Personal Use of Company Assets in Bulgaria — Expense Tax and Alternatives under CITA and PITA (2026)

When does the personal-use expense tax arise

The liability arises whenever a company asset is also used for personal purposes by:

• employees and officers of the company;
• managing directors, procuratorial representatives and board members;
• partners and shareholders, if they use the asset in a personal capacity;
• related parties within the meaning of §1(3) of the Transitional and Concluding Provisions of the Tax-Insurance Procedure Code.

Common scenarios in practice:

• Company car driven home and on weekends.
• Company phone or laptop used for personal calls and networks.
• Office apartment where the managing director lives permanently or on weekends.
• Villa or dwelling owned by the company and made available to the shareholders.

Mixed use (partly personal, partly business) is the most common scenario and requires an objective allocation of expenses. Pure business use does not trigger the tax, but documenting it is the company’s burden — during an audit the NRA looks for logbooks, schedules or other evidence.

The three tax-treatment options

CITA and PITA offer three alternatives. The choice is made per asset and for the entire tax year and is binding:

Option A — advantages

• Fixed 10% rate, final tax.
• No social-security contributions on the amount.
• Expenses remain recognised for corporate taxation.
• Employee or shareholder sees no change in salary or income.

Option B — advantages

• Builds social-security service and contributions in favour of the employee.
• May be cheaper for small expenses and for employees below the contribution ceiling.
• For a shareholder-manager without an employment contract — reduced SSC burden when the contribution base is at the minimum of EUR 1,075/month.

Option C — when it applies

Rarely chosen. When the expenses for a specific asset are limited, the company may simply not recognise them for tax purposes. The taxable financial result is increased by the non-recognised expense and 10% corporate tax is applied. No additional rate — but the mixed-accounting option is also lost.

Tax-base formulas for vehicles (Art. 215a CITA)

For motor vehicles the law provides three alternative ways to determine the personal-use share. The choice is made per vehicle:

Method 1: Kilometre ratio

Tax base = total expenses × (personal km / total km). Requires maintaining a logbook with each trip — destination, purpose, km.

Example: Company car with EUR 10,000 annual expenses. 30,000 km driven, of which 6,000 km personal.

• Personal base: 10,000 × (6,000 / 30,000) = EUR 2,000
• Weekend tax: 2,000 × 10% = EUR 200

Method 2: Hours ratio

Similar to km but with a time metric: total expenses × (personal hours / total hours). Suitable for assets without a km meter (machinery, equipment).

Method 3: 50% fixed (no logbook)

When the company does not wish to keep a logbook, the law allows a fixed 50% rate. The tax base is 50% of all vehicle expenses.

Example: Same car with EUR 10,000 annual expenses.

• Personal base: 10,000 × 50% = EUR 5,000
• Tax: 5,000 × 10% = EUR 500

The comparison shows why maintaining a logbook pays off: at actual 20% personal use, Method 1 yields EUR 200 tax, Method 3 yields EUR 500 (a difference of EUR 300 per year per car).

Expenses included in the base

• Fuel;
• Insurance (Civil Liability, Casco);
• Technical inspections, vignettes, toll charges;
• Depreciation (per accounting policy);
• Leasing instalments (principal and interest);
• Repairs and service;
• Vehicle tax and other duties (see our vehicle tax article).

Real estate and other assets

Real estate

For real estate the tax base is determined by an objective metric — most commonly the area used personally as a share of the total area. For a depreciable property, depreciation is included (4% per year for buildings under Art. 55(1) CITA).

Example: Office apartment of 100 sq.m., of which 40 sq.m. is inhabited by the managing director.

• Total expenses (electricity, water, fees, depreciation): EUR 12,000 per year.
• Personal base: 12,000 × (40/100) = EUR 4,800
• Tax: 4,800 × 10% = EUR 480

Other assets (laptop, phone, machinery)

Where no objective metric is available, the law creates a presumption of 20% personal use. The taxpayer may prove a different percentage (e.g. with a usage log, technical data), but without documentation the 20% default applies.

Example: Company iPhone with EUR 600 annual expense (subscription + depreciation).

• Personal base (default 20%): 600 × 20% = EUR 120
• Tax: 120 × 10% = EUR 12

VAT consequences (Art. 9(3) VATA)

Use of a company asset for personal purposes qualifies as a gratuitous supply of services under Art. 9(3) VATA, provided that input VAT was deducted at acquisition or on maintenance of the asset.

The regime offers two approaches:

• Full deduction at acquisition + VAT on personal use. The company claims the full input VAT and charges output VAT monthly/annually on the personal-use share.
• Partial deduction at acquisition (Art. 73a VATA). The business-use percentage is forecast and input VAT is deducted proportionally at acquisition.

The VAT base is the direct costs of the supply — the same as those used to calculate the CITA tax. In practice the two bases coincide, which simplifies administration.

Filing, deadlines and payment

The personal-use expense tax is not filed on a separate form; it is part of the annual corporate tax return under Art. 92 CITA. Specific fields are populated in the Expense Tax Annex.

Key deadlines for the 2025 tax year (filing in 2026)

The filing and payment deadline was moved from 31 March to 30 June by a CITA amendment effective 1 January 2024 — to align with corporate tax.

Consequences of errors

• Method not accepted — NRA reclassifies on audit, often to the higher 50% fixed base.
• No VAT charge — assessment plus interest under the Delayed Tax and State Receivables Act.
• Incomplete logbook — Method 1 rejected; 50% applies.
• Administrative penalties under CITA and VATA.

How to choose the optimal method

The choice between CITA and PITA depends on several parameters:

The choice cannot be changed during the year. If Option A is selected for a given asset at the start of 2026, it applies through 31 December 2026. Method change is made in the next annual return.

Practical tips

• Calculate expenses carefully before choosing. Method 1 (km) is often cheaper but requires discipline.
• For vehicles used mainly for representation — consider full business use + documentation.
• For an owner living in the company office apartment — the tax is unavoidable; the choice is between 10% CITA and PITA (often the former is cheaper).
• For technical assets (laptop, phone) — the 20% default is often overstated; with actual 5–10% personal use, document and reduce the base.

The CITA text is available at lex.bg. The NRA’s official guidance on expense tax is published at nra.bg.

Frequently asked questions