Bulgarian Patent Tax in 2026 — Activities, Municipal Rates and Filing under Art. 61n

Who qualifies for patent tax

Patent tax under Arts. 61z–61p of the Local Taxes and Fees Act (LMDT) is available to individuals, including sole traders (ET). The regime does not apply to commercial companies — EOOD, OOD and joint-stock companies are taxed under the Corporate Income Tax Act (CITA) at 10 %, plus 5 % on dividend distribution (combined effective rate 15 %).

Cumulative conditions

• Turnover ≤ EUR 51,130 (BGN 100,000) for the previous calendar year. The threshold was raised effective 01.01.2026, aligned with the higher mandatory VAT registration threshold.
• Not VAT-registered at the time of carrying out the patent activity. Narrow exceptions: registration under Art. 97a VATA (services received from EU taxable persons), Art. 99 (intra-Community acquisitions) or Art. 100(2) VATA — in these specific cases the patent regime can be preserved.
• The activity is listed in Annex 4 to the LMDT — 40 specific patent activities.

If any of the three conditions is not met, the patent regime is unavailable and the person is taxed under the general rules of the Personal Income Tax Act (PITA) or CITA.

Legal framework

Patent tax is a local tax governed entirely by the LMDT and the secondary acts of municipal councils. Key provisions:

• Arts. 61z–61p LMDT — general regime, taxable persons, reliefs and penalties;
• Annex 4 to the LMDT — exhaustive list of 40 patent activities with statutory minimum and maximum rates;
• Art. 61z(2) LMDT — income from patent activities is not included in the annual tax return (ATR) under PITA. This drastically simplifies reporting;
• Art. 61l LMDT — patent tax is due for each separate establishment where the activity is performed;
• Art. 61m LMDT — reliefs for persons with 50 %+ reduced work capacity, pensioners and those training apprentices;
• Art. 61n LMDT — declaration procedure and filing deadlines;
• Art. 123 LMDT — penalty up to EUR 256 (BGN 500) for failure to file.

Each municipality adopts its own ordinance setting the amount of local taxes, which specifies the concrete rates per patent activity within the statutory ranges in Annex 4.

Which activities qualify (Annex 4)

Annex 4 to the LMDT contains 40 exhaustively listed activities. If your activity is not on the list, the patent regime is unavailable — even with low turnover.

Typical patent activities

• Accommodation establishments with up to 20 rooms (hostels, guesthouses, family hotels, private rooms);
• Food and beverage outlets — restaurants, cafes, pastry shops, beer halls, bars (up to a certain class and seating count);
• Retail trade in establishments with commercial area up to specified limits;
• Paid car parks and garages;
• Hairdressing and barber services;
• Cosmetic services, manicure, pedicure, tattoos;
• Tailoring, shoemaking, leather services, hat production;
• Jewellery and metal-processing services;
• Vehicle repair, bodywork and paint services;
• Furniture making, carpentry, glasswork and upholstery;
• Taxi services (for a vehicle of which the driver is the owner);
• Private lessons in school subjects;
• Translation services (outside a bureau engagement);
• Pawnshops (high rate);
• Vehicle diagnostics and technical inspection services.

Activities that are NOT patent

Several popular liberal professions are explicitly outside Annex 4 and are taxed under the general rules of PITA:

• IT services — software development, web design, system administration;
• Legal services — attorney, notary, arbitration activity;
• Medical and dental practice;
• Financial and accounting services by registered auditor or certified accountant;
• Architectural and engineering services;
• Consulting services (marketing, HR, management).

Practice tip: before launching a new activity, compare the precise description in Annex 4 with your KID-2008 code. Literal matching is critical — even a conceptually similar activity with a different code may fall outside the patent regime.

Tax amount — rates per activity

The law sets minimum and maximum rates for each activity; the municipal council chooses a specific value within that range. As a rule, large cities (Sofia, Plovdiv, Varna, Burgas) apply the upper bound and small municipalities — the lower bound. Indicative rates for 2026 (EUR/year):

Important: the exact rates are set by the ordinance of the specific municipality. Before filing, always check the current ordinance of the municipality where the establishment is located. Ordinances are published on the municipal council’s website.

Where the activity is performed at several establishments (Art. 61l LMDT), tax is due for each establishment separately, with no discount for multiplicity.

Declaration under Art. 61n LMDT

Persons subject to patent tax file a declaration under Art. 61n LMDT. The form is approved by the Minister of Finance and is available on the municipal website or on the Ministry of Finance portal.

Content of the declaration

• Identification data of the person — name, personal ID (EGN), permanent address;
• Establishment data — address, area, number of workstations / seats / rooms (depending on activity type);
• Type of patent activity under Annex 4;
• Period during which the activity is performed;
• Application for reliefs (disability, pension, apprentices) with supporting evidence.

Where to file

• In the municipality where the establishment is located — standard case;
• In the municipality of the person’s permanent address — if the activity is not tied to a specific establishment (e.g. taxi driver without dedicated stand);
• With several establishments in different municipalities — a declaration is filed in each municipality separately.

Filing deadlines

• By 31 January — for activity continuing from the previous year;
• Immediately before commencing the activity — for new patent activity starting during the calendar year.

Penalties for non-filing

Under Art. 123 LMDT, failure to file on time or filing a declaration with incorrect content carries a penalty of up to EUR 256 (BGN 500) for individuals. Repeated offences double the penalty.

Payment deadlines

Four equal instalments

Patent tax is paid into the budget of the municipality where the establishment is located, in four equal instalments:

5 % discount for lump-sum payment

Under Art. 61k LMDT, where the full annual tax is paid by 31 January, the taxable person benefits from a 5 % discount. This discount frequently exceeds the effect of monetary inflation and makes lump-sum prepayment financially attractive.

Specific situations

• Several establishments: tax is due per establishment (Art. 61l LMDT). The 5 % discount applies to the aggregate amount.
• Mid-year start: the full quarterly tax is due for the quarter in which the activity begins — no pro-rata calculation.
• Cessation of activity: tax already paid is not refunded for terminated quarters.
• Late payment: default interest applies (BNB base rate + 10 percentage points); prolonged non-payment triggers enforcement under the Tax-Insurance Procedure Code.

Tax reliefs (Art. 61m LMDT)

The law provides substantial reliefs that can reduce the effective rate to symbolic levels. The order of application is set out in Art. 61m(1) LMDT.

Relief 1: Disability 50 % and above

Persons with 50 % or more reduced work capacity certified by a TELK/NELK expert decision pay 50 % of the patent tax due. This applies to all establishments where the person performs the activity personally.

Evidence: copy of the TELK/NELK expert decision in force, attached to the Art. 61n declaration.

Relief 2: Pensioners

Persons receiving a pension under the Social Security Code benefit from a reduction of 50 % of the tax.

Evidence: NOI (National Social Security Institute) certificate of the awarded pension or current pension statement.

Relief 3: Multiple patent activities with personal labour

If the person performs up to three patent activities and personally contributes labour to all of them (rather than relying on hired staff), tax is due only for the activity with the highest amount. The remaining patent activities are exempt.

This provision protects small craftspeople combining several related activities (e.g. a tailor also offering manicure in the same studio).

Relief 4: Training apprentices

Persons training apprentices under the applicable legislation are entitled to a 50 % reduction on the tax for the relevant workstations. Rarely used in practice — the regime requires a formal training contract.

Cumulation of reliefs

Where the same person meets several grounds (e.g. pensioner with 50 %+ disability), reliefs do not stack to 100 % — a single 50 % reduction applies. This prevents full exemption through multiple grounds.

Patent tax vs. EOOD — which is more advantageous

The choice between patent regime, sole trader (ET) and EOOD depends on turnover, margin and business purpose. Summary comparison:

Break-even point

• Hairdresser, Sofia, turnover EUR 10,000: patent EUR 430 = effective rate 4.3 %. Favourable.
• Hairdresser, Sofia, turnover EUR 45,000: patent EUR 430 = 0.96 %. Extremely favourable.
• Hairdresser, turnover EUR 60,000: exceeds the EUR 51,130 threshold — mandatory transition to ET or EOOD.

At average margin and turnover approaching the threshold, patent tax almost always beats corporate taxation. For aggressive growth or where limited liability is needed, an EOOD is more appropriate. See also our guides on EOOD registration and freelancer registration.

Practical case studies

Case 1: Young hairdresser in Sofia

Jane, 28, opens a hair salon with 1 workstation (herself). Turnover for 2025: EUR 20,000. Patent (Sofia, 1 workstation): EUR 430. Effective rate: 2.15 %. No ATR under PITA, no VAT. She pays minimum self-insurance on EUR 550.66/month. The net tax-and-social-security burden stays well below that of an EOOD with the same turnover.

Case 2: Retired shoemaker in a small municipality

Ivan, 68, pensioner, shoemaking services in a municipality with 15,000 inhabitants. Turnover EUR 8,000. Patent (small municipality, 1 workstation): EUR 20/year. 50 % relief (pensioner): final EUR 10/year. Effective rate: 0.125 % — symbolic.

Case 3: Restaurant in Sunny Beach — borderline case

Maria runs a 30-seat restaurant in a small coastal municipality. Rate ~EUR 4 per seat ↠ annual patent ~EUR 120. Turnover for 2025: EUR 120,000 — exceeds the EUR 51,130 threshold. For 2026 she loses patent eligibility and moves to the general regime (PITA for ET or CITA for EOOD), with mandatory VAT registration. Practice tip: when approaching the threshold, start early preparation — register an EOOD, enter the VAT register, reassign fiscal devices.

Case 4: Disabled person with two patent activities

Peter has 60 % reduced work capacity and personally performs two activities — manicure (EUR 215/year) and tailoring (EUR 150/year) in the same studio. Tax is due only for the highest-rated activity — manicure EUR 215. With 50 % disability relief: final EUR 107.50/year.

Frequently asked questions