How to Distribute Dividends in Bulgaria as a Foreign Shareholder – 2025 Guide
If you are a foreign shareholder, properly managing dividend distribution in Bulgaria is essential for legal compliance and tax optimization.
At T&G Consulting ✅ we help investors minimize unnecessary tax costs and plan their payments effectively in 2025.
When Can Dividends Be Paid?
In Bulgaria, dividends can only be paid if a profit has been generated. There are two options:
- After the end of the financial year – following the approval of the annual financial report and confirmation of the profit. This is the most common practice.
- As interim dividends – during the year, if there is sufficient profit for the relevant period. For this, you need:
- Quarterly financial statements proving the profit;
- A resolution by the general meeting of shareholders or the sole owner;
- The same tax procedures as for annual dividends.
Mandatory Steps for Dividend Distribution
- Shareholders’ Resolution – holding a General Meeting or issuing a decision by the sole owner.
- Dividend Protocol – documenting the exact amounts allocated to each shareholder and the payment deadlines.
- Accounting Records – recording the dividends as liabilities in the company’s accounting books.
- Withholding Tax – calculating and paying the 5% withholding tax and submitting the declaration to the Bulgarian tax authorities (NAP) within the deadline.
Taxation of Foreign Shareholders
By default, foreign shareholders are subject to a 5% withholding tax. However, a reduced rate or full exemption may apply under a Double Taxation Avoidance Agreement (DTA). To benefit from this:
- Obtain a Tax Residency Certificate from your country;
- Submit it together with the required form to NAP before the dividend payment.
If the documents are not submitted on time, the standard 5% tax will be withheld, and reclaiming it later is a lengthy and complex process.
How Are Dividends Paid?
💶 Payment can be made:
- To a Bulgarian or foreign bank account;
- In BGN, EUR, or another agreed currency;
- Via bank transfer, with proper documentation of every transaction.
Your accounting records must accurately reflect the payment, and the tax must be reported on time to avoid penalties.
Useful Tips for 2025
- ✅ Plan your dividend distributions in advance with your accountant to ensure full legal compliance.
- ✅ Keep all protocols and tax documents — they may be required during audits.
- ✅ If you are considering reinvesting dividends, seek advice on corporate tax optimization strategies.
Proper dividend distribution in Bulgaria requires close attention to tax rules and accounting compliance. Foreign shareholders must strictly follow all procedures to avoid penalties and benefit from tax reliefs.
With the T&G Consulting 💼 team by your side, you can be confident that everything is handled legally, efficiently, and securely.
Contact us today and ensure a smooth and hassle-free dividend distribution in 2025! ✅
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