Bulgaria - Crypto penetration

intro

Bulgaria is one of those countries that have recently introduced regulation but have already established themselves as a hub in the EU. For example, this is where the Nexo exchange is licensed.

Security level

Bulgaria has a minor danger security level according to our rating. Jurisdiction has 62.5 points (from 100) for safety level in Numbeo crime rating (1). Homicide level (2) is 1.3 per 100,000 inhabitants a year. Story of firearm-related death (3) 1.51 per 100,000 inhabitants a year.

Crypto Payments

Salary under an employment contract can only be paid (4) in fiat money. The following options remain:

crypto payroll from a foreign company;

accepting payments in crypto under a civil law contract.

Crypto Salaries

Crypto payments are valued (5) (converted) into Bulgarian leva at the time of receipt. They form insurance income and tax base from economic activity.

Legal

The Council of Ministers of Bulgaria adopted a Decree (6) in 2020, which contains information on creating a special register of companies - providers of crypto services to separately designate the obligation of such companies to comply with AML requirements. If you are interested in details of crypto regulation in Bulgaria, you may check the law text in English (7). Based on that law dozens of crypto entities (over 200) got VASP status in official register () managed by National Revenue Agency.

However, from that time regulations have changed. Now Bulgaria has two other crypto regulators: Bulgaria National Bank (BNB) and the Financial Supervision Commission (FSC). In two interviews in 2022, the BNB Deputy Governor in charge of the banking department expressed the general unofficial opinion that cryptocurrencies are unregulated in Bulgaria in every aspect, except for anti-money laundering (AML) purposes, and will remain unregulated until general European legislation is adopted (8). Back in early 2024, Bulgaria tightened the requirements for VASP and only 139 companies remained in the VASP register by March 2024.

Local authorities prepared a new crypto bill () to adopt MiCA - Bill on Crypto-assets Markets (BCAM) in Summer 2024. However, we haven't find information that the bill was approved by local parliament. Probably this bill get approval soon. It gives to operating entities 12 months of transition period to get CASP license. Also BCAM increases government fees () to get crypto license: from 2,500 to 15,000 EUR. Also capital requirements grew up - up to 350k EUR for stablecoin providers.

Taxation

Tax name	Index
PIT tax Min	10
PIT tax Max	10
Corporate tax (CIT)	10
Min Individual CGT (for crypto)	10
Max Individual CGT (for crypto)	15
Wealth tax Min	0
Wealth tax Max	0

In 2014, the Bulgarian National Revenue Agency stated (13) that any profit a person who is a tax resident of Bulgaria might gain from trading with Bitcoin and any kind of cryptocurrency is subject to an income tax of 10%.

PIT

A flat tax rate of 10% applies to all personal income, with some exceptions in obedience to PWC (14).

CIT

Corporate income is generally subject to corporate income tax (CIT) at a flat rate of 10% per PWC (15).

CGT

Capital gains are subject to the average PIT rate according to PWC (16), but there is a special rate for crypto - 15%

Links

1)Crime Index by Country 2023 Mid-Year

2)List of countries by intentional homicide rate

3)List of countries by firearm-related death rate

4)Cryptocurrency regulation in Bulgaria. LinkedIn

5)Наръчник за крипто данъци на Tax Monkey. Tax Monkey's Crypto Tax Guide. Article