Paying tax on rental income
Short-term letting of property through platforms such as Airbnb and Booking attracts different taxes depending on the status of the person carrying out the activity.
The main options are:
- An individual, including a sole trader. Following the tax changes in force from 1 January 2020, income from this activity is taxed primarily under the patent tax regime. Where the person does not meet the conditions for patent tax, they are taxed under the Personal Income Taxes Act (ZDDFL).
- A legal entity – 10% corporate tax.
Step 1. Registering the apartment
Every apartment let short-term on platforms such as Airbnb and Booking must be registered with the municipal tourism department as class B accommodation – guest rooms and apartments.
Registration is done at the municipality where the apartment is located. You submit an application in person at an administrative service centre, or electronically through the secure electronic delivery system. You may register an apartment you do not own – this requires a tenancy agreement along with the same declaration.
The registration fee is BGN 20 per bed, with double beds charged twice, i.e. BGN 40. Within seven days of submission the tourism department issues a certificate with the guest accommodation number.
Step 2. Registering with the Unified Tourist Information System (ESTI)
Every registered accommodation submits guest data to ESTI. Access is requested from the Ministry of Tourism, and the submission itself can be automated – see how Guestin generates ESTI reports for you.
Step 3. Declaring and paying tourist tax
Tourist tax is payable to the municipality where the property is located and is calculated on the number of nights and the number of guests. The rate is set by the relevant municipality.
Step 4. VAT
Whether you must register for VAT depends on your taxable turnover over the last 12 months, and on whether you receive services from platforms established outside Bulgaria.
Step 5. Social contributions
Contribution obligations depend on the status under which you operate – as an individual, a sole trader, or through a company.
Step 6. Tax
Depending on the form chosen, patent tax, tax under the Personal Income Taxes Act, or 10% corporate tax is due.
Note: This article is for information only and does not constitute tax advice. Rates and requirements change – check the current position with the National Revenue Agency and your municipality, or consult an accountant.