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Bulgaria Freelance Taxes: Detailed Breakdown

dmitryfrank.com

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Re: Bulgaria Freelance Taxes: Detailed Breakdown

#101

Post by AdrianB1 »

jwr wrote: post #70
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).

If you are self-employed and running a SaaS, the rate is actually 8.5% of revenue (PKWiU 58.29.40). Source: I am self-employed and running a SaaS. With my cost structure my (calculated for comparison) effective income tax rate is 13.5%, and that includes all social security and health insurance payments. It's unbelievably good, socially unjust, and I don't think it will last, but here we are. Poland also happens to b…

Poland is really nice, except if you don't like cold weather and you like to swim in the sea. Even some of my native Polish colleagues complain about the cold, especially the older ones.

Re: Bulgaria Freelance Taxes: Detailed Breakdown

#102

Post by AdrianB1 »

charlesdm wrote: post #15
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.

It may be possible; maybe not 2.5%, but total tax rate below 10% is possible =legally= in some places. Yes, it is a punch in the face from the governments to people that pay huge taxes like 50-70% in most of Europe, but this is what governments are very good at doing: discriminating.

Re: Bulgaria Freelance Taxes: Detailed Breakdown

#103

Post by [deleted] »

SantiagoElf wrote: post #85
Oron7 wrote: post #62

Earlier quoted context omitted.

In which cities do you think there is the most work in the IT sector? Also, how do you rent a place? With agencies, do they want a lot of documents and stuff? Thanks!

Sofia, without a doubt - the capital. Not much documents are needed in order to start working with an agency due to the fact that the market is starved for IT specialists. It's not uncommon a person with 0 experience to start at 2K BGN which is around 1K eur. Ranges are ( these are NET salaries after tax): - Super Jr -> 1k - 1.5k EUR - Juniour -> 1.5k - 2.5k EUR - Mid-Level -> 2.5k - 3.5k EUR - Sr. Dev -> 3.5k -> ~4-…

[deleted]

Re: Bulgaria Freelance Taxes: Detailed Breakdown

#104

Post by overfl0w »

SantiagoElf wrote: post #85
Oron7 wrote: post #62

Earlier quoted context omitted.

In which cities do you think there is the most work in the IT sector? Also, how do you rent a place? With agencies, do they want a lot of documents and stuff? Thanks!

Sofia, without a doubt - the capital. Not much documents are needed in order to start working with an agency due to the fact that the market is starved for IT specialists. It's not uncommon a person with 0 experience to start at 2K BGN which is around 1K eur. Ranges are ( these are NET salaries after tax): - Super Jr -> 1k - 1.5k EUR - Juniour -> 1.5k - 2.5k EUR - Mid-Level -> 2.5k - 3.5k EUR - Sr. Dev -> 3.5k -> ~4-…

The ranges mentioned are in BGN. Nobody will pay 1.5k - 2.5k EUR to a junior.

source: I work there

Also this: https://noblehire.io/salary-survey-2021/

Re: Bulgaria Freelance Taxes: Detailed Breakdown

#105

Post by eloff »

I just want to throw out there that this is nice, but it's zero in Panama on foreign source income. The country uses the US dollar and is quite stable and modern. I used to live there, and I want to go back to that tax system as soon as I can.

Re: Bulgaria Freelance Taxes: Detailed Breakdown

#106

Post by dimonomid »

eloff wrote: post #105

I just want to throw out there that this is nice, but it's zero in Panama on foreign source income. The country uses the US dollar and is quite stable and modern. I used to live there, and I want to go back to that tax system as soon as I can.

Thanks for that info!

Yeah taxes in Bulgaria are lower than the average, but not lowest for sure. Good to know about Panama.

What about social security though?

Re: Bulgaria Freelance Taxes: Detailed Breakdown

#107

Post by saberdancer »

dimonomid wrote: post #61
atxbcp wrote: post #46

The numbers in this article are wrong, especially the company vs individual chart: you'd only pay 16% tax with a company if you paid yourself in dividends. Past a certain threshold, with a company, the best option is to pay yourself a salary every month. Then your tax rate will be in the 11 - 15% range depending on your income. source: I've got a company in Bulgaria conclusion: coming to Bulgaria to pay less taxes ca…

Could you elaborate? Of course I do have a local accountant, and if what you're saying is true, I am disappointed she didn't mention that; they just said, paying salary will end up being more expensive than dividends.

I'm not from Bulgaria but I think what was said is that you depending on profitability of your company you can pay out a part of the profit as a dividend (using the lower tax rate until the cutoff) and then the rest as a salary.

It's not one or the other. As a company owner you can use both the dividend and pay yourself a salary.

Re: Bulgaria Freelance Taxes: Detailed Breakdown

#108

Post by saberdancer »

mch0lic1 wrote: post #92
romaniatax wrote: post #52

Earlier quoted context omitted.

In Romania you pay 7% tax for an LTD (dividend + corporate tax) and for up to 100k turnover you pay 90% after tax as per above.

What about VAT? A turnover threshold in Romania is 88500€ (as quick google search suggests). How on earth are you keeping 90% when VAT is 19% there. Asking for a friend :)

In my case since I work B2B and my clients are mostly B2B as well then VAT is not really cost to the other side. They just subtract VAT they pay to me from the VAT they need to pay.

VAT is a problem if you work with end users directly, they can't "subtract" it like that.

Re: Bulgaria Freelance Taxes: Detailed Breakdown

#109

Post by atxbcp »

dimonomid wrote: post #61
atxbcp wrote: post #46

The numbers in this article are wrong, especially the company vs individual chart: you'd only pay 16% tax with a company if you paid yourself in dividends. Past a certain threshold, with a company, the best option is to pay yourself a salary every month. Then your tax rate will be in the 11 - 15% range depending on your income. source: I've got a company in Bulgaria conclusion: coming to Bulgaria to pay less taxes ca…

Could you elaborate? Of course I do have a local accountant, and if what you're saying is true, I am disappointed she didn't mention that; they just said, paying salary will end up being more expensive than dividends.

By paying yourself with a salary via your company, you'd pay 10% revenue tax + health insurance (ЗО) + social insurance (ДЗПО, ДОО)... except the insurance part is capped on a maximum revenue of 3000 BGN or something like that... so as you make more money, your total tax rate converges to 10%. Take these numbers with a grain of salt because I'm no accountant, but I know for sure your accountant is wrong, because I know how much tax I pay, and that's close to 11.5% total.

Re: Bulgaria Freelance Taxes: Detailed Breakdown

#110

Post by dimonomid »

saberdancer wrote: post #107
dimonomid wrote: post #61

Earlier quoted context omitted.

Could you elaborate? Of course I do have a local accountant, and if what you're saying is true, I am disappointed she didn't mention that; they just said, paying salary will end up being more expensive than dividends.

I'm not from Bulgaria but I think what was said is that you depending on profitability of your company you can pay out a part of the profit as a dividend (using the lower tax rate until the cutoff) and then the rest as a salary. It's not one or the other. As a company owner you can use both the dividend and pay yourself a salary.

While I def agree that those are not mutually exclusive and I considered paying myself a salary, but paying a salary still involves a bunch of extra taxes, which end up being more than the dividend's 5%. At least that's what I had from my accountant, but I'd be happy to know details of how to make the combination of salary+dividends to require less taxes than just dividends.
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