Digital nomads are establishing themselves as one of the fastest growing and most impressive groups in today's global labour market. Due to its low tax burden, Bulgaria is proving to be a preferred place to live and work for these mobile professionals, who take advantage of modern technologies and their flexibility.
Colloquially, a digital nomad is someone who is not based anywhere for a long period of time and does their work – whether self-employed or employed – on a laptop.
Legally, however, digital nomadism in Bulgaria is somewhat of a grey area, and the same questions arise time and again – where is the income earned taxed, where are social security contributions payable?
If digital nomads settle in Bulgaria for a longer period of time, they must register as self-employed or their employer must register as a foreign employer.
For non-EU citizens, there is also the question of whether and under what conditions digital nomads can enter Bulgaria and carry out their activities from here.
On 18 June 2025, the Bulgarian Parliament passed the law amending and supplementing the Law on Foreigners in the Republic of Bulgaria. This introduces significant changes to the legislation governing the entry and residence of foreigners in the country, with the aim of creating clearer rules and new residence options for various categories of foreigners, including so-called digital nomads – a social phenomenon that is becoming increasingly important in the global economy. With the amendments introduced, our country aims to take into account and respond to the needs of today's realities of mobile work and international business life.
What is a digital nomad?
The law defines a digital nomad as a foreigner who provides remote services using information technologies without working in Bulgaria or providing services to persons. To be classified as a digital nomad, the foreigner must meet one of the following conditions:
- They must be employed under an employment contract by an employer registered/established outside a Member State of the European Union, a signatory state to the Agreement on the European Economic Area or the Swiss Confederation and provide remote services using information technologies, or
- He must be a legal representative, member of the management body, owner of a company, shareholder or partner who owns more than 25 per cent of the capital of a company that is registered/established outside a Member State of the European Union, a signatory state to the Agreement on the European Economic Area or the Swiss Confederation, which provides remote services using information technologies and does not perform any work and/or services for persons in the territory of Bulgaria, or
- Personally provides remote services using information technologies for a period of at least one year prior to submitting the application and does not perform any work or services for persons in the territory of Bulgaria and does not engage in any freelance activity in that country.
Tax and legal treatment of digital nomads
To determine the place of taxation, Bulgarian legislation distinguishes between two basic types of persons – residents and non-residents. The main difference is that in Bulgaria, only the income of non-residents earned in the country (in accordance with the provisions on withholding tax) is taxed, whereas the income of residents earned worldwide (income earned in the country or abroad) is taxed. This means that if income has been paid to a foreigner in Bulgaria, they are subject to taxation both in Bulgaria and in the country where they are a resident. In order to optimise taxation and avoid double taxation, countries sign double taxation agreements (DTAs). One of the main aspects of the DTA is determining the place where individuals must pay tax on their income.
A resident person under Article 4 of the Income Tax Act for natural persons is a person who:
- has permanent residence in the territory of Bulgaria;
- stays in the territory of Bulgaria for more than 183 days during a period of twelve months;
- has the centre of their vital interests in Bulgaria;
- has been sent abroad by the Bulgarian state, its bodies, organisations or Bulgarian companies, as well as their family members.
If a person does not have a permanent residence in Bulgaria, the second criterion is clarified, namely the duration of their stay in the territory of the country. "The law does not contain a specific definition of the term 'centre of vital interests'. It refers to the family, assets, the place from which the person pursues their employment, profession or trade, or the place from which they manage their assets. If the person has the centre of their vital interests in both countries, the criterion of "habitual residence" is examined.
A domestic natural person, regardless of citizenship, is one who stays in Bulgaria for at least 183 days within a twelve-month period, including the day of arrival and departure. It is important to note that stays for educational purposes or medical treatment are not taken into account when calculating the length of stay in Bulgaria (Art. 4(3) of the Income Tax Act for Natural Persons). The law does not specify any specific evidence of the length of stay. For this purpose, declarations by the person or any documents on which the competent authorities in the country note the dates of departure and entry may be used. In practice, during the procedure for issuing a certificate of residence for specific periods, tax office officials often request flight tickets and boarding passes for the person's entry into and exit from Bulgaria as additional evidence of the applicant's stay in the country/abroad. It is particularly important whether the certificate of residence of a person from an EU member state was issued more than 183 days ago. It is possible that additional documents such as proof of ownership of real estate, rental agreements or agreements with internet, television and/or mobile phone providers may also be requested. Someone who is staying in the country but whose centre of life is elsewhere is not considered a resident. The centre of life is therefore an extremely important factor. The law does not provide a precise definition of this term. It is associated with family, property, the place from which someone pursues their employment, professional or economic activity, or the place from which someone manages their property. For Bulgaria, regardless of nationality, persons and their family members who have been sent abroad by the Bulgarian state, its authorities or companies are also considered tax residents. If the person has their habitual residence in both countries, their nationality is taken into account. If they are a national of both countries, the countries must reach an agreement.
For individuals who do not spend more than 183 days in any one country, or who do not own property or have family members there, it is quite complicated to determine where such individuals have their centre of life and, therefore, where their tax liability lies. According to the case law of the Supreme Administrative Court in Bulgaria, Bulgarian citizens are treated as residents even if they cannot prove that their centre of life is in Bulgaria, as long as they cannot provide evidence of residence (or centre of life) in another country – together with proof of payment of income tax in that country. As part of the audit procedure, the Bulgarian tax authorities check whether the conditions for classifying a person as a resident in Bulgaria are met, whereby, according to the practice of the Supreme Administrative Court, the burden of proof that a person is resident in Bulgaria lies with the tax office. Therefore, persons who have been determined by an audit notice to be required to report and pay taxes in Bulgaria do not bear the burden of proof that they do not meet the requirements for a domestic person. However, if a certificate of residence issued by another country is available, it can be successfully asserted in the audit procedure, so that no tax liabilities are determined.
Social security
Under European Union law, nationals of a Member State have the right to freedom of movement as workers and are therefore entitled to work in another EU country without requiring a work permit. With the aim of guaranteeing this right, the social security systems of the Member States are coordinated in accordance with Council Regulation No 1408/71 and Regulation 574/72 (on the implementation of Regulation No 1408/72). New regulations in the field of social security came into force in May 2010, namely Regulation (EC) No 883/2004 and Regulation (EC) No 987/2009 laying down the procedure for implementing Regulation (EC) No 883/2004.
The basic principle of the new regulations confirms that a person who is employed or self-employed in a Member State is subject to the legislation of only one Member State. Regulation No 883/2004 stipulates that a person is subject to the legislation of the Member State in which social security contributions are due, even if these insurance contributions are due for activities and income from other Member States. Special rules for employed and self-employed persons are introduced in Title II of the Regulation.
These rules stipulate that posted workers are subject to the legislation of the state in which the employer carries out a substantial part of its activities. In particular, Article 12(1) of Regulation (EC) No 883/2004 clarifies that a person who is employed in a Member State by his employer, where he normally works, and who is posted by that employer to another Member State to perform work there continues to be subject to the legislation of the first Member State, provided that the anticipated duration of this work does not exceed twenty-four months and that this person is not replacing another posted person. The main purpose of the principles introduced by the Regulation is to simplify the free movement of workers and the free provision of services within the EU by avoiding administrative burdens that could be imposed on insured persons, employers and authorities if the legislation of the host Member State were to apply for the duration of the temporary work.