Legal Framework
The principal legislative act governing local taxes and fees in Bulgaria is the Local Taxes and Fees Act (LTFA). The Act establishes the categories of local taxes, the taxable bases, the statutory ranges of rates, the deadlines for declaration and payment, as well as the administrative liability for non-compliance.
A distinctive feature of local taxes is that they are administered by the municipalities and not by the National Revenue Agency. Each municipality maintains a dedicated „Local Taxes and Fees“ directorate, which carries out the assessment of taxable bases, issues administrative acts, collects receivables, and enforces compliance with the LTFA.
The specific rates within the statutory limits are determined by ordinance of the Municipal Council of the respective municipality. This means that the same property may be taxed at different rates depending on which municipality it is located in. For example, the property tax rate in Sofia, Plovdiv, Varna, and Burgas may vary significantly, but always within the legal range of 0.1‰ to 4.5‰.
In addition to the LTFA, the Property Act, the Local Self-Government and Local Administration Act, and the Tax and Social Security Procedure Code (TSSPC) governing procedural rules are also relevant. See our related guides on buying property in Bulgaria and taxes and social security contributions.
Types of Local Taxes and Fees
The LTFA provides for several categories of local levies, which may be classified as taxes (obligations without reciprocal performance) and fees (payable in exchange for the provision of a specific service). The main categories are:
- Real Estate Tax — annual tax on ownership of land and buildings;
- Inheritance Tax — one-time tax on acceptance of an inheritance;
- Gift Tax — tax on the gratuitous acquisition of property;
- Acquisition Tax on Property for Consideration — tax on the purchase and sale of real estate and vehicles;
- Motor Vehicle Tax — annual tax on cars, motorcycles, ships, and aircraft;
- Patent Tax — alternative tax for certain categories of merchants and craftsmen;
- Tourist Tax — tax on overnight stays at accommodation establishments;
- Taxi Passenger Transport Tax — special tax applicable to taxi operators;
- Waste Collection Fee — annual fee for waste collection, treatment, and maintenance of public cleanliness;
- Dog Ownership Fee — annual fee for pet owners;
- Administrative and Technical Service Fees — certificates, sketches, permits, and others.
Real Estate Tax
Real estate tax is an annual property tax due from owners of land, buildings, and self-contained units within buildings. The rate is determined by the Municipal Council within a statutory range from 0.1‰ to 4.5‰ (per mille) of the tax assessment value of the property — not the market price.
Taxable base
The tax assessment value is determined in accordance with the rules of Appendix No. 2 to the LTFA, which contains a statutorily prescribed methodology. The main factors influencing the tax assessment value include:
- Location (zone, settlement, degree of urbanisation);
- Type of property (residential, office, commercial, industrial, agricultural);
- Total built-up area and plot area;
- Construction type (masonry, lightweight, semi-masonry);
- Year of construction and depreciation coefficients;
- Presence of engineering infrastructure.
In practice, the tax assessment value is typically significantly lower than the market price of the property — often 3 to 5 times lower. In Sofia, the typical rate for residential properties is around 1.875‰, meaning approximately BGN 18.75 of annual tax for every BGN 10,000 of tax assessment value.
Payment deadlines and discounts
The tax is paid in two equal instalments:
- First instalment — by 30 June;
- Second instalment — by 31 October.
By paying the entire annual tax by 30 April, the taxpayer receives a 5% discount. This option is economically advantageous and is typically used by diligent taxpayers.
Reliefs and exemptions
- Primary residence — the tax is reduced by 50%. „Primary residence“ means the property in which the person is registered under their current address and which is used to satisfy their own housing needs;
- Persons with 50% or more reduced working capacity — 75% reduction for a property that serves as a primary residence;
- Exemptions — for certain properties of the state, municipalities, religious buildings, community centres, and objects of cultural and historical heritage.
Declaration of newly acquired properties
Pursuant to Article 14 of the LTFA, owners are obliged to declare newly acquired properties or changes in circumstances within 2 months of the acquisition or the occurrence of the change. The declaration is filed with the „Local Taxes and Fees“ directorate of the municipality in which the property is located. Failure to file on time triggers administrative liability and interest.
Motor Vehicle Tax
Since 2019, a reformed methodology for calculating motor vehicle tax has been in force in Bulgaria. The key innovation is the introduction of two components, which reflect not only the engine power but also the environmental profile of the vehicle.
Property component
The property component is based on the engine power in kW. The rate is set by the Municipal Council on a sliding scale under which more powerful vehicles are taxed at a higher per-kW rate. The scale typically has several thresholds — up to 55 kW, 55–74 kW, 74–110 kW, and over 110 kW.
Environmental component
The environmental component is a coefficient by which the property component is multiplied, according to the European emissions standard of the vehicle:
| Emissions standard | Coefficient |
|---|---|
| No standard / Euro 1 | 1.10 – 1.40 |
| Euro 2 | 1.00 – 1.20 |
| Euro 3 | 0.90 – 1.10 |
| Euro 4 | 0.80 – 1.00 |
| Euro 5 | 0.60 – 0.80 |
| Euro 6 / EEV | 0.40 – 0.60 |
The formula for calculating the tax is:
Vehicle Tax = (kW × per-kW rate) × environmental coefficient
Electric vehicles and exemptions
Electric vehicles are fully exempt from motor vehicle tax in most municipalities, including the Sofia Municipality. The exemption is a policy instrument aimed at promoting environmentally friendly transport.
Persons with 50% or more reduced working capacity are exempt from motor vehicle tax for one vehicle with an engine power of up to 117.64 kW (corresponding to 160 horsepower), provided that the vehicle is used for personal purposes.
The payment deadlines for motor vehicle tax are identical to those for real estate tax — two instalments by 30 June and 31 October, with a 5% discount for full payment by 30 April.
Waste Collection Fee — 2026 Reform
The waste collection fee is one of the most debated local charges in Bulgaria. As of 1 January 2026, a substantial reform has entered into force, fundamentally changing the way the fee is calculated. The new regime is set out in Article 67 of the LTFA.
The change: from tax assessment value to a quantitative basis
For many years, the waste fee was calculated on the basis of the tax assessment value of the property — an approach that was widely criticised as unfair because the fee did not reflect the actual amount of waste generated by the specific user. The Constitutional Court and expert bodies repeatedly pointed out that the fee must correspond to the actual cost of providing the service.
Pursuant to the 2026 reform, the waste collection fee must now be calculated on a „quantitative basis“, reflecting the waste actually generated. Permissible methods include:
- Number and volume of containers serving the property;
- Number of users (individuals) using the property;
- Actually measured amount of waste (via electronic systems, container chips, etc.).
Components of the fee
The waste fee comprises three main components, reflecting the full cost of managing household waste:
- Collection and transport — removal of waste from containers to landfills or treatment facilities;
- Treatment — processing, sorting, recycling, and disposal of waste;
- Maintenance of public cleanliness — cleaning of streets, squares, and parks.
It should be noted that many municipalities are still in a transitional period of adapting to the new methodology. Some municipalities apply hybrid models in which part of the fee is calculated on the basis of the number of users and another part on the basis of tax assessment value. We recommend that owners consult the specific 2026 ordinance of their municipality.
Acquisition Tax
The acquisition tax on property for consideration is a one-time tax due on every transaction by which ownership or a limited real right over property or a motor vehicle is acquired against payment. The rate is determined by the Municipal Council within a statutory range of 0.1% to 3%.
Taxable base
Pursuant to Article 47 of the LTFA, the taxable base is the higher of:
- The purchase price stated in the contract;
- The tax assessment value of the property.
This rule is intended to prevent practices whereby parties formally understate the price in the notarial deed in order to reduce the tax burden. In Sofia, the typical rate is 3%, which on a residential purchase of BGN 400,000 translates into a tax of BGN 12,000.
Who pays
The acquisition tax is payable by the buyer (acquirer). In practice, it is collected by the notary at the time the notarial deed is drawn up — the notary confirms payment and transfers the amount to the municipality. Without payment of the tax, the notarial deed cannot be entered in the Property Register.
The tax applies to the acquisition of real estate, motor vehicles, and the transfer of a business undertaking or assets. For more details on the procedure, see our articles on purchasing property in Bulgaria and on preliminary real estate contracts.
Inheritance and Gift Tax
Inheritance tax
Inheritance tax is progressive and depends on the degree of kinship between the testator and the heir, as well as on the value of the inherited share.
- Direct heirs (children, spouse, parents) — 0%, full exemption under Article 31, paragraph 2 of the LTFA. This is the most favourable category and covers the closest family circle;
- Brothers, sisters, and their children — 0.4% to 0.8% on the amount exceeding EUR 127,823 (BGN 250,000);
- All other persons — 3.3% to 6.6% on the amount exceeding the non-taxable threshold.
Gift tax
Similarly to inheritance tax, gift tax is determined by the degree of kinship:
- Between direct relatives (spouses, children, parents) — 0%;
- Between brothers, sisters, and their children — 0.4% to 0.8%;
- Between other persons — 3.3% to 6.6%.
It should be noted that inter vivos gifts are documented by a notarised contract, and the tax is due at the moment of conclusion of the gift contract. In the case of inheritance, a declaration must be filed within 6 months from the opening of the succession.
Other Local Taxes and Fees
Tourist tax
The tourist tax is payable by persons offering accommodation (hotels, hostels, family hotels, guesthouses, apartments for short-term rental). The rate ranges from EUR 0.10 to EUR 1.53 (BGN 0.20 to BGN 3.00) per overnight stay, depending on the category of the establishment. Higher categories (4 and 5 stars) attract higher rates.
Dog ownership fee
The dog fee ranges from EUR 2 to EUR 10 (BGN 4 to BGN 20) per year, depending on the municipality. Exemptions apply to service dogs, guide dogs for the visually impaired, hunting dogs with valid documents, and other special categories. The fee is due within 3 months from the acquisition of the dog.
Patent tax
Patent tax is an alternative tax regime for certain categories of merchants and craftsmen with turnover of up to BGN 50,000. Instead of paying corporate income tax or personal income tax, they pay a fixed annual patent tax. The amounts are set by the municipalities — in Sofia the typical patent for certain activities is around EUR 1,790, whereas in smaller towns it may be around EUR 767. Patents cover activities such as hairdressing services, car repair shops, small-scale hotel accommodation, food service establishments, and others.
Payment Methods
The modernisation of municipal administration allows taxpayers to discharge their obligations through several convenient means:
- Online through the municipality portal — most large municipalities maintain an electronic portal, for example the Sofia Municipality offers services via sofia.bg, with the option to check balances and pay by card;
- ePay.bg — the electronic payments platform supports local taxes and fees to almost all municipalities in the country;
- Bank transfer — to the account of the respective municipality, indicated in the tax notice. It is mandatory to use the correct payment type code;
- In cash or by card at the offices of the „Local Taxes and Fees“ directorate;
- Easypay and B-Pay — the widely available networks of payment points for utility obligations.
When making payment, always check the tax notice (TN), which contains the lot number, the amount of the liability, and the payment deadline. Even if you have not received the TN, the payment obligation remains in force — non-receipt does not release the taxpayer from liability.
Frequently Asked Questions
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The Innovires Legal team provides advice on local taxes and fees, appeals against tax assessments, declarations of real estate and motor vehicles, and representation before municipal „Local Taxes and Fees“ directorates.