Inheritance Tax in Bulgaria — rates, exemptions and procedure (2026)

Legal framework

The taxation of inheritances in Bulgaria is regulated by the Local Taxes and Fees Act (LTFA), Section II „Tax on Inheritances“, Art. 29–43. Together with the taxes on real property, vehicles, donations and onerous transfers, inheritance tax is one of the local taxes administered by the municipalities, and NOT by the National Revenue Agency.

This distinction has several important practical consequences:

• Rates are set by the Municipal Council — the LTFA only establishes the statutory ranges, while the specific amount is adopted by a local taxes ordinance of the relevant municipality. As a result, the rate applicable to inheritance between siblings may differ between Sofia, Plovdiv and Varna within the statutory ranges.
• Revenue flows into the municipal budget — the tax is paid into the account of the relevant municipality and forms part of its own revenue.
• Competent authority — the municipal administration at the last permanent address of the deceased receives the declarations, determines the tax, issues assessment acts and collects the amounts due.

Alongside the LTFA, the provisions of the Inheritance Act also apply. The Inheritance Act governs substantive matters — opening of succession, intestate and testamentary succession, acceptance and renunciation of inheritance, forced heirship shares, etc. The two statutes are applied in parallel: the Inheritance Act determines who inherits what, while the LTFA determines whether and how much tax is due.

Taxable persons (Art. 29 LTFA)

Under Art. 29 LTFA, the persons liable for inheritance tax are the heirs under the law and under a will, as well as legatees. The obligation arises by operation of law upon the opening of succession (i.e. the date of death of the decedent), and not upon formal acceptance of the inheritance.

The category of taxable persons includes:

• Heirs under the law (intestate heirs) — persons called to inherit pursuant to the order established by the Inheritance Act (children, spouse, parents, siblings, more distant relatives under the statutory orders of succession).
• Heirs under a will — persons designated by the testator in a will, including universal successors appointed by testamentary disposition.
• Legatees — persons to whom specific property or a sum of money has been bequeathed (legacy), without acquiring the status of heir.

With regard to the scope of taxation, the LTFA draws an important distinction between residents and non-residents:

• Bulgarian nationals — taxed on the entire inheritance, including assets located abroad (worldwide inheritance principle).
• Foreign nationals — taxed only on property situated on the territory of the Republic of Bulgaria (territoriality principle). This covers real estate in Bulgaria, vehicles registered in Bulgaria, bank accounts with Bulgarian banks, shares and interests in Bulgarian companies, etc.

Where the heirs are resident abroad, it may be necessary to appoint a tax representative and to apply any double tax treaties — although Bulgaria has concluded relatively few bilateral agreements in the area of inheritance taxes.

Taxable base (Art. 33 LTFA)

Under Art. 33 LTFA, the taxable base is the market value of the inherited property at the moment of opening of succession, i.e. as of the date of death of the decedent. The law provides for different valuation methods depending on the type of asset:

• Real estate and limited real rights — the base is the higher of the tax assessment value under Appendix 2 to the LTFA and the market value. The tax assessment is issued by the municipal administration based on area, location, construction and age of the property.
• Motor vehicles — the base is the insurance value of the vehicle at the moment of opening of succession, i.e. the value used for Casco comprehensive insurance purposes.
• Securities — for traded securities, the market price on a regulated market is used. For non-traded securities, the book (balance sheet) value according to the latest financial statements of the company is applied.
• Foreign currency and precious metals — valued at the official exchange rate of the Bulgarian National Bank as of the date of opening of succession.
• Other movable property — works of art, antiques, jewellery, collections, etc. are valued at market value. Where necessary, the municipality may appoint an expert appraiser.

It is essential that heirs have documents establishing the value as of the date of death — tax assessments, insurance policies, account statements, appraisal reports. Valuation at any subsequent date is not admissible, as the LTFA expressly fixes the moment of opening of succession as the relevant point.

Non-taxable minimum (Art. 38 LTFA)

One of the most favourable features of the Bulgarian regime is the substantial non-taxable minimum provided under Art. 38 LTFA. For any heir who does not fall within the category of exempt direct line heirs, inheritance tax is due only on the portion of the inheritance share that exceeds EUR 127,823 (BGN 250,000).

Key features of the non-taxable minimum:

• The threshold applies per heir, not per inheritance as a whole. This means that if five distant relatives inherit assets of a total value of EUR 600,000, each of them receives an individual threshold of EUR 127,823.
• Tax is applied only on the excess above the threshold. For example, if the inheritance share of a given heir is EUR 200,000, the taxable base will be EUR 72,177 (200,000 minus 127,823).
• The threshold does not apply to direct line heirs and the spouse, as they are fully exempt from tax by virtue of Art. 31(2) LTFA — for them no taxation arises at all, regardless of value.

The practical effect is that inheritance tax is actually due only from heirs in the more distant categories who receive substantial assets. For ordinary family inheritances — between spouses, from parents to children, from grandparents to grandchildren — no tax is due at all.

Tax rates (Art. 36 LTFA)

Inheritance tax rates are set out in Art. 36 LTFA, with the LTFA establishing only the statutory ranges. The specific rate is adopted by the Municipal Council of the relevant municipality through a local taxes ordinance. Rates are charged only on the portion exceeding the non-taxable minimum of EUR 127,823.

Crucially: the exemption for direct line heirs and spouse is absolute — it is not limited by value and is not linked to the non-taxable minimum. Even where an inheritance amounts to several million euros, if it is distributed among a spouse and children, no inheritance tax is due at all.

By way of reference, as of 2026 in Sofia Municipality the rates are approximately 0.7% for siblings and their children and around 5% for third parties. Before any inheritance matter, it is advisable to check the applicable ordinance of the relevant municipality.

Deductions from the inheritance estate (Art. 34 LTFA)

Art. 34 LTFA permits heirs to reduce the taxable base by deducting certain liabilities and expenses that existed as of the date of opening of succession or were incurred in connection with it. The permitted deductions include:

• Debts of the decedent — all claims of creditors against the decedent existing as of the date of death. These include bank loans, contractual obligations, unpaid invoices, judicially established claims, etc.
• Creditor claims on valid grounds — obligations that are objectively provable and have a legal basis, even if they were not asserted prior to death.
• Funeral expenses — the expenses for the burial of the decedent, in a reasonable amount and supported by documents (invoices, funeral home receipts, expenses for the grave, monument, etc.).
• Obligations towards the state and municipalities — taxes, fees, fines and other public liabilities of the decedent unpaid as of the date of death.
• Medical expenses during the last year — provable expenses for treatment, hospital stay, medications and medical care incurred by or for the decedent during the last year before death.

Key requirement: all deductions must be documented. The municipality may require written evidence — contracts, invoices, statements, decisions, court acts — before recognising the respective deduction. Unproven liabilities are not recognised and do not reduce the taxable base.

Filing (Art. 32 LTFA)

Under Art. 32 LTFA, heirs, legatees and their legal representatives are required to file a declaration for assessment of inheritance tax within the statutory deadline. The obligation arises regardless of whether tax is ultimately due.

Filing deadline:

• 6 months from the opening of succession (the date of death of the decedent) — the general rule.
• 6 months from becoming aware — for heirs who learn of the opened succession at a later time (for example, where the death becomes known only after the passage of time, or where the heir was unaware of the existence of the decedent).
• 6 months from becoming aware — for heirs residing abroad.

Place of filing:

• With the municipality at the last permanent address of the deceased — the general rule.
• For a deceased foreign national without a Bulgarian permanent address — with the municipality at the location of the taxable property (e.g. the location of real estate in Bulgaria).

Form: the standard Declaration under Art. 32 LTFA, approved by the Ministry of Finance, is used.

Required supporting documents:

• Death certificate of the decedent;
• Certificate of heirs, issued by the municipality at the last permanent address;
• Inventory of the estate — real estate, vehicles, bank accounts, securities, shares and interests, significant movable property;
• Valuation documents — tax assessments for real estate, insurance policies for vehicles, account statements, expert appraisals;
• Documents evidencing debts of the decedent (where deductions are claimed) — loan agreements, receipts, court acts;
• Receipts and invoices for funeral expenses;
• In case of testamentary succession — a certified copy of the will with notarial attestation.

Exemptions (Art. 38 LTFA)

Beyond the non-taxable minimum of EUR 127,823, Art. 38 LTFA also provides full exemptions — categories of heirs and types of property for which no inheritance tax is due at all:

• Direct line heirs and spouse — fully exempt (0% rate), regardless of the value of the inheritance share.
• Property acquired by the state and municipalities — in the case of testamentary succession in favour of public structures.
• Bulgarian Red Cross — a special exemption reflecting its humanitarian activity.
• Legally registered religious denominations — churches, religious communities and their legal entities.
• Community cultural centres (chitalishta) — as cultural and educational institutions.
• Non-profit legal entities acting in the public benefit — registered under the Non-Profit Legal Entities Act, where inheritance serves their principal activity.
• Educational, scientific and cultural institutions on budgetary funding — universities, research institutes, museums, libraries, etc.
• Ordinary personal belongings — clothing, household items and other movable property of a personal nature, which traditionally pass to the heirs without taxation.
• Small agricultural land plots — subject to the statutory conditions regarding area and intended use.
• Restituted property — real estate restored to the decedent or the heirs under the restitution laws.

Exemptions do not apply automatically in all situations — heirs must state the ground in the declaration and provide evidence (certificates of kinship, court decisions on restitution, registration of public benefit non-profit legal entities, etc.).

Payment of the tax

After the declaration under Art. 32 LTFA is filed, the municipal administration determines the amount of tax due and notifies the heirs by a notice (act for establishing the liability).

• Payment deadline — 2 months from service of the municipality’s notice of the assessed tax.
• Place of payment — into the budget of the municipality, to the account of the relevant local administration. Payment may be made by bank transfer, in cash or electronically, depending on the options available with the municipality.
• Default interest — in case of late payment, the statutory default interest is charged for each day of delay. In case of persistent non-compliance, the municipality may proceed with enforced collection.

It is important to note that the payment period starts running from the date of notification by the municipality, not from the filing of the declaration or from the opening of succession.

Practical examples

To illustrate the application of the tax in typical situations, consider the following scenarios (amounts are given in euros for ease of comparison):

1. Spouse and two children inherit assets of EUR 460,000 — the heirs fall within the category of „spouse and direct line heirs“, which are fully exempt from tax under Art. 31(2) LTFA. Tax due: EUR 0. The only requirement is to file the declaration with the municipality within the 6-month deadline.
2. Brother inherits EUR 205,000 — the brother falls within the second category. The taxable base is formed on the excess above the non-taxable minimum: EUR 205,000 − EUR 127,823 = EUR 77,177. At a rate of 0.7% (typical for Sofia Municipality): EUR 77,177 × 0.7% = approximately EUR 540 in tax.
3. Friend (third party) inherits EUR 255,000 by will — falls within the category of „other persons“. Taxable base: EUR 255,000 − EUR 127,823 = EUR 127,177. At a rate of 5% (typical for Sofia Municipality for third parties): EUR 127,177 × 5% = approximately EUR 6,359 in tax.

These examples clearly demonstrate the key features of the Bulgarian regime — full exemption for the closest family members, a high non-taxable minimum and moderate rates even for the more distant categories of heirs.

Special situations

Foreign heirs

Where heirs are foreign nationals without a permanent address in Bulgaria, it may be necessary to appoint a tax representative — a person with a permanent address in the country who receives communications from the municipality on behalf of the heir. This facilitates both the filing of the declaration and the subsequent payment.

Foreign inheritance for Bulgarian decedents

Bulgarian nationals are taxed on their worldwide inheritance — i.e. including assets located outside the country. In such cases, heirs are required to declare the foreign assets as well. Bulgaria has relatively few bilateral double taxation treaties in the area of inheritance taxes, which may result in a conflict with the tax laws of the foreign jurisdiction. Prior tax advice is strongly recommended.

Renunciation of inheritance

An heir who does not wish to accept an inheritance (for example, due to substantial debts or tax liabilities) has the right to renounce the inheritance. Renunciation is made by written application to the district court at the place of opening of succession and is entered in a special register. A person who has validly renounced is not considered an heir and accordingly does not owe inheritance tax.

European Certificate of Succession

For cross-border inheritances within the European Union, Regulation (EU) No 650/2012 on jurisdiction, applicable law, recognition and enforcement of decisions in matters of succession applies. The regulation introduces the European Certificate of Succession, which facilitates proof of heir status in different Member States and is a useful instrument in international inheritance matters.

Frequently asked questions