Income taxes on liberal professions

In Bulgaria, when natural persons exercise a trade or a freelance practice, their income from the activity performed is subject to taxation under the Income Taxes on Natural Persons Act (ITNPA). The term „freelance practitioners” is not strictly defined and covers a wide range of professions, such as notaries, lawyers, court experts, private enforcement agents, tax consultants, licensed assessors, journalists, translators, and others.


Taxation under ITNPA of income from agricultural activity exercised by natural persons who are not traders

Freelance practitioners, who are not registered as traders within the meaning of Commercial Act, are considered taxable on the annual basis of taxation for income from other business activities.

The annual basis of taxation is determined by reducing the taxable income under ITNPA by the contributions that the self-insured person is obligated to make for the year of taxation at their own expense; if the person is not self-insured - by the compulsory social insurance contributions made at their own expense under the Social Insurance Code and the Health Insurance Act, as well as the compulsary insurance contributions made abroad, paid by the natural person in question.

The taxable income originating from business activities of those natural persons who are not traders within the meaning of the Commerce Act shall be determined by way of subtracting the operating expenses from the income received, the operating expenses being as follows under Art.29:

  • by 60 per cent for income from the activity of natural persons, registered as agricultural producers, for the production of non-processed agricultural products, except for the income from production of decorative plants;

As of 1.01.2011, natural persons registered as tobacco producers and farmers, registered under VATA, have been given the option to form their taxable income under CITA. Once having chosen to exercise this option, they must apply it within no fewer than 5 consecutive years of taxation.

  • by 40 per cent for income originating from the activity of natural persons for production of processed or unprocessed agricultural products, author's and licence remuneration, including income originating from the sale of inventions, works of science, culture and art by their authors, as well as income originating from the performance of actors-performers;
  • by 25 % for the income originating from working as a freelance practitioner and for the income originating from legal relationships other than the employment such.


The taxable income does not include the profits that formed taxable income for previous years.

It is a matter of personal judgment for a person registered as a sole proprietor to form a basis of taxation under Art. 29 ITNPA for income originating from transactions undertaken without declaring their performance in commercial capacity. In this sense it is permissible for a natural person to declare income as both a sole proprietor and from income from other business activities.


Taxation under VATA

According to the Bulgarian Value Added Tax Act (VATA), any person who independently carries out economic activity, whatever its purpose and results thereof, is a taxable person. This comprises the activities of producers, traders and persons supplying services, including mining and agriculture, as well as the practice of a liberal profession, including as private enforcement agents and notaries. Natural persons, who are freelance practitioners are considered taxable persons within the meaning of Art. 3 VATA, and as such are obliged to apply the statutory provisions under the Act and those who engage in taxable supplies performed within the territory of the country, must register for the purposes of VATA after reaching the taxable turnover under Art. 96 VATA and charge tax on the taxable supplies performed.