What You Will Learn
- How the tax base is determined for long-term rentals and why the effective rate is exactly 9 %.
- What advance tax payments you owe and when they are due.
- How to file the annual tax return and when you qualify for a 5 % early filing discount.
- Which tax regime applies to short-term lettings through Airbnb or Booking.
- Your obligations regarding VAT, social security contributions and tourist tax.
- How non-resident individuals receiving rent from Bulgarian property are taxed.
- Practical examples with detailed calculations at three different rent levels.
How Long-Term Rental Income Is Taxed (Art. 31 Personal Income Tax Act)
Rental income earned by individuals is governed by the Personal Income Tax Act. The mechanism is straightforward and consists of two steps.
Step 1: Statutory Deductible Expenses — 10 %
Under Article 31(1) of the Personal Income Tax Act, when determining the taxable income from rent, statutory deductible expenses of 10 % are subtracted from the gross income. These expenses are recognised automatically — you do not need to present invoices or supporting documents. The legislature assumes that every landlord incurs costs for maintenance, repairs and depreciation of the property.
This means the tax base is 90 % of the rent received.
Step 2: Flat Tax — 10 %
A tax of 10 % is then charged on the resulting tax base. Since the base is 90 % of the rent, the end result is:
Effective tax rate = 90 % × 10 % = 9 % of gross rent
This mechanism has been unchanged for years and remains in force in 2026. No legislative amendments are planned in this respect.
What Counts as Gross Income
Gross rental income includes all amounts the tenant pays as rent. If the tenant covers expenses that are contractually your obligation (for example, property tax, waste collection charges, or building insurance), those amounts are also considered rental income and are subject to tax.
Utility costs (electricity, water, heating, internet) that the tenant pays directly under invoices in their own name or reimburses you against supporting documents are generally not treated as rental income, provided they are clearly separated from the rent.
Practical Examples with Calculations
To illustrate the taxation mechanism, here are three examples at different monthly rent levels.
Example 1: Studio apartment — EUR 500/month
| Item | Amount |
|---|---|
| Monthly rent (gross) | EUR 500.00 |
| Statutory deductible expenses (10 %) | EUR 50.00 |
| Tax base | EUR 450.00 |
| Tax (10 % of base) | EUR 45.00 |
| Annual tax (12 months) | EUR 540.00 |
| Effective rate | 9 % |
On annual rental income of EUR 6,000, you owe a total of EUR 540 in tax.
Example 2: One-bedroom apartment — EUR 1,000/month
| Item | Amount |
|---|---|
| Monthly rent (gross) | EUR 1,000.00 |
| Statutory deductible expenses (10 %) | EUR 100.00 |
| Tax base | EUR 900.00 |
| Tax (10 % of base) | EUR 90.00 |
| Annual tax (12 months) | EUR 1,080.00 |
| Effective rate | 9 % |
On annual rental income of EUR 12,000, the total tax is EUR 1,080.
Example 3: Commercial premises or luxury residence — EUR 2,500/month
| Item | Amount |
|---|---|
| Monthly rent (gross) | EUR 2,500.00 |
| Statutory deductible expenses (10 %) | EUR 250.00 |
| Tax base | EUR 2,250.00 |
| Tax (10 % of base) | EUR 225.00 |
| Annual tax (12 months) | EUR 2,700.00 |
| Effective rate | 9 % |
On annual rental income of EUR 30,000, the annual tax is EUR 2,700.
As these examples show, the effective rate of 9 % is constant regardless of the rent amount. Bulgaria applies a flat tax — there is no progressive taxation and no tax-free allowance for rental income.
Advance Tax — Quarterly Deadlines (Art. 44 Personal Income Tax Act)
Rental income tax is not paid as a lump sum at year-end. Under Article 44 of the Personal Income Tax Act, individual landlords owe quarterly advance tax for the first three quarters of the year. No advance payment is due for the fourth quarter — the final settlement is made through the annual tax return.
Advance Tax Payment Deadlines
| Quarter | Period | Payment Deadline |
|---|---|---|
| Q1 | January — March | 30 April |
| Q2 | April — June | 31 July |
| Q3 | July — September | 31 October |
| Q4 | October — December | No advance payment due |
How to Calculate the Advance Payment
The advance tax for each quarter is calculated as follows:
- Add up the rent received during the quarter.
- Deduct 10 % statutory expenses.
- Apply 10 % tax on the remainder.
Example at EUR 1,000/month rent:
- Rent for the quarter: EUR 3,000
- Less 10 % statutory expenses: EUR 300
- Tax base: EUR 2,700
- Advance tax: EUR 270
You remit this EUR 270 by the deadline for the relevant quarter.
Who Withholds the Tax
If your tenant is a legal entity or a sole trader, the tenant is obliged to withhold the advance tax when paying the rent and remit it to the budget. In that case, you receive the rent net of the withheld tax (withholding at source).
If the tenant is an individual (not a sole trader), the obligation to declare and pay the advance tax is yours.
What Happens If You Miss the Deadlines
Late payment of advance tax attracts default interest. The interest is calculated at the Bulgarian National Bank base rate plus 10 percentage points per year. While the interest is not dramatic, systematic late payment can trigger an NRA audit.
Annual Tax Return (Art. 50 Personal Income Tax Act)
Regardless of whether you made advance payments during the year, you are required to file an annual tax return under Article 50 of the Personal Income Tax Act. In it, you declare all rental income received during the calendar year.
Filing Deadline
The deadline for filing the annual return and paying the remaining tax (after deducting advance payments already made) is 30 April of the following year. For income earned in 2026, the deadline is 30 April 2027.
5 % Early Filing Discount
If you file the annual tax return electronically (using a personal identification code (PIC) issued by the NRA or a qualified electronic signature) by 31 March, you are entitled to a discount of 5 % on the tax due for payment, up to a maximum of EUR 255.65.
Example: On annual rent of EUR 12,000, the tax due is EUR 1,080. If you paid EUR 810 in advance (for three quarters), the remaining tax is EUR 270. The 5 % discount is EUR 13.50. You therefore pay EUR 256.50 instead of EUR 270.
This discount is available only if you have no outstanding public debts subject to enforcement at the date of filing.
Annex No. 4
Rental income is declared in Annex No. 4 to the annual tax return. There you report the total rent received, the statutory deductible expenses and the calculated tax base. If the tenant withheld advance tax, you also report the withheld amounts, which are deducted from the annual tax liability.
Short-Term Lettings (Airbnb/Booking) — A Different Regime
Renting out a property for short stays through platforms such as Airbnb, Booking.com, VRBO or similar is treated differently under Bulgarian tax law. The applicable regime depends on the nature of the activity and the municipality where the property is located.
Option 1: Patent Tax (Art. 61z Local Taxes and Fees Act)
When you let rooms for short-term accommodation (up to 30 days) and the property is in a municipality included in the patent tax list, the activity may be subject to patent tax under the Local Taxes and Fees Act.
Patent tax is a fixed annual amount per room, depending on the category of the municipality:
| Municipality Category | Patent Tax per Room/Year |
|---|---|
| First category (resort centres) | EUR 63.91 — EUR 127.82 |
| Second category | EUR 25.56 — EUR 63.91 |
| Third category | EUR 12.78 — EUR 25.56 |
Advantage: With high occupancy, patent tax can be significantly lower than income tax under the Personal Income Tax Act. If you let two rooms in Sofia and generate EUR 1,500/month in revenue, the patent tax may be only EUR 127.82 — EUR 255.64 per year, instead of EUR 1,620 under the standard regime.
Condition: To qualify for patent tax, your turnover from this activity must not exceed EUR 25,564.59 for the preceding year, and you must not be VAT-registered.
Option 2: Taxation Under the Personal Income Tax Act (as a Sole Trader)
If you do not meet the conditions for patent tax or prefer to be taxed under the general rules, income from short-term letting is treated as business income. In this case, the statutory deductible expenses are 15 % (for income from hospitality services), rather than the 10 % that applies to long-term rentals.
The effective rate is: 85 % × 10 % = 8.5 % — even lower than for long-term rentals.
Mandatory VAT Registration Under Art. 97a of the VAT Act
This is an aspect that many landlords overlook. When you let a property through Airbnb or Booking.com, you receive a service from a company established in another EU Member State (Airbnb Ireland UC, Booking.com B.V.). Under Article 97a of the VAT Act, any taxable person who receives services from a person established in another Member State is required to file a VAT registration application no later than 7 days before the date on which the tax becomes chargeable.
In practice, this means that before you publish your first listing on Airbnb or Booking, you must register for VAT under Article 97a. This is a special registration — it does not oblige you to charge VAT on the rent itself, but it does require you to file monthly VAT returns.
Failure to comply carries a penalty of EUR 255.65 to EUR 5,113.04.
Tourist Tax
Short-term lettings also attract tourist tax, set by the municipal council. The amount varies by municipality and property category:
| Municipality | Tourist Tax per Night |
|---|---|
| Sofia, Plovdiv, Varna | EUR 0.51 — EUR 1.53 |
| Regional cities | EUR 0.26 — EUR 1.02 |
| Smaller towns and villages | EUR 0.10 — EUR 0.51 |
The tax is collected from guests and remitted to the municipal budget. As the accommodation provider, you must maintain a guest register and submit reports to the municipality.
Social Security Obligations for Short-Term Lettings
Unlike long-term rental income, short-term letting through platforms is treated as a business activity. This means you owe social security contributions as a self-insured person:
- State Social Insurance (SSI): minimum EUR 79.22/month
- Health insurance: EUR 20.45/month
- Supplementary mandatory pension insurance (SMPI): included in SSI
The total minimum social security cost is approximately EUR 99.67/month, calculated on the minimum insurable income.
Long-Term vs Short-Term Rental — Comparison
To help you make an informed choice between the two regimes, here is a side-by-side comparison assuming monthly income of EUR 1,000.
| Criterion | Long-Term Rental | Short-Term Rental (Airbnb) |
|---|---|---|
| Legal basis | Art. 31 Personal Income Tax Act | Art. 61z Local Taxes Act / Personal Income Tax Act |
| Statutory deductible expenses | 10 % | 15 % (as sole trader) or patent |
| Effective tax rate | 9 % | 8.5 % (Personal Income Tax Act) or fixed patent |
| Annual tax on EUR 12,000 income | EUR 1,080 | EUR 1,020 (Personal Income Tax Act) or EUR 127.82—255.64 (patent) |
| VAT registration under Art. 97a | No | Yes (mandatory) |
| Social security contributions | No (except health insurance for the unemployed) | Yes — min. EUR 99.67/month |
| Tourist tax | No | Yes — EUR 0.10—1.53/night |
| Guest register | No | Yes — mandatory guest register |
| Advance tax | Quarterly (Q1—Q3) | Quarterly or under patent |
| Administrative burden | Low | High |
When Long-Term Rental Is More Favourable
Long-term letting is preferable when you value predictability, a low administrative burden and prefer not to register for VAT. With a stable tenant and a long-term contract, management costs are minimal and your tax obligations come down to three advance payments and one annual return.
When Short-Term Rental Is More Favourable
Short-term letting through platforms can be more profitable when the property is in a tourist area with strong seasonal demand and you can achieve substantially higher income per night compared to a monthly rent. Under the patent tax regime, if you generate EUR 20,000 in annual revenue, the tax burden can be below 1 % — but remember to factor in social security contributions (minimum EUR 1,196 per year), tourist tax and administrative costs.
Non-Resident Landlords (Art. 37 Personal Income Tax Act)
If you are a non-resident individual (i.e. not a tax resident of Bulgaria), your rental income from Bulgarian property is subject to final tax under Article 37 of the Personal Income Tax Act.
Tax Rate
The final tax is 10 % on gross rental income, without any deduction for statutory expenses. This means the effective rate for non-residents is 10 %, not the 9 % that applies to residents.
Example: On a monthly rent of EUR 1,000, the tax is EUR 100 (not EUR 90 as for a resident).
Who Withholds and Remits the Tax
The tax is withheld by the tenant (the company or self-insured person paying the rent) and remitted to the budget by the end of the month following the quarter in which the income was accrued.
If the tenant is an individual (not a sole trader), withholding is not mandatory — in this case, the non-resident must declare and pay the tax themselves.
Double Tax Treaties
Bulgaria has concluded double tax treaties (DTTs) with most European countries and many others. If you are a resident of a country that has a DTT with Bulgaria, the tax rate may be reduced, or the tax paid in Bulgaria may be credited against your tax liability in your country of residence. Check the relevant treaty or consult a tax specialist.
Filing Obligations
Non-residents file a return under Article 55(1) of the Personal Income Tax Act for the final tax. If the tax was withheld by the tenant, the tenant files the return.
Social Security Obligations (Art. 40(5) Health Insurance Act)
Rental income generally does not trigger an obligation for social security contributions. There are, however, two important exceptions.
Health Insurance for Persons Without Other Coverage
If you are not insured on another basis (you are not employed under a labour contract, not self-insured, not a pensioner), under Article 40(5) of the Health Insurance Act you owe health insurance contributions of 8 % on half of the minimum insurable income.
For 2026, the minimum monthly health insurance contribution under Art. 40(5) is approximately EUR 20.45/month (8 % × 50 % × the minimum insurable income).
Annual Reconciliation
In the annual tax return, rental income is included when determining the annual insurable income. If your total annual income (including rental income) exceeds the minimum insurable income on which you were insured, you may owe additional health insurance contributions upon annual reconciliation (Table 2 of the tax return).
Social Security for Short-Term Lettings
As noted above, short-term letting through platforms is treated as a business activity. In that case, you owe the full set of social security contributions as a self-insured person — state social insurance, supplementary pension insurance and health insurance.
Frequently Asked Questions
Conclusion
Taxation of rental income in Bulgaria is relatively straightforward for long-term lettings — a 9 % effective rate, three quarterly advance payments per year and one annual return. For short-term lettings through platforms, the picture is more complex: VAT registration obligations, social security contributions and tourist tax all come into play.
Proper structuring of your rental activity can make a significant difference to your tax burden. The choice between long-term and short-term letting, between patent tax and standard income tax, and questions around double tax treaties for non-resident landlords — all of this requires careful analysis of the specific circumstances.
This article is provided for informational purposes only and does not constitute legal or tax advice. The content is current as of the date of publication (24 March 2026) and reflects the legislation in force at that time. For specific questions relating to your tax situation, we recommend consulting a qualified tax adviser or lawyer.
Need assistance?
The Innovires Legal team can assist with tax planning, return filing and structuring your rental activity.