The Personal Income Tax Act provides for various types of tax relief available under specific circumstances. To take advantage of these reliefs, certain conditions must be fulfilled, which should be carefully reviewed in advance. An essential requirement is that you must not have any outstanding public liabilities subject to enforcement as of the date on which your annual tax return is submitted.

Tax relief includes the following categories:

•         Reduced working capacity

•         Voluntary insurance and insurance contributions

•         Length of insurance service at retirement

•         Donations

•         Young families

•         Children

•         Children with disabilities

•         Cashless payments

•         Improvements and/or repairs to real estate used for residential purposes

For more information visit:

•         Direct Taxes and Tax Reliefs page, Income, Social Security, Taxes section, I Want to Learn category.

Social security contributions are payable only on employment income up to a certain limit – the maximum insurable income – above which contributions are no longer required. Workers and employees are mandatorily insured regardless of the nature of their work, the method of payment, or the source of financing, except for certain professional categories defined by law.

The amount of contributions paid into the state social security system determines the benefits a person is entitled to receive in cases such as unemployment, temporary incapacity for work due to general illness, and maternity. It also affects the size of the pension from the first pillar of the pension system.

Contributions to the second pillar of the pension system (mandatory supplementary pension insurance) are also part of the overall social security framework. However, these contributions are not paid into the state budget but are transferred to the individual accounts of insured persons in private pension funds.

Health insurance contributions are payable even when a person is not employed. They ensure access to the public healthcare system. Even if you are not health insured, you will still receive emergency medical assistance free of charge in life-threatening situations. For all other cases, including urgent medical care, it is necessary to have paid your health insurance contributions.

For more information visit:

•         Social Insurance and Pension Fund and Other Insurances and Health Insurance pages, Income, Social Security, Taxes section, I Want to Learn category.

Value Added Tax (VAT) is a tax that everyone pays in their daily life because it is included in the final price of all goods and services for the consumer. It is an indirect tax, also called a consumption tax, and is applied across the European Union, with varying rates in each country. In Bulgaria, the standard VAT rate is 20%. Value Added Tax (VAT) is a tax that everyone pays in their daily life, as it is included in the final price of all goods and services purchased by consumers. It is an indirect tax, also known as a consumption tax, and is applied throughout the European Union, with rates varying from country to country. In Bulgaria, the standard VAT rate is 20%. A reduced rate of 9% applies to accommodation-related tourist services, as well as to books, textbooks, and periodicals (in both physical and digital form), and to baby and toddler goods such as food, diapers, and other related items.

Some goods and services are exempt from VAT, while others are taxed at a zero rate. Exemptions apply to specific services in areas such as healthcare, education, sports, social care, insurance, financial services, religious activities, postal services, culture, and gambling, which is subject to a separate specific tax. VAT represents the largest source of revenue for the state.

For more information visit:

•         Indirect taxes page, Income, Social Security, Taxes section, I Want to Learn category.

Excise duties are also a type of tax – a form of consumption tax – that contributes to the final price of certain goods. They are imposed by the state to limit the consumption of so-called demerit goods, as these products generate adverse external effects. For example, the harm caused by smoking affects not only active smokers but also passive ones. Other goods subject to excise duties include alcoholic beverages, due to the irreversible damage that regular consumption can cause to the brain, heart, or liver. Energy products and electricity are also subject to excise duties, as energy resources are limited and their use needs to be kept within reasonable bounds.

By imposing excise duties, the prices of specific goods increase, which is expected to reduce demand and, consequently, consumption.

For more information visit:

•         Indirect taxes page, Income, Social Security, Taxes section, I Want to Learn category.

Customs duties are a type of indirect tax, also known as a consumption tax, that contributes to the final price of goods. They are imposed on the import or export of certain goods into or out of the country. Customs duties serve as an important tool in trade relations between countries and are used to promote or protect the national economy.

Within the European Union, a Customs Union operates, allowing member states to trade goods freely among themselves without imposing duties. Consequently, a common customs tariff applies at the EU’s external borders for goods coming from third countries. The TARIC system can be used to verify applicable duties.

For more information visit:

•         Indirect taxes page, Income, Social Security, Taxes section, I Want to Learn category.