📊 Crypto Assets Taxation in Bulgaria
Today, we continue last week’s topic on crypto assets, this time focusing on their tax treatment.
The tax regime for crypto transactions depends on who performs them:
- 👤 individuals
- 🏢 legal entities (companies)
Different rules apply to each category.
👤 I. Taxation for Individuals
Taxation is governed by the Personal Income Tax Act (PITA).
💱 1. Sale and Exchange of Cryptocurrencies
Income from selling or exchanging crypto assets is treated as:
👉 income from the transfer of rights or property
📌 How Taxable Income Is Calculated
For each transaction:
Then:
- All profits and losses are aggregated for the year
- A 10% normative expense deduction is applied
👉 Tax base:
👉 Tax rate: 10%
📊 Example
- Purchase price: 10 USD
- Selling price: 100 USD
➡️ Profit: 90 USD
➡️ Normative expenses (10%): 9 USD
➡️ Taxable amount: 81 USD
➡️ Tax due: 8.10 USD
📝 2. Declaration and Administration
- Declared in the annual tax return (Article 50)
- ❌ No advance tax required
- ❌ No mandatory attachments
- 📁 Documents must be kept for 5 years
🔒 3. Staking (Individuals)
Staking income is not treated as interest.
👉 Taxation occurs:
- ❌ not when tokens are received
- ✅ only when they are sold
➡️ Tax is due only upon realized income
⛏️ 4. Crypto Mining
If mining is conducted professionally, it is treated as an economic activity.
📌 When is an individual considered a trader?
- Performs systematic activity
- Uses specialized equipment
- Intends to generate ongoing income
⚠️ Registration as a sole trader is not required
💼 Tax Treatment
- Taxed as income from economic activity
- Profit calculated under the Corporate Income Tax Act
- Declared in Appendix No. 2
- ❌ No 10% normative expense deduction allowed
🏢 II. Taxation for Legal Entities
Companies are taxed under the Corporate Income Tax Act (CITA).
💼 1. Corporate Tax
👉 Rate: 10%
Profit is calculated as:
📌 Deductible Expenses
Examples include:
- transaction fees (gas fees)
- electricity
- hardware
- software
- rent
- administrative costs
💸 2. Dividend Tax
When profits are distributed:
👉 5% dividend tax
📊 Total Tax Burden
- 10% corporate tax
- 5% dividend tax
👉 Effective total: ~14.5% (excluding social contributions)
🛡️ 3. Social Security Contributions
Company managers must pay:
- mandatory social contributions
- at least on the minimum insurable income
Exceptions:
- reaching the maximum threshold
- pensioners
🔄 4. Revaluation of Crypto Assets
Due to volatility:
- annual revaluation is required
- ❌ gains/losses do NOT affect taxable income
- ✔️ treated as temporary tax differences
📈 5. Staking (Companies)
Staking is treated differently compared to individuals.
👉 Why?
- tokens are recorded as assets
- financial results increase
- taxable profit increases immediately
➡️ Result:
staking is less tax-efficient for companies
📌 III. Summary
👤 Individuals
| Activity | Taxation |
|---|---|
| 💱 Selling crypto | 10% on 90% of profit |
| 🔒 Staking | Taxed upon sale |
| ⛏️ Mining | Economic activity |
| ⏳ Advance tax | Not required |
🏢 Legal Entities
| Tax Type | Rate |
|---|---|
| 💼 Corporate tax | 10% |
| 💸 Dividend tax | 5% |
| 🛡️ Social contributions | Mandatory |
| 📊 Total burden | ~14.5% + contributions |
✅ Conclusion
- Individuals benefit from relatively light taxation
- Mining and systematic activities are treated as business activity
- Companies face full corporate taxation and contributions
- Staking is more tax-efficient for individuals
- 📁 Proper record-keeping is essential
🚀 Call to Action
👉 Your crypto assets deserve more than just a tax return.
With Saad Consulting, you gain security and strategy. 📊🚀