaining your hard earned $$$. Among the trade-offs, tax residency is the most important. Things are a bit complicated for US citizens as the government taxes their income regardless of their tax residency, citizenship-based.

P.S. That 2,5% includes all the fees like accounting, legal consultations and banking fees (account maintenance, transfers…)

Re: Bulgaria Freelance Taxes: Detailed Breakdown

#12

Post by ddorian43 »

firechickenbird wrote: post #7

Considering moving in Bulgaria after this, thanks! My Freelance taxes/social sec/retirement tax in Italy is on average 76% on a total of 80k eur average gross annual income (98th income percentile).

Come to Albania, should be easier for italians. Assuming you work remote, no taxes until ~$120K, then it's 15% of profit.

On your wage, you'll pay $50/month economist + $80/month health/pension + $80/month municipal taxes.

These taxes changed this year. Previous year it was 5% if you pass $50K and 15% if you surpass ~$120K.

Re: Bulgaria Freelance Taxes: Detailed Breakdown

#13

Post by bobcostas55 »

otar wrote: post #11

I am a big believer in Flag Theory and stuff… I currently pay about 2,5% on my gross income ($100k+) as a software developer, which is more than most of EU/US developers are left after tax… In a short, if you’re willing to make some trade-offs and optimize your taxes, you’ll be legally retaining your hard earned $$$. Among the trade-offs, tax residency is the most important. Things are a bit complicated for US citize…

Go on...

Re: Bulgaria Freelance Taxes: Detailed Breakdown

#14

Post by sfe22 »

ddorian43 wrote: post #12
firechickenbird wrote: post #7

Considering moving in Bulgaria after this, thanks! My Freelance taxes/social sec/retirement tax in Italy is on average 76% on a total of 80k eur average gross annual income (98th income percentile).

Come to Albania, should be easier for italians. Assuming you work remote, no taxes until ~$120K, then it's 15% of profit. On your wage, you'll pay $50/month economist + $80/month health/pension + $80/month municipal taxes. These taxes changed this year. Previous year it was 5% if you pass $50K and 15% if you surpass ~$120K.

Do you have a source for this?

Re: Bulgaria Freelance Taxes: Detailed Breakdown

#15

Post by charlesdm »

otar wrote: post #11

I am a big believer in Flag Theory and stuff… I currently pay about 2,5% on my gross income ($100k+) as a software developer, which is more than most of EU/US developers are left after tax… In a short, if you’re willing to make some trade-offs and optimize your taxes, you’ll be legally retaining your hard earned $$$. Among the trade-offs, tax residency is the most important. Things are a bit complicated for US citize…

Unless you're actually living in a tax haven or a third world country with no CFC laws, you're almost certainly breaking the law with this.

The conversations I have had with people who have found the gold wheel is mind boggling, and they almost all get in trouble at some point.

Re: Bulgaria Freelance Taxes: Detailed Breakdown

#16

Post by cromka »

jakozaur wrote: post #6

Similar as in Poland: 1. Long-term remote contracting as software engineers is legal. No need to worry about being forced into being employee. 2. Regressive taxation at very low level (e.g. recently in Poland you can opt-in for 12.5% taxation of revenue).

Just moved back to Poland after 6 years in US, looking to work remotely for US-based contractors. Dare to elaborate, please? First time I hear of this.

Re: Bulgaria Freelance Taxes: Detailed Breakdown

#17

Post by sfe22 »

charlesdm wrote: post #10
jakub_jo wrote: post #8

Earlier quoted context omitted.

Do you mean you'll only make 19.2k net from 80k gross? That sounds like an awful amount of taxes. I'm from Austria and here it's ~27% for social security and income tax is ranging from 0% to 55%. From 80k gross you would make around 42k net (Calculated without any tax benefits).

He is probably adding VAT to his income tax rates, which imo is not correct.

Is vat not a tax? I think every government cost that is a percentage of income or spending should be calculated as your expense for the government. I think inflation also should be kept in mind as it is a hidden tax. Maybe harder to calculate.

Re: Bulgaria Freelance Taxes: Detailed Breakdown

#18

Post by charlesdm »

dimonomid wrote: post #3
gcbirzan wrote: post #2

I am 100% sure long term residents also pay health insurance. Are you an EU citizen?

I'm not an EU citizen, no. And while I was living there as a long-term resident, I didn't pay 8% health insurance. Perhaps it's indeed different for EU citizens, I'm not sure. I should probably mention it there.

It seems weird you are forced to distribute the dividend in BGN. Pay the withholding tax, yes. But the dividend itself? Most accountants can calculate the corresponding currency equivalent for the dividend being declared on the payout day. Worth looking into.

Also, does Bulgaria support interim dividends? The loan set-up, while not an issue, can perhaps be avoided by use of interim dividends.

Re: Bulgaria Freelance Taxes: Detailed Breakdown

#19

Post by charlesdm »

sfe22 wrote: post #17
charlesdm wrote: post #10

Earlier quoted context omitted.

He is probably adding VAT to his income tax rates, which imo is not correct.

Is vat not a tax? I think every government cost that is a percentage of income or spending should be calculated as your expense for the government. I think inflation also should be kept in mind as it is a hidden tax. Maybe harder to calculate.

VAT is a tax on consumption. But it is only levied when you take a certain action with your funds -- i.e. consume it. You could also (re)invest and let your capital compound.

So yes, if you spend all your money to the last penny, that would be your tax rate. But many (higher income) people do not.

Re: Bulgaria Freelance Taxes: Detailed Breakdown

#20

Post by sfe22 »

charlesdm wrote: post #19
sfe22 wrote: post #17

Earlier quoted context omitted.

Is vat not a tax? I think every government cost that is a percentage of income or spending should be calculated as your expense for the government. I think inflation also should be kept in mind as it is a hidden tax. Maybe harder to calculate.

VAT is a tax on consumption. But it is only levied when you take a certain action with your funds -- i.e. consume it. You could also (re)invest and let your capital compound. So yes, if you spend all your money to the last penny, that would be your tax rate. But many (higher income) people do not.

But all your income is meant to be spent. All people invest so they get to buy more in the future, not for the sake of it. If you don’t pay VAT today, you will in the future.
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