What is Bulgaria's headline tax for entrepreneurs?

Bulgaria applies a 10 percent flat personal income tax with no progressive brackets, a 10 percent corporate income tax on company profit, and a 5 percent dividend tax on distributions — a 15 percent combined effective rate on profit taken out of a Bulgarian EOOD by the owner. A registered Bulgarian freelancer reaches an effective rate of about 7.5 percent through a 25 percent statutory expense allowance. There are no separate regimes, no caps, no qualifying conditions — the rates apply to every Bulgarian tax resident on the same terms.

Is the Italian impatriati regime still a 70 or 90 percent exemption?

No — not for individuals who became Italian tax-resident from 1 January 2024 onwards. Under Decree-Law 209/2023, the impatriati regime was reformed: the previous 70 percent (or 90 percent in southern Italy) income exemption was reduced to 50 percent, the qualifying conditions were tightened (defined period of prior tax-residence abroad, qualifying activity requirements), income caps were introduced, and the duration was set at five years (with extension to eight years in defined family configurations). Individuals already enrolled under the old rules before 2024 retain those rules to expiry under transitional provisions.

What about Italy's EUR 200,000 flat tax for high-net-worth new residents?

The Italian non-dom regime under article 24-bis of the Italian Income Tax Code was introduced in 2017 as a EUR 100,000 annual flat fee on all foreign-source income for new tax residents who had not been Italian tax-resident for at least nine of the previous ten years. In the 2024 reform the fee was doubled to EUR 200,000 per year for individuals who become Italian tax-resident from August 2024 onwards. The regime lasts up to fifteen years and can be extended to family members for a smaller additional fee per family member. It is the Italian answer to the British non-dom and Portuguese NHR regimes, and it materially shifts the comparison for high-net-worth individuals.

We are a Bulgarian law firm. Our work is the Bulgarian side — company setup, residence, tax registration, banking, ongoing operation. Where the right answer for a client is Italy, we say so and refer to Italian counsel. We do not chase the Bulgarian side when the Italian side is genuinely a better fit. This article is the honest comparison; it is not a sales pitch in either direction.

Bulgaria vs Italy Flat Tax for Entrepreneurs (2026)

Q: Does Italy have a flat tax?

Italy has three preferential regimes that are commonly called flat tax in marketing language but are very different in substance. The regime forfettario applies a 15 percent substitute tax (5 percent for the first five years of new businesses) on revenue up to EUR 85,000 per year for self-employed individuals. The impatriati regime — reformed by Decree-Law 209/2023 effective from 2024 — grants a 50 percent exemption from Italian personal income tax on qualifying employment and self-employment income earned by individuals who become Italian tax residents after a defined period abroad (subject to income caps and conditions). The non-dom flat tax under article 24-bis of the Italian Tax Code is a EUR 200,000 annual flat fee — doubled from EUR 100,000 in the 2024 reform — on all foreign-source income for new high-net-worth residents who have not been Italian tax-resident for at least nine of the previous ten years, available for up to fifteen years.

Q: Italy regime forfettario vs Bulgaria freelancer — which wins?

On rate, Italy can be cheaper — the regime forfettario is 5 percent in the first five years of a new business or 15 percent thereafter, against Bulgaria's about 7.5 percent effective. But Italy's regime applies only to revenue up to EUR 85,000 per year; above that the standard Italian progressive rates apply (up to 43 percent plus regional surcharges). Italy also applies INPS social-security contributions on top of the flat tax, with rates depending on the contributor category. Bulgaria is uncapped at the headline rate but tightly capped on social security through the maximum insurable income. For most freelancers below EUR 85,000, Italy's first-five-years 5 percent beats Bulgaria's 7.5 percent. Above EUR 85,000, Bulgaria takes the lead because the Italian flat tax falls away and standard rates apply.

Q: When does Bulgaria beat Italy?

Three main profiles. First, entrepreneurs and freelancers with annual revenue or distributed profit above EUR 85,000 to 150,000 — once the Italian regime forfettario cap is breached, Bulgaria's 10 percent flat and 15 percent combined are simply cheaper than Italian standard rates. Second, founders who run a Bulgarian EOOD with modest distributions but build value inside the company — Italian taxation of retained corporate profit (24 percent IRES plus IRAP) is materially heavier than Bulgaria's 10 percent CIT. Third, anyone who wants a low operating cost and a simple compliance picture without time-limited regimes or transitional uncertainty — the Bulgarian rates apply year after year on the same terms.

Q: When does Italy beat Bulgaria?

Two main profiles. First, high-net-worth individuals with very large foreign-source income — once you have ten million euro a year or more in dividends, interest or foreign capital gains, the EUR 200,000 annual flat fee under article 24-bis is effectively a small percentage of total income, and the regime can be cheaper in absolute terms than Bulgaria's 10 percent on worldwide income (which has no cap). Second, qualifying high-earning professionals returning to or arriving in Italy under the impatriati regime — the 50 percent exemption on a large Italian salary or self-employment income can outperform the Bulgarian flat rate after the lifestyle and substance trade-offs are added. Each case is fact-specific.

Italy does not have one flat tax — it has three preferential regimes that get called "flat tax" in marketing language, plus the standard Italian rates underneath them. The regime forfettario is a 5 or 15 percent substitute tax up to EUR 85,000 of revenue. The impatriati regime, reformed in 2024, is a 50 percent income exemption (reduced from 70 or 90 percent under the old rules). And the article 24-bis non-dom regime is a EUR 200,000 annual flat fee on foreign income — doubled in 2024 from the original 100,000 — for new high-net-worth Italian residents. Bulgaria has one tax: 10 percent flat on income, 15 percent combined on company profit distributed to the owner. The right question is not "which has a flat tax" — both do — but "which preferential regime, applied to which income profile, leaves you with more money after the substance, the cost of living and the time-limit clock all add up."

This guide is for entrepreneurs and high-net-worth individuals weighing Bulgaria against Italy as a tax base, with the 2024 Italian reforms factored in. We cover the three Italian regimes, the Bulgarian baseline, the standard Italian rates underneath, when each jurisdiction wins, and the structural EU points that both regimes share. We are a Bulgarian law firm; where Italy is genuinely the right answer for a client we say so — see our equivalent Bulgaria vs Malta and Bulgaria vs Georgia pieces for the same honest-comparison treatment.

15%

Bulgaria combined effective (10% + 5%)

5–15%

Italy regime forfettario up to EUR 85k

€200k

Italy HNW flat fee (doubled 2024)

50%

Italy impatriati exemption (post-2024 reform)

Italy's Three "Flat Taxes" — What Each Actually Is

1. Regime forfettario — 5 / 15 percent substitute tax up to EUR 85,000

A simplified regime for Italian self-employed individuals and small businesses under Law 190/2014, as amended. A substitute tax of 5 percent applies in the first five years of new business activity (subject to qualifying conditions), and 15 percent thereafter, on revenue (turnover) up to EUR 85,000 per year. Above the cap, the regime falls away and standard Italian progressive rates apply. INPS social-security contributions are paid separately on top of the substitute tax, at rates that depend on the contributor category. The regime is the most common low-tax route in Italy and is genuinely simple to operate — but the EUR 85,000 ceiling is hard.

2. Impatriati regime — 50 percent income exemption (reformed 2024)

The Italian "inbound workers" regime is for individuals who become Italian tax-resident after a defined period abroad. Under the previous rules, qualifying income (employment, self-employment, business income with conditions) was 70 percent exempt — or 90 percent in the southern regions — for five years, extendable in family configurations. Decree-Law 209/2023 reformed the regime with effect from 2024: the exemption was reduced to 50 percent, income caps were introduced, qualifying conditions were tightened, the geographic premium was removed, and the duration was set at five years (with extension to eight in defined family configurations). Individuals enrolled before 2024 retain the old rules to expiry under transitional provisions.

3. Article 24-bis non-dom flat tax — EUR 200,000 per year on foreign income

The Italian non-dom regime introduced in 2017, modelled on the British non-dom and competing with Portuguese NHR. New Italian tax residents who have not been Italian tax-resident for at least nine of the previous ten years pay an annual flat fee on all foreign-source income — originally EUR 100,000 per year, doubled to EUR 200,000 per year in the 2024 reform for individuals becoming Italian tax-resident from August 2024 onwards. The regime lasts up to fifteen years and can be extended to family members for a defined additional fee per family member. Italian-source income is taxed at standard Italian rates under the regime.

Important context on the impatriati reform. The 70 / 90 percent impatriati narrative that still circulates on expat blogs is out of date for anyone arriving in Italy after 2023. The post-reform 50 percent regime is materially less generous, the conditions are stricter, and a Bulgarian alternative that was unattractive against 90 percent exemption becomes much more competitive against 50 percent.

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Bulgaria's Baseline — One Tax, One Rate, No Time Limit

Bulgaria does not need three regimes because the headline rate is already low enough.

10 percent flat personal income tax on Bulgarian tax residents' worldwide income, with no progressive brackets, no regional surcharge, and no regime-specific qualifying conditions.
10 percent corporate income tax on Bulgarian-resident companies' profit, with the same flat rate regardless of size or sector.
5 percent dividend tax on distributions from a Bulgarian EOOD to the owner — a 15 percent combined effective rate on profit taken out of the company.
Registered freelancer (свободна професия): 25 percent statutory expense allowance applied to gross income, with the 10 percent flat PIT on the remaining 75 percent — an effective rate of about 7.5 percent. Uncapped on income amount; capped on the social-security base by the maximum monthly insurable income.
No time limit. The same rates apply year after year. There is no five-year, eight-year or fifteen-year clock.

Head-to-Head — the Tax Comparison

Bulgaria vs Italy — preferential regimes and standard rates (2026)
Income type	Bulgaria	Italy
Freelancer income up to EUR 85,000	~7.5% effective	5% (first 5 yrs) or 15% under regime forfettario
Freelancer income above EUR 85,000	~7.5% effective (uncapped on PIT)	Standard progressive — up to 43% PIT + regional surcharges
Profit distributed from a company	15% combined (10% CIT + 5% dividend)	~27.9% CIT (24% IRES + ~3.9% IRAP) + 26% dividend WHT
Personal income tax — standard	10% flat	23%–43% progressive + regional/municipal surcharges
Qualifying inbound worker — impatriati	Standard 10% applies	50% exemption (post-2024); old 70/90% only for pre-2024 entrants
High-net-worth foreign-income holder	10% flat on worldwide income (no cap)	EUR 200,000/year flat fee under Art. 24-bis (doubled from 100k in 2024)
VAT standard rate	20%	22%
Capital gains — listed EU/EEA shares (individuals)	0%	26% capital gains tax
Time limit on regime	None — same rates year after year	5 yrs forfettario / 5–8 yrs impatriati / 15 yrs Art. 24-bis

The table reads cheaper for Italy in two narrow bands — freelance income under EUR 85,000 in the first five years, and very large foreign-source income for HNW individuals under article 24-bis. In every other band, Bulgaria is materially cheaper.

When Bulgaria Wins

Five profiles where, in our practice, Bulgaria is materially the better answer.

Freelancer or consultant above EUR 85,000. The Italian regime forfettario cap is hard. The day your annual revenue crosses EUR 85,000 you fall into standard Italian progressive rates (top 43 percent plus surcharges). Bulgaria's 7.5 percent effective freelancer rate has no equivalent cap. For an EU consultant or technology freelancer earning EUR 100,000 to 250,000 a year, Bulgaria is materially cheaper.
Owner-manager of a real operating company. Italian corporate tax (IRES 24 percent plus IRAP roughly 3.9 percent) plus the 26 percent dividend withholding on distributions to the individual is a much heavier owner-extraction stack than Bulgaria's 10 percent CIT plus 5 percent dividend WHT. For any genuine SME with retained profit and meaningful distributions, the Bulgarian EOOD's 15 percent combined effective rate beats the Italian equivalent decisively.
Founders who want no time-limit clock. The Italian preferential regimes are all time-limited — 5 years (forfettario, impatriati), 8 years (impatriati extension) or 15 years (Art. 24-bis). After expiry, standard Italian rates apply. Bulgaria has no clock; the same rates apply in year one and year twenty.
Anyone weighing the post-2024 impatriati against the alternatives. The reformed 50 percent exemption is materially less generous than the old 70/90 percent regime. For high-income inbound workers who arrive after 2023, the Bulgarian 10 percent flat on the full income is increasingly competitive against an Italian 50 percent exemption applied to a high marginal rate.
Operating-cost-sensitive entrepreneurs. Bulgaria's setup and recurring compliance are cheap by EU standards. Italian compliance — INPS contributions on top of substitute tax, regional surcharges, IRAP for businesses, audit thresholds at the company level — is heavier and more expensive.

When Italy Wins

Honest mirror. Two profiles where Italy genuinely beats Bulgaria.

New freelancer in the first five years, revenue below EUR 85,000. The regime forfettario at 5 percent in the first five years undercuts Bulgaria's 7.5 percent freelancer rate. For an independent designer, consultant or developer with a clear five-year horizon and revenue comfortably under the cap, Italy is straightforwardly cheaper on the headline. After year five (or when revenue crosses EUR 85,000, whichever comes first), the comparison flips.
High-net-worth individual with very large foreign-source income. Article 24-bis caps your Italian tax at EUR 200,000 per year on all foreign-source income. At foreign-source income of EUR 2 million the regime is effectively 10 percent; at EUR 5 million it is 4 percent; at EUR 10 million or more it is materially below Bulgaria's 10 percent worldwide rate. The break-even sits in the EUR 2 to 3 million range, depending on the composition of the income. Below that, Bulgaria's 10 percent is cheaper; above it, Italy's flat fee wins. Add the regime's fifteen-year duration, the family-extension fee, and the requirement of nine of ten years of prior non-Italian residence — and Italy becomes a real high-net-worth jurisdiction again.

Where the line sits. For most entrepreneurs and freelancers we work with — EUR 50,000 to 500,000 annual revenue or distributed profit, building a business across five-plus years, EU-facing — Bulgaria is the better answer. For the high-net-worth client with eight-figure foreign passive income who can satisfy the article 24-bis qualifying conditions, Italy is the better answer. We say so in both directions.

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What Bulgaria and Italy Share — EU Positioning

Both are EU member states, both are in the eurozone, both are in Schengen, both have extensive double tax treaty networks. The structural EU advantages that separated Bulgaria from Georgia in our Bulgaria vs Georgia piece are not a differentiator here — Italy has them too. The choice between Bulgaria and Italy is therefore a purer tax-and-cost comparison than the Bulgaria-vs-non-EU comparisons, because the EU access layer is equal on both sides.

Both jurisdictions also have:

EU VAT system including OSS for cross-border B2C — see our piece on Wise, Stripe and PayPal accounting and VAT for the Bulgarian operational layer;
Full single-market freedom of establishment and services;
SEPA banking and euro-denominated contracts;
EU social-security coordination under Regulation 883/2004 for inbound and outbound workers;
EU AML, including CESOP cross-border payment reporting since 1 January 2024 and DAC7 platform reporting since 2023.

What Bulgaria and Italy do not share is cost of living. Sofia, Plovdiv and Bulgaria's coastal cities are materially cheaper than Milan, Rome, Florence and the Italian Riviera. For a founder weighing where to live as well as where to pay tax, the lifestyle and cost-of-living layer often decides cases that the tax tables leave finely balanced.

Cost of Operating and Living

For a comparable lifestyle in a comparable EU city:

Setup cost — Bulgarian EOOD: EUR 1,500 to 3,000 in year one; Italian SRL: materially higher across notary, register, statutory contributions and accountancy;
Annual compliance — Bulgarian EOOD: EUR 1,500 to 3,500 typical; Italian SRL: EUR 3,000 to 10,000+ depending on size, plus INPS contributions and IRAP;
Rent — Sofia or Plovdiv: a fraction of Milan or Florence;
Restaurants, services, transport — Bulgaria roughly half of Italian equivalents in major cities;
Talent — Bulgaria has a deep, lower-cost IT and back-office talent pool; Italy has a deeper professional services and design pool but at materially higher salary levels.

For the SME founder spending EUR 5,000 to 15,000 a month on personal cost of living, the Bulgarian setup typically delivers an extra EUR 3,000 to 8,000 per month back to the founder, before tax differences even enter the picture.

Decision Framework — Three Questions

The Bulgaria-vs-Italy answer in our practice follows three questions, in this order.

Is your annual income below or above EUR 85,000? Below — Italy regime forfettario at 5 or 15 percent is a real comparison and may win in years 1 to 5. Above — Italy's regime forfettario is off the table; Bulgaria wins decisively.
Are you a high-net-worth individual with eight-figure foreign passive income? Yes — Italy's article 24-bis EUR 200,000 flat fee is a genuine competitor for fifteen years; we recommend Italian counsel for a serious comparison. No — move on.
Do you want a permanent, simple, no-time-limit setup? Yes — Bulgaria. The Italian preferential regimes all expire; Bulgaria's flat rates do not.

The case we see most often. A European-facing SME founder, EUR 150,000 to 500,000 annual distributed profit, mid-thirties to mid-fifties, wants a long-term EU base, EU citizens or third-country nationals with EU substance. For this profile Bulgaria is materially cheaper across every band — and we win the comparison without needing to talk down Italy.

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Common Mistakes Comparing Italy and Bulgaria

1. Quoting the pre-2024 impatriati numbers

The 70 percent and 90 percent exemption regimes are not available for new arrivals after 2023. The current regime is 50 percent with stricter conditions. The expat blogs lag the reform by months or years.

2. Forgetting the EUR 85,000 forfettario cap

The 5 / 15 percent rate is the headline that travels. The cap that defeats it is rarely mentioned in the same paragraph. Above EUR 85,000 you are in standard Italian rates.

3. Treating article 24-bis as a flat 100,000 still

The fee was doubled to EUR 200,000 in the 2024 reform for new entrants from August 2024 onwards. The 100,000 figure applies only to individuals who became Italian tax-resident before the reform.

4. Comparing personal headline rates while ignoring social security

Italian INPS contributions on freelancer or self-employed income are material on top of the regime forfettario substitute tax. Bulgaria's capped insurable income makes the SSC structurally lower at higher income levels. Run the comparison net of social security, not net of income tax only.

5. Forgetting the time-limit clock

The Italian regimes all expire. A five-year forfettario advantage that becomes a 43 percent standard rate in year six is a different planning problem than a permanent 7.5 percent Bulgarian rate that does not change.

Common questions before booking:

Can I run a Bulgarian EOOD while living in Italy? Mechanically yes — but with material risk that Italian tax authorities treat the EOOD as Italian tax-resident on place-of-effective-management grounds. See our resident vs non-resident director piece. Substance has to live where the law expects it.

Do you set up Italian companies or apply for Italian regimes? No — we are a Bulgarian law firm. Where Italy is the right answer we refer to Italian counsel.

What about Cyprus, Portugal, Spain? Each has its own preferential regime. For broader comparisons see our Bulgaria vs Malta piece and the digital nomad jurisdiction comparison.

What does the Bulgarian setup cost? Full EOOD or freelancer setup, residence, banking and NRA registration: from EUR 2,000 plus state fees. First consultation is free.

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Frequently Asked Questions

Does Italy have a flat tax? +

Three preferential regimes: regime forfettario (5 or 15 percent up to EUR 85,000), impatriati (50 percent exemption post-2024), and article 24-bis non-dom flat fee (EUR 200,000/year on foreign income for new HNW residents, doubled from 100,000 in the 2024 reform).

What is Bulgaria's headline tax? +

10% flat PIT, 10% CIT, 5% dividend = 15% combined effective on profit out of an EOOD. Registered freelancer effective ~7.5%. No cap on income, no time limit, no regime conditions.

Italy regime forfettario vs Bulgaria freelancer — which wins? +

Italy wins below EUR 85,000 in the first five years (5% vs Bulgaria's ~7.5%). Bulgaria wins above EUR 85,000, after year five, or on extraction from a company. The cap and the clock decide most cases.

Is the Italian impatriati still 70% or 90% exemption? +

Not for new arrivals after 2023. Decree-Law 209/2023 reduced the exemption to 50%, tightened conditions, and removed the southern Italy 90% premium. Old rules apply only to individuals enrolled before 2024.

What is the EUR 200,000 flat tax for HNW new residents? +

Article 24-bis non-dom regime — flat annual fee on all foreign-source income for new Italian tax residents who had not been Italian-resident for at least 9 of the previous 10 years. Was EUR 100,000; doubled to EUR 200,000 in the 2024 reform for entrants from August 2024 onwards. Lasts up to 15 years.

When does Bulgaria beat Italy? +

Most entrepreneurs and freelancers above EUR 85,000 revenue; owner-managers of real operating companies; founders who want a permanent setup without a time-limit clock; anyone weighing the post-2024 50% impatriati against the alternatives. Ask us.

When does Italy beat Bulgaria? +

New freelancer in years 1-5 with revenue under EUR 85,000 (regime forfettario at 5%); HNW individuals with foreign-source income above roughly EUR 2-3 million per year under article 24-bis (EUR 200,000 cap becomes a fraction of total income).

Where do you operate? +

We are a Bulgarian law firm. Where Italy is the right answer we say so and refer to Italian counsel. This article is the honest comparison; not a sales pitch in either direction.

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Disclaimer: This article provides general information comparing the Bulgarian and Italian tax regimes for entrepreneurs and high-net-worth individuals. It does not constitute individual legal or tax advice. Italian-side specifics — regime forfettario eligibility, impatriati qualifying conditions, article 24-bis access — must be confirmed with Italian counsel; we are a Bulgarian law firm. Last reviewed: May 23, 2026.

Legal notice: This article is for informational purposes only and does not constitute individual legal or tax advice. For your specific situation, please consult a qualified lawyer or tax advisor. The legal framework may change after the publication date.