Economic Overview
The economy assembled force in Q1, with development enlivening from the strong, local interest drove extension in Q4 2018.
The upturn was floated by peppy outside interest, which drove trade development to hit a one-and-a-half year high. Inside, be that as it may, movement diminished: Fixed venture facilitated recognizably while rising joblessness and expansion likely burdened shopper spending, in spite of family wages profiting by significant compensation gains.
This was prove by lukewarm retail deals development in the quarter generally, which incorporated the primary decrease in deals in about six years in February. Going to Q2, accessible review information indicates that elements have remained extensively steady: all things considered, purchasers were as critical in April–May as in Q1, while trust in the retail exchange and administrations divisions slipped just imperceptibly.
The economy is relied upon to keep up a strong pace of development this year, fundamentally buttressed by local interest. A tight activity market and higher wages are seen supporting private utilization, while the proceeded with retention of EU basic assets and shabby acquiring expenses should prop up fixed venture. Raised worldwide exchange strains and rising work deficiencies cloud the viewpoint.
Main sectors of economy
Industry and construction
Quite a bit of Bulgaria’s socialist period industry was overwhelming industry, despite the fact that biochemicals and PCs were huge items starting during the 1980s. fter appearing first development since the socialist period in 2000, Bulgaria’s modern part has developed gradually yet consistently in the mid 2000s. The presentation of individual assembling enterprises has been uneven, in any case. Sustenance preparing and tobacco handling experienced the loss of Soviet markets and have not kept up models sufficiently high to contend in Western Europe.
Energy
Bulgaria depends on imported oil and petroleum gas (the greater part of which originates from Russia), together with local age of power from coal-controlled and hydro plants, and the Kozloduy atomic plant. The economy remains vitality concentrated in light of the fact that protection practices have grown gradually. The nation is a noteworthy provincial power maker.
Bulgaria positions as a minor oil maker (97th on the planet) with an all out creation of 3,520 bbl/day.
Ongoing years have seen a relentless increment in power creation from sustainable power sources, for example, wind and sunlight based power.
Services and Tourism
In spite of the fact that the commitment of administrations to total national output (GDP) has dramatically increased in the post-socialist time, a considerable offer of that development has been in taxpayer supported organizations, and the subjective dimension of administrations changes extraordinarily.
In 2007 Bulgaria was visited by 5,200,000 vacationers, positioning 39th on the planet. Vacationers from Greece, Romania and Germany represent 40% of guests.
Agriculture, forestry, and fishing
In the socialist period, Bulgaria’s horticulture was vigorously unified, incorporated with farming related enterprises, and state-run. Bulgaria’s principle field yields are wheat, corn, and grain. The principle mechanical yields are sugar beets, sunflowers, and tobacco. Tomatoes, cucumbers, and peppers are the most significant vegetable fares. Creation of apples and grapes, Bulgaria’s biggest natural product items, has diminished since the socialist period, however the fare of wine has expanded fundamentally.
In 2005 around 70 percent of the all out woods asset was appraised monetarily suitable.
The fish cultivating industry (especially sturgeon) has extended in the mid 2000s, and some ecological enhancements operating at a profit Sea and the Danube River, the essential wellsprings of fish, may build the take in future years.
Mining and minerals
Bulgaria’s mining industry has declined in the post-socialist period. Numerous stores have stayed immature in light of an absence of present day hardware and low financing. Mining has contributed under 2 percent of GDP and connected under 3 percent of the workforce in the mid 2000s. Bulgaria has the accompanying evaluated stores of metallic minerals: 207 million tons of iron metal, 127 million tons of manganese metal, 936 million tons of copper metal, 238 million tons of chromium metal, and 150 million tons of gold metal.
Taxation in Bulgaria
Corporate income tax
The corporate income tax applies to companies and partnerships established under Bulgarian law and permanent establishments of non-resident entities in Bulgaria. The corporate tax rate is 10% and is calculated on the taxable profit. The taxable profit is the annual financial result adjusted for tax purposes.
Withholding tax
The taxable income for calculating withholding tax includes seven types of income when accrued to a non-resident entity:
- capital gains resulting from transactions with real estate,
- capital gains from disposal of financial assets issued by the State/municipalities or resident entities (there is an exemption for capital gains resulting from disposal of shares on a regulated Bulgarian/EU/EEA market),
- dividends and liquidation quotas,
- income from renting out movable property or real estates,
- interest, royalties, franchising and factoring fees,
- service fees and remuneration for the use of rights (except for the actually received rights); penalties or damage fees (with the exception of insurance compensation) accrued to entities having tax residence in low tax jurisdictions,
- technical and management services fees.
The withholding tax rates are as follows:
- 5% on the gross amount of dividends and liquidation quotas (0% for distributions to EU/EEA entities)
- 5% on interest and royalties accrued to related party legal entities residing in the EU (under several conditions). Starting from the first of January 2015, Bulgaria has to implement the EU Interest and Royalties Directive: 0% withholding tax on interest and royalties paid to an associated company of another member state.
- 10% on the gross amount of all other taxable income
Investing in Bulgaria
The main reasons for investing in Bulgaria are:
- An advantageous taxation system for investors
- A sizeable workforce that is skilled and low-cost
- Very low cost of living
- Membership in the European Union, guaranteeing regular reform cycles
- Strong and robust defense against external economic shocks
- Strong political stability
- A positive reputation for the country’s prudent tax regulations
- A budget surplus since 2013
The government established a very advantageous taxation system and the costs of starting a company have also been lowered. Some of the most important measures put in place are:
- Fixed company taxation rate of 10%
- Competitive labor costs
- Skilled active population
- Foreign investors, who are citizens of countries outside the EU, EEA, and Switzerland, are eligible for a Bulgarian permanent residence permit valid for an unlimited period of time if they invest over BGN 1,000,000 (approximately €511,292).