Payment of taxes on rental property
- Kristo Daud
- Mar 20
- 7 min read
When short-term subletting real estate through platforms such as Airbnb and Booking, different taxes are due depending on the status of the person carrying out the activity.
The main options are:
An individual , including a sole proprietor. After the changes in tax legislation, which are in effect from 01.01.2020, income from this activity is mainly taxed with patent tax. In the event that the person does not meet the conditions for taxation with patent tax, he is taxed under the Personal Income Tax Act (PITA).
Legal entity - 10% corporate tax
Find out more about the category that best describes your situation here !
Step 1. Apartment registration
All apartments that are rented out short-term on platforms such as Airbnb and Booking should be registered with the OP Tourism as a class B accommodation - guest rooms and apartments.
Registration is carried out in the municipality where the apartment is located. It is necessary to submit an application for registration at a counter in an administrative service center, or electronically through the secure electronic delivery system. You have the right to register an apartment that is not your property. This is done with a rental agreement and again the declaration in question.
The registration fee is 20 BGN per bed, with double beds being paid double, i.e. 40 BGN. After submitting the documents, within 7 days OP Tourism issues a certificate with a number for the guest place.
Step 2. Registration in the Unified Tourist Information System (USTI)
Registration with ESTI is mandatory and is carried out after registering the property as a place of accommodation.
The system aims to collect statistical information on the number of overnight stays.
The registration process in ESTI is entirely electronic and is carried out through the Unified Tourist Information System - government.bg website .
You are required to submit regular information about all overnight stays, which must occur on the day of check-in. You will need personal information from the clients – for Bulgarian citizens – three names and date of birth, for foreign citizens – names, date of birth and ID number.
The registration process in ESTI is entirely electronic, and you can submit information about overnight stays in two ways:
Web service, through which, in a previously agreed XML format, statistical data on registered overnight stays and identification data for individuals are submitted from the hotel information systems pursuant to Art. 116, para. 5, item 2;
A web-based user interface through which registered users, representatives of Accommodations, have the opportunity to submit the requested data by: Directly entering the information or by importing a data file in a predefined format.
ESTI Working Guide – Video Training
Step 3. Declaration and payment of tourist tax (tourist fee)
Tourist tax is required to be paid by all persons offering overnight stays. It is paid monthly, by the 15th of the month, for the overnight stays realized in the previous month. The amount of the tourist tax is different for each municipality. It is determined by ordinance of the municipal council and ranges from 0.20 BGN to 3.00 BGN per overnight stay per person (for Sofia it is 1 BGN per overnight stay/person).
The tourist tax is calculated by multiplying the number of nights by the number of guests accommodated at the rate, each month. For this purpose, you can use a statement from ESTI. You can pay your obligations at the municipality counter, or through online banking - transfers to the budget, to the municipality's account.
Once a year, a declaration is submitted, which reconciles the data submitted in the ESTI. If everything has been paid correctly by you, you should not owe anything additional.
You can get more information in our guide, in the Unified Tourist Information System - ESTI or the Ministry of Electronic Government .
Step 4. Payment of VAT
If you are a natural person or legal entity not registered for VAT, a special VAT registration is required according to Art. 97A. because platforms such as Booking Aırbnb are not registered in Bulgaria and do not issue VAT invoices. In this case, you must self-assess and pay VAT on the invoices for withheld commission that you received from the platforms. If you do not work with foreign platforms, registration is NOT necessary!
You fill out a Registration Application and submit it to the NRA.
If you operate as a VAT registered individual or legal entity , you are required to charge and pay 9% VAT on the gross price per night. The reduced rate of 9% applies only to the accommodation service - additional services are subject to 20% VAT. VAT is charged on the gross value - the price the guest pays, not on the income you receive.
Step 5. Securing
Regardless of whether the activity of short-term rental of property through online platforms is subject to patent tax or personal income tax, it is subject to social security contributions - for social security, additional mandatory pension insurance in a universal pension fund (SMP in UPF) and health insurance.
If you are an individual, you must register as a self-insured person and pay monthly insurance contributions (the exception is people who are employed and insured at the maximum insurance threshold - 3,750 BGN for 2024).
As a legal entity, you are required to pay monthly insurance premiums.
Registration is carried out at the National Revenue Agency.
More information in our guide and the official website of the NRA .
Step 6. Tax
6.1 Patent tax
This method of taxation is applicable to individuals , including sole proprietors, who:
have an annual turnover of less than 100,000 BGN.
are not registered under the VAT Act, with the exception of registration for supplies of services under Art. 97a and for intra-Community acquisitions under Art. 99 and Art. 100, para. 2 of the same Act
carry out a precisely defined (patented) activity, namely - renting out accommodation facilities with no more than 20 rooms, categorized with one or two stars or registered under the Tourism Act
The patent tax rate is determined by the Municipal Council each year for the following year.
You pay patent tax in the municipality where the apartment is located every year by January 31 of the year to which it applies, or upon starting the activity.
Administered by the municipal authorities (not by the National Revenue Agency), the tax amount for short-term rentals, for accommodations with less than 20 rooms with a 1 or 2 star category or registered under the Tourism Act, is in the range between 25 and 250 BGN per year. (for 2024 in Sofia the rate is 25 BGN)
6.2 Income tax under the Personal Income Tax Act
Individuals , including sole proprietors, who do not meet the conditions for taxation with patent tax, are taxed on income from renting out property through an online platform under the Personal Income Tax Act. In these cases, the taxation procedure depends on whether the person is defined as a trader within the meaning of the Commercial Code.
In case it is defined as a trader within the meaning of the Commercial Code, regardless of whether it is registered as a sole trader, the income from the activity of the individual will be taxed at 15% tax on the annual tax base under Art. 28 of the Personal Income Tax Act . In this case, an annual income tax return must be filed, with the income from this activity being filled in Appendix No. 2. In these cases, an annual activity report (AAR) is also submitted together with the annual tax return. See more .
Important! This taxation regime does not exempt you from the obligation to register in the Commercial Register in accordance with the relevant procedure.
Exception! If, as an individual, you provide hotel services by providing rooms in your occupied residence, including through online platforms, you are not a trader within the meaning of the Commercial Code. In these cases, if you do not meet the conditions for taxation with patent tax, your income will be taxed at a 10 percent tax on the total annual tax base, in a manner identical to that applied to rental income and will accordingly be declared in Appendix No. 4 of the annual tax return under Art. 50 of the Personal Income Tax Act .
6.3 Corporate tax 10%
This tax is applicable when the activity is carried out by a legal entity and is not applicable to sole traders and individuals. In this case, a 10% tax is paid on the taxable profit, which is formed by transforming the accounting financial result for tax purposes. Legal entities are required to keep accounting records, but accounting expenses related to their economic activity can also be recognized for tax purposes.
The tax financial result and the annual corporate tax due are declared with the annual tax return under Article 92 of the Corporate Income Tax Act, and the annual activity report is also submitted together with it.
VAT and registration under the VAT Act for supplies of services for which the tax is due from the recipient (Art. 97a of the VAT Act)
Short-term rental of property through online platforms requires special registration under the VAT Act. This is because you use intermediary services on platforms such as AirBnB, Booking and similar ones, i.e. you are the recipient of a taxable supply of a service with a place of performance on the territory of the country, provided by a foreign person (the online platform), which is not established on the territory of the country. For this purpose, you must submit an application for registration on the basis of Art. 97a of the VAT Act electronically on the NRA e-services Portal , signed with an electronic signature or on site at the NRA office at your permanent address. The deadline for submitting the application for registration is 7 days before the date on which the tax for the supply of intermediary services becomes due.
After registering under the VAT Act, you are required to submit monthly VAT returns, sales and purchase logs, respectively. Registered persons pursuant to Art. 97a of the VAT Act shall record in the sales log only the documents issued in connection with the supplies of services under Art. 21, para. 2 of the same Act with a place of performance on the territory of another Member State, as well as the supplies of services received for which the tax is due from the recipient under Art. 82, para. 2, item 3 of the Act and the intra-Community acquisitions made with a place of performance on the territory of the country. These persons may not prepare a purchase log. In this case, the purchase log submitted by the person must contain a single entry with the values "zero" for the numeric fields and "interval" for the character fields.
Detailed information about tax and administrative obligations, as well as personalized advice for your situation, can be found in our guide !
