When concluding a civil contract in Bulgaria, the question arises as to what tax the income received under it is taxed.
Taxable under the Personal Income Tax Act (PITА) is the income from all sources acquired by a taxable person during the tax year, except for income that is exempt from tax by law.
Local natural persons are liable for taxes on acquired income from sources in Bulgaria and abroad, and foreign natural persons are liable for taxes on acquired income from sources in Bulgaria.
Income under a civil contract is income from remuneration under non-employment legal relationships. They are subject to taxation on the general annual tax base.
The income is considered to be acquired on the date of payment – in case of payment in cash or on the date of verification of the account of the recipient of the income – in case of cashless payment. The income of an individual acquired under a civil contract is reduced by 25 percent of business expenses.
The tax rate for income received in connection with a concluded civil contract is 10 percent.
Income from other economic activity, which also includes income under a civil contract, is subject to advance taxation.
When the payer of the income from economic activity is an enterprise, the amount of the tax is determined and the tax is withheld from the payer of the income when it is paid.
In his capacity as a local natural person, the employee under a civil contract has the obligation to submit an annual tax return under PITA, for the incomes acquired during the year, subject to taxation on the general annual tax base, both from sources in Bulgaria and from abroad.
For consultation regarding the declaration of income received under a civil contract, you can contact our experts.