Despite the lack of an approved state budget for 2026, a number of significant changes to the main tax laws came into force, namely: the Value Added Tax Act, the Corporate Income Tax Act, the Personal Income Tax Act, and the Local Taxes and Fees Act. This article summarizes the most important of these changes.
Value Added Tax Act (VATA)
The threshold for mandatory VAT registration is now set in euros – €51,130. A significant change is the method of determining turnover for the past 2025. New rules have been introduced under Article 168c, whereby specific real estate and financial services transactions, which were previously excluded, are now included in the calculation of the threshold.
Another important change is that the turnover for registration is monitored for the calendar year (from January 1 to December 31), rather than on a monthly basis for the last 12 months, as was previously the case. The deadline for submitting a registration application has also been changed – it is now 7 days from the date on which the threshold is exceeded, rather than by the 7th day of the following month.
– New regimes for small businesses
Two new modes have been introduced:
- Regime for small business in the country – VAT exemption for supplies with a place of performance in Bulgaria with a turnover of less than €51,130.
- Small business regime in the EU – allows Bulgarian companies to be exempt from VAT on supplies to other Member States if their total turnover throughout the European Union is less than €100,000.
To apply these regimes, registration with the National Revenue Agency is required, whereby an identification number with the prefix “BG” and the suffix “EX” is obtained. Persons from third countries cannot benefit from these regimes and are required to register under the VAT Act before making their first taxable supply in Bulgaria.
Persons applying the small business regimes are not entitled to deduct tax credit for the goods and services received. If the turnover under Article 96 of the VAT Act is exceeded, the right to apply the regime ceases and an obligation to register under the general procedure arises.
– Date of registration and billing terms
Until now, the date of registration under the general procedure was the date of delivery of the act. Before receiving the act, the person issued invoices without VAT, and then began to charge tax. The new Article 103 changes this for registrations above the threshold (Article 96, paragraphs 1 and 2): the date of registration is now the day following the day on which the threshold was exceeded. Not the day of the act, but the day after the threshold was exceeded.
Corporate Income Tax Act (CITA)
New tax breaks and incentives have been introduced, including:
Tax relief for research and development (R&D).
More favorable depreciation regime for electric cars – for tax purposes, the annual depreciation rate can be up to 50%, which allows for faster recognition of expenses.
Exemption from corporate tax for certain income from property rental where the recipient is a religious organization (churches and religious institutions).
A proposal has also been accepted that, starting in 2026, companies’ financial statements will be submitted to a single location—the NSI—from where the information will be forwarded to the Registry Agency. As of January 2026, this amendment has not yet been promulgated, so it is uncertain whether the 2025 reports will have to be submitted again to the Commercial Register.
Personal Income Tax Act (PITA)
The most significant change for 2026 is the transition from levs to euros.
All tax returns, payments, and administrative documents for periods beginning on or after January 1, 2026, should be submitted and/or paid in euros, even when the period covers a time when the lev and the euro are used in parallel.
For income received in 2025 but declared in 2026 (e.g., declarations under Articles 50 and 55 of the Income Tax Act), the amounts in the declarations are stated in BGN, but the tax due is paid in EUR.о.
Law on Local Taxes and Fees (LLTF)
The main changes include:
Abolish the current principle of determining the household waste fee as a percentage of the tax assessment or balance sheet value of the property. Instead, the fee may be determined according to the number of users or by another method based on actual load and pollution, in accordance with the “polluter pays” principle. Introduction of a new environmental category “Euro 7” for the taxation of vehicles, which ensures fair tax treatment of cars registered in 2026 and meeting the latest emission standards.
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