Employees in Bulgaria working for companies registered only as foreign insurers, without a permanent establishment or base in the country, can benefit from annual tax relief as parents of children under 18. Despite these employers not being required to withhold or declare advance taxes on employee income, legislation allows employees to recover overpaid taxes or reduce their annual tax burden.
What is the Tax Relief?
The tax relief for parents of children under 18 is a refund based on the reduction of the parents' total annual tax base. The amounts are as follows:
- BGN 6,000 for one child.
- BGN 12,000 for two children.
- BGN 18,000 for three or more children.
- BGN 12,000 per disabled child.
Employees can claim this relief only if taxes have been withheld or paid on their income during the year.
Foreign Insurers and Employee Responsibility
Companies registered as insurers without a permanent establishment in Bulgaria are not considered employers under the Income Tax Act. This means they are:
- Not obligated to withhold advance tax from employee income.
- Not required to report taxes in monthly filings.
The responsibility for tax compliance in these cases shifts to the employee. Employees must:
- Calculate their due tax independently.
- File an annual tax return to declare income and claim tax relief.
Filing and Deadlines
Employees must submit their annual tax return between 10 January and 30 April of the year following the income year. The process includes:
- Attaching the “Earned Income from Employment” form to report income.
- Attaching the “Tax Relief” form to claim a refund.
The National Revenue Agency (NRA) processes refunds within one month of verifying the tax return. The refunded amount is transferred to the employee's designated bank account.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
