When we talk about taxes in Bulgaria we always end up focusing on the rates fixed at 10% for both natural and legal persons, which, in fact, are unique within the European Union and have led Bulgaria itself to be one of the reference destinations for those who want to do business in Europa.
However, there are other aspects, again relating to the Bulgarian tax legislation, which are equally interesting as, in addition to providing us with details on what taxation is in this country, they also make us understand how it is suitable for those who do business; an approach, if we like, diametrically opposed to the Italian one, in which taxes often act as an obstacle course aimed at discouraging those who try to create wealth.
In this post we will specifically delve into the topic of deductible expenses and amortization. An important issue especially for medium-large companies which often, in the face of significant turnover, also have significant expenses to bear which would have an advantage in deducting from profits.
Deductible expenses according to the Bulgarian tax system are as follows:
- Devaluations from investments
- Interest cost
- Devaluations of real estate assets, including intangible ones
- Higher expenses resulting from debt
There is also the whole issue relating to depreciation. With regards to movable assets, the depreciation period in Bulgaria is 5 years and provides for the depreciation of the following categories of products according to the percentages indicated:
- Vehicles at 25% per year
- Buildings at 4% per year
- Machinery at 30% per year
- Means of transport at 10% per year
- IT equipment at 50% per year
- All others good at 15% per year
Added to the deductions and amortization are further tax benefits such as those aimed at encouraging the creation of businesses in areas with a high rate of unemployment. What is it about? In practice, anyone who opens a business in a municipality in Bulgaria where official data declare a general unemployment rate in the previous year higher than 25% compared to the national average is completely exempt from paying taxes on company profits. To access this tax benefit, the company must hire at least 10 employees and at least 50% of them must be directly employed in manufacturing production.
Deductions, amortization and tax benefits are topics that appeal to those who do business. We understand it. At the same time, however, it is good to approach them with the right knowledge to avoid making mistakes and therefore fines or administrative sanctions.
For this reason, VR and Partners makes available to entrepreneurs who want to do business in Bulgaria, taking advantage of all the tax opportunities listed above, a group of experts capable of following them step by step, moving safely between the various local regulations.