At the beginning of 2026, as usual and despite the lack of a state budget for 2026, a number of significant changes to the most important tax laws came into force in Bulgaria, namely in the Value Added Tax Act, the Corporation Tax Act, the Income Tax Act for natural persons and the Local Taxes and Fees Act. This article details the most important changes.
I. Value Added Tax Act
The threshold for VAT registration in Bulgaria is now €51,130 in annual turnover. An important detail is the way in which turnover for the past year 2025 is determined. There are new provisions in Article 168b, although the activity is considered retrospectively. Certain real estate transactions or financial services that were previously excluded are now also taken into account when calculating the threshold of €51,130. Another new feature is that turnover for registration is monitored daily for a calendar year – from 1 January to 31 December – rather than monthly for the last 12 months. In addition, the deadline for submitting an application is now 7 days from the date of exceeding the threshold and no longer until the 7th day of the following month, as was previously the case.
A. We would like to draw your attention to two new regulations:
- Regulation for small domestic companies – exemption from VAT returns only for deliveries with a place of performance in Bulgaria below the threshold of €51,130.
- Regulation for small businesses in the EU – allows a Bulgarian company to be exempt from VAT on deliveries to other Member States if its total turnover in the entire European Union is below €100,000. In order to benefit from these regulations, persons must register with the National Revenue Agency to obtain an identification number preceded by the letters ‘BG’ and followed by the suffix ‘EX’. Persons from third countries cannot benefit from these regulations and must register before making their first taxable delivery in Bulgaria. Persons applying the small business scheme are not entitled to a tax credit, tax offset or VAT refund for the goods and services received. If the turnover exceeds the limit specified in Article 96 of the VAT Act, the right to apply the small business scheme is lost and mandatory registration under the VAT Act is required.
B. Date of registration and deadlines for invoicing:
Previously, under the general rule, the date of registration was the date of delivery of the notice. Before receiving the notice, the person issued invoices without VAT and then began calculating the tax. The new Art. 103 changes this for registrations exceeding the threshold (Art. 96 (1) and (2)). The date of registration is now the day after the day on which the threshold is exceeded. Not the day on which the notice is delivered, but the day after the threshold is exceeded.
II. Corporation Tax Act
- Tax relief and new incentives – Tax relief for research and development (R&D);
- More favourable depreciation rules for electric cars for tax purposes. The annual tax depreciation rate can be up to 50% (i.e. faster recognition of depreciation costs).
- Tax exemption for certain income – from the rental of real estate if the recipient is a religious organisation (churches, religious institutions).
- The long-awaited regulation was also passed, according to which, from 2026, companies will only have to submit their financial reports to one place – the National Statistical Institute of Bulgaria, from where the information will be forwarded through official channels to the Bulgarian Commercial Register. Unfortunately, this regulation has not yet been published in the State Gazette by January 2026, so it is not yet certain whether the financial reports for 2025 will have to be submitted to the Commercial Register again.
III. Income Tax Act
The biggest change for 2026, which also affects the Bulgarian Income Tax Act, is the transition from the previous Bulgarian currency, the lev (BGN), to the euro (EUR):
- All tax returns, payments and administrative documents for periods from 1 January 2026 must be submitted and/or paid in euros, even if the period covers a time when the lev and the euro are used simultaneously.
- For income earned in 2025 but reported in 2026 (e.g. reports pursuant to Articles 50 and 55 of the Income Tax Act), the amounts in the reports submitted in 2026 must be stated in lev, but the tax must be paid in euros.
IV. Law on Municipal Taxes and Fees
The most important changes here are:
- Abolition of the old principle of calculating the household waste collection fee as a percentage of the tax value or balance sheet value of the property. Instead, the waste collection fee can now be determined according to the number of users of the property or another principle based on the actual burden and pollution, i.e. according to the polluter pays principle.
- Motor vehicle tax – ‘Euro 7’ environmental class. This ensures the correct taxation of vehicles registered in 2026 with this latest emission standard.
When the new national budget for 2026 is passed, we will inform you as usual.