Rental income in Bulgaria is taxable. Many landlords — particularly those with one or two properties — operate informally and don't declare rental income. This is both illegal and increasingly risky as the National Revenue Agency (НАП) has expanded its cross-referencing of property registry data with declared income. This guide explains how rental income is taxed, what deductions are available, and what you need to do to stay compliant in 2025.
Who needs to declare rental income?
Any individual (физическо лице) who receives rental income in Bulgaria is required to declare it annually, regardless of the amount. There is no minimum threshold below which rental income is exempt. The only exception is if the rental income is received through a company (EOOD or OOD) — in that case it is subject to corporate tax (10% flat) rather than personal income tax.
The tax rate
Rental income received by individuals is taxed at a flat rate of 10% under the Personal Income Tax Act (ЗДДФЛ). This applies to the taxable base after deductions — not the gross rental income.
The 10% expense deduction
Bulgarian tax law allows landlords to deduct a flat 10% of gross rental income as a deemed expense allowance (нормативно признати разходи), without needing to provide receipts. This means the effective tax rate on gross rental income is 9% (10% tax on 90% of income).
Example: if you collect €12,000 in rent over the year, you deduct 10% (€1,200), leaving a taxable base of €10,800. Tax at 10% = €1,080. Effective rate on gross: 9%.
You cannot claim additional actual expenses (repairs, insurance, mortgage interest) on top of the 10% flat deduction — it's one or the other, and in practice the flat 10% is what almost all individual landlords use.
Social security contributions
If you rent out property as an individual and are not otherwise insured (i.e. not an employee or self-employed with separate social security obligations), rental income may trigger an obligation to pay health insurance contributions (здравни осигуровки). The rules here are nuanced and depend on your overall income situation. If rental income is your primary or sole income source, consult an accountant — the obligation and calculation differ by case.
Filing deadlines 2025
- Annual tax return (годишна данъчна декларация): filed by 30 April of the following year. For 2024 rental income, the deadline is 30 April 2025.
- Early filing discount: if you file online via the NRA portal (nap.bg) before 31 January, you receive a 5% discount on the tax due, capped at BGN 500.
- Tax payment deadline: also 30 April. Pay online via the NRA portal or at a bank.
What if the tenant is a company?
If your tenant is a Bulgarian company (legal entity), the company is legally required to withhold 10% tax at source and remit it to the NRA on your behalf. You receive the net amount and the company provides you with a certificate of withheld tax. You still need to declare the income in your annual return, but the tax will already have been paid.
The most common mistakes
- Not declaring at all — NRA increasingly cross-references property registry and utility data. Undeclared rental income discovered in an audit results in back taxes plus interest plus a penalty of up to 100% of the unpaid tax.
- Declaring the wrong amount — always declare the gross rent, not what you received after deducting the tenant's share of utilities.
- Missing the early-filing deadline — the 5% discount is free money. Filing online in January takes 15 minutes.
- Confusing VAT registration — individual landlords renting residential property are not required to register for VAT regardless of rental income. VAT applies to commercial property rentals above the BGN 100,000 annual threshold.
Keeping records
You should keep records of: signed lease contracts, rent payment receipts or bank statements showing transfers received, and any repair invoices (useful if you ever need to substantiate costs in an audit, even if you use the flat deduction). DomFlat maintains a complete payment history for every property, which doubles as your rental income record for tax purposes — exportable as a CSV for your accountant.