Corporate tax – general position

According to art.1, point 2 of Law on Corporate Income Tax /LCIT/ legal entities which are not traders, including not-for-profit organizations, organization on state budget subsidies and religious organization, shall be taxed for their profit and income, received from commercial transaction in accordance with Art.1 from the Commercial Code as well as the income from renting their own property. If NGOs carry out business activities, they shall pay corporate income tax at the same rate as commercial organization. The rate of the corporate tax is 10 %.

Donations in favor of NGOs in public benefit, healthcare institutions, specialized organizations providing social services under the Law on Social Support, the Bulgarian Red Cross and others must be accounted as expenses. These expenses are not levied with a corporate tax and lead directly to decrease of the financial result if they amount up to 10% from the positive financial result. If the expenses for donation exceed 10% from the positive financial result of the legal entity-donor, the financial result is increased with the surpass, which means that it is levied with a corporate tax.

The corporate donors do not have the right of tax incentives for donations in favor of organizations not listed as privileged in the law among which are NGOs in mutual benefit.

Property taxes – "inheritance tax", "donation tax" and "tax on chattels" are payable to the municipalities . The type and size of taxes and fees are regulated by the Law on Local Taxes and Fees /LLTF/. Exempt from tax on chattels are Municipalities, "Chitalishta", buildings of the Bulgarian Red Cross, buildings, used by the Universities and Bulgarian Academy of Science, park and sports facilities for public use, historical buildings and cultural monuments, museums, galleries and libraries, and other persons exhaustively listed in the Law.

According to art. 38, par. 1 the property inherited as well as the donations made or received by non-profit legal entities in public benefits hall not be taxed with inheritance and donation tax. Otherwise the tax rate could be from 3,3 to 6,6 % as the exact amount is pointed out in a municipal regulation on local taxes and fees, adopted by each  municipality.

According to the Law on Individuals Income Taxation individuals working under labour contract, self-employed individuals, or people receiving income from rent, annuity and lease are entitled to deduct donations from their taxable income. The donations must be made in favor of some of the recipients, exhaustively listed in the law, among which are pubic benefit organizations. The amount of the deduction may not exceed 5% of the income.