[HN Gopher] Bulgaria Freelance Taxes: Detailed Breakdown
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Bulgaria Freelance Taxes: Detailed Breakdown
Author : dimonomid
Score : 81 points
Date : 2022-01-09 08:32 UTC (14 hours ago)
(HTM) web link (dmitryfrank.com)
(TXT) w3m dump (dmitryfrank.com)
| firechickenbird wrote:
| Considering moving in Bulgaria after this, thanks!
|
| My Freelance taxes/social sec/retirement tax in Italy is on
| average 76% on a total of 80k eur average gross annual income
| (98th income percentile).
| romaniatax wrote:
| Try Romania - lower taxes, see my previous comment, higher
| standard of living and there's a small but decent size italian
| community here.
| akmarinov wrote:
| Actually go for Lithuania or Malta - even lower taxes than
| Romania and even higher standard of living (especially Malta)
| romaniatax wrote:
| While I am not so sure about Lithuania (lower GDP per
| capita than Bucharest, Bucharest being twice as developed
| as the rest of Romania, ibm, google, amazon, microsoft all
| having offices here with pay comparable to germany as a
| backup plan - could be wrong, but it sure is colder), Malta
| is now an option considering your comment - had no idea
| taxes are low in that country. Working from near a beach is
| the dream tbh.
| pedrosorio wrote:
| > While I am not so sure about Lithuania (lower GDP per
| capita than Bucharest ...)
|
| Why are we comparing a country with a city in GDP per
| capita terms? And is this meant to imply that standard of
| living is higher in Bucharest than, say, Vilnius?
|
| I would assume two cities with similar GDP per capita (as
| Vilnius and Bucharest) can have wildly different standard
| of living depending on many other factors.
| [deleted]
| romaniatax wrote:
| I can only speak about Bucharest as that's the area I
| know best. From what I see it has a slightly higher GDP
| per capita than Lithuania, and if you factor in the metro
| area, Bucharest has the same population as the country.
|
| "And is this meant to imply that standard of living is
| higher in Bucharest than, say, Vilnius?"
|
| Statistically, it is, albeit by a small margin. There is
| also Cluj Napoca (Romania's second or third largest city,
| similar size to Vilnius), also at a higher standard of
| living than both, but I don't know much about that city.
| Outside these two, Romania is a wasteland.
|
| Edit: Interesting:
|
| Vilnius is the major economic centre of Lithuania. The
| GDP per capita (nominal) in Vilnius county was EUR25,400
| (~US$30,000)[285] in 2019, making it the wealthiest
| region in Lithuania and the second-wealthiest region in
| the Baltic states.
|
| Almost one third of national taxes is paid by Bucharest's
| citizens and companies. In 2009, at purchasing power
| parity, Bucharest had a per-capita GDP of EUR26,100, or
| 111% that of the European Union average and more than
| twice the Romanian average.
|
| So likely Bucharest's GDP per capita is higher by a wider
| margin.
|
| Edit 2: The region Bucharest-Ilfov is the most developed
| region in Romania, with a GDP per capita of 139% of the
| European average. Bucharest thus surpasses other European
| capitals such as Athens, where the GDP per capita reaches
| 92% of the EU average, Madrid (125%), Berlin (118%), or
| Budapest (102%).
|
| https://rumaenien.um.dk/en/the-trade-council/about-
| romania
| jakub_jo wrote:
| Do you mean you'll only make 19.2k net from 80k gross? That
| sounds like an awful amount of taxes. I'm from Austria and here
| it's ~27% for social security and income tax is ranging from 0%
| to 55%. From 80k gross you would make around 42k net
| (Calculated without any tax benefits).
| charlesdm wrote:
| He is probably adding VAT to his income tax rates, which imo
| is not correct.
| xondono wrote:
| Why not?
|
| VAT is typically charged to customers and then compensated
| with the VAT you pay if you as a freelancer have expenses.
|
| For instance in Spain I have to increase my clients
| invoices by 21%, but if those invoices are for software,
| you have almost no purchases to offset that, so I need to
| pay that 21% quarterly.
|
| So to earn 50kEUR in net terms, I would need to charge
| 25kEUR extra just on income tax, plus 3.5kEUR on direct
| taxes on freelancing (because Spain), plus 21% VAT.
|
| It's no wonder the south of Europe does poorly.
| sfe22 wrote:
| Is vat not a tax? I think every government cost that is a
| percentage of income or spending should be calculated as
| your expense for the government. I think inflation also
| should be kept in mind as it is a hidden tax. Maybe harder
| to calculate.
| charlesdm wrote:
| VAT is a tax on consumption. But it is only levied when
| you take a certain action with your funds -- i.e. consume
| it. You could also (re)invest and let your capital
| compound.
|
| So yes, if you spend all your money to the last penny,
| that would be your tax rate. But many (higher income)
| people do not.
| sfe22 wrote:
| But all your income is meant to be spent. All people
| invest so they get to buy more in the future, not for the
| sake of it. If you don't pay VAT today, you will in the
| future.
| arthur234 wrote:
| Unless you invoice more than ~120kEUR it's generally more
| convenient, if possible, to cap your work/earnings at 65kEUR
| and pay less taxes, less social security contribution, and no
| VAT
| firechickenbird wrote:
| Yes, if you want to only pay around 50% (which is still
| insanely high) in taxes there is a 65k eur gross cap.
|
| Once you make 1 cent more, you get hammered with 76+%.
| stefano wrote:
| Depending on your age and how much you can deduct, the switch
| over can come as "low" as 90k. At 100k you should always be
| ahead in any case. And that's without counting the social
| security contributions. Depending on how you value them, it
| might be more convenient even under <90k.
| stefano wrote:
| Taxes at that income level are around 50%, including ~20k worth
| of social security contributions. You're probably mixing up
| VAT, advance payments and final balance payments to get to that
| 76%, which is NOT what you're really paying on your income,
| unless your accountant made some major mistake.
|
| BTW, if you invoiced 65k instead of 80k, you could use the
| "forfettario" tax regimen, which would result in a higher net
| income (yes, it's that crazy: you earn more if you earn less).
| ddorian43 wrote:
| Come to Albania, should be easier for italians. Assuming you
| work remote, no taxes until ~$120K, then it's 15% of profit.
|
| On your wage, you'll pay $50/month economist + $80/month
| health/pension + $80/month municipal taxes.
|
| These taxes changed this year. Previous year it was 5% if you
| pass $50K and 15% if you surpass ~$120K.
| tomcooks wrote:
| Albania also has great sea, amazing food and welcoming people
| sfe22 wrote:
| Do you have a source for this?
| ddorian43 wrote:
| You can see here:
| https://www.tatime.gov.al/eng/c/4/96/107/income-tax
|
| The thing is that remote programming is considered "export"
| and export has no VAT. The numbers above are literally the
| taxes I paid in 2021 & 2020 (I paid the 5% of profit tax on
| 2020). I may have missed any small thing like $14/month for
| electronic signature & software. Mostly less than $500/year
| in all other things combined.
|
| Edit: By "taxes changed this year" on parent comment, I
| meant in 2021. Not in 2022.
| akmarinov wrote:
| The only drawback is that insurance companies don't insure
| your car inside Albania for whatever reason.
| ddorian43 wrote:
| Can you be more explicit ? Minimum car insurance is
| mandatory, and you can pay for full insurance if you want.
| folmar wrote:
| Full insurance in European Union often has explicit
| exception for Albania if you bring your car from there.
| ddorian43 wrote:
| If you live in Albania you'll have to do the local
| insurance. I dont know how it is with foreign license
| plate.
| lultimouomo wrote:
| > My Freelance taxes/social sec/retirement tax in Italy is on
| average 76% on a total of 80k eur average gross annual income
| (98th income percentile).
|
| If you have a profit of 80k and your net income is 19k, you're
| doing something very wrong. This is not an accurate
| representation of Italian taxes and social security. A more
| reasonable net income for that gross is 40k; but you have to
| take into consideration that with around 24k of the other 40k
| you are paying a pension (not a very generous one, but still).
| galfarragem wrote:
| Maybe is just me but paying 76% taxes is dystopic. The
| economics of slavery are not that far.
| betaby wrote:
| Developers in many developed countries (Germany, Belgium) are
| in ~50% effective tax bracket for the salary, add there
| company paid taxes for the 'salary budget' or whatever it
| called properly and you certainly in ~60% territory.
| jstx1 wrote:
| > And if your income is smaller than 710 BGN, even if it's
| straight zero, then you'll have to pay social security as if your
| income was 710 BGN
|
| Is this really how it works? They're taxing people with 0 income?
| I guess it isn't relevant to the target audience of the article
| but it must suck for the unemployed.
|
| > Accountant fees: about 150 - 200 BGN per month independently of
| the income.
|
| This seems really high. Why do you need an accountant every month
| instead of once a year?
| dimonomid wrote:
| > Is this really how it works? They're taxing people with 0
| income? I guess it isn't relevant to the target audience of the
| article but it must suck for the unemployed.
|
| No no, the social security min base 710 BGN is only relevant if
| you declared that you're actively working, but in fact getting
| no income. If one decides to e.g. take a break for a year, they
| can declare that they don't actively working anymore, and thus
| they'll be paying a lot less (I don't know exact amounts
| though)
|
| And also, unemployment is a whole lot different story, but I
| don't know details about that.
|
| > This seems really high. Why do you need an accountant every
| month instead of once a year?
|
| As already mentioned by phoronixrly, yes it's because of the
| VAT registration. Having that registration, accountants have to
| do some paperwork every month.
| AdrianB1 wrote:
| Same in Romania, there is a tax minimum that you need to pay
| even if you don't make that kind of money. on the other side,
| there is no max on taxes, sky is the limit.
| phoronixrly wrote:
| > In either case (company or individual), due to our line of
| business, most likely you'll also need to do the VAT
| registration. It's something like 150 - 200 BGN.
|
| The VAT registration requires _monthly_ declarations of VAT.
| Tracking your VAT takes time for the accountants as they need
| to summarize all your invoices, expenses, and other paperwork.
| Links (conveniently only available in Bulgarian):
|
| * VAT form:
| https://nra.bg/wps/portal/nra/documents/taxes/zdds/35c5ece4-...
|
| * VAT law overview: https://nra.bg/wps/portal/nra/taxes/dds-v-
| balgariya
| [deleted]
| [deleted]
| WJW wrote:
| Not sure how it works in Bulgaria, but over here in the
| Netherlands if your income is lower than some level you can
| (with some conditions) apply for unemployment benefits that
| will include enough money for the social security taxes. This
| is a bit roundabout (why not just withhold the social security
| money from the benefits in the first place?), but such are the
| joys of a complex tax system evolved over multiple centuries.
| Hokusai wrote:
| In Spain for self employed workers there is also a minimum. If
| you do not want to pay it you need to unregister.
|
| This does not apply for employees. It's just for self employed
| workers as it's more of a fee for the paperwork that you
| generate for the government than a tax on income.
| xondono wrote:
| > it's more of a fee for the paperwork that you generate for
| the government than a tax on income.
|
| It's more of a total ripoff. I do less than 20 invoices a
| year so 300$/month is ridiculously overpriced if it's only
| supposed to cover "paperwork costs".
| atxbcp wrote:
| The numbers in this article are wrong, especially the company vs
| individual chart: you'd only pay 16% tax with a company if you
| paid yourself in dividends. Past a certain threshold, with a
| company, the best option is to pay yourself a salary every month.
| Then your tax rate will be in the 11 - 15% range depending on
| your income.
|
| source: I've got a company in Bulgaria
|
| conclusion: coming to Bulgaria to pay less taxes can definitely
| be done, but hire a local accountant and get professional advice.
| romaniatax wrote:
| In Romania you pay 7% tax for an LTD (dividend + corporate tax)
| and for up to 100k turnover you pay <2% as a consultant
| registered as a PFA (sole trader), or 10% as a non consultant
| but software engineer as a PFA. The cost of living is a bit
| higher than bulgaria but so is the standard of living (i.e.: I
| pay roughly 850 EUR rent pcm in Bucharest for a two bed flat,
| enjoy private health care and generally speaking a more decent
| living standard). Earn around 120k EUR per year and get to keep
| > 90% after tax as per above.
| fy20 wrote:
| I was working with a Ukrainian guy for a few years, and he
| was always complaining about taxes and how he wanted to pay
| less. Eventually he told us he was paying an effective tax
| rate of 7% :D
| romaniatax wrote:
| Considering how tax money are being used in these
| countries, even 7% is too much. I don't mind taxes, but
| there's too much embezzlement so some dude in the
| parliament can buy lambos. An issue common to countries in
| the region, but less so in Poland or Romania.
| mch0lic1 wrote:
| What about VAT? A turnover threshold in Romania is 88500EUR
| (as quick google search suggests). How on earth are you
| keeping 90% when VAT is 19% there.
|
| Asking for a friend :)
| saberdancer wrote:
| In my case since I work B2B and my clients are mostly B2B
| as well then VAT is not really cost to the other side. They
| just subtract VAT they pay to me from the VAT they need to
| pay.
|
| VAT is a problem if you work with end users directly, they
| can't "subtract" it like that.
| tudorconstantin wrote:
| One (LTD or PFA) only has to pay VAT if they invoice
| Romanian companies. Otherwise, based on what's called
| "taxare inversa" (reverse taxing), the invoices won't
| contain VAT, so it doesn't have to be paid either, even if
| the commercial entity is a VAT paying one.
| romaniatax wrote:
| No need to ask for a friend :P as in other countries
| mentioned here, VAT for intra community (or in my case non
| EU / UK) trade there is no VAT. You do have to register as
| a VAT company but since there is none you charge there is
| none to pay. My daily rate is 450 GBP (500 EUR more or
| less) and that's it. No VAT added despite being a VAT reg
| company. There is nothing dodgy, it is by design. The
| country benefits by preventing a brain drain and keeping
| money in the country.
| sbacic wrote:
| I was under impression it was 1-3% profit tax + 5% dividend
| with an upper limit of 1 million euros? Or has that changed
| (again)?
|
| Also, 850 pcm seems kind of high, at least compared to what I
| saw on olx.ro.
| romaniatax wrote:
| > I was under impression it was 1-3% profit tax + 5%
| dividend with an upper limit of 1 million euros? Or has
| that changed (again)?
|
| Correct, but on average mine works out around 7% and I have
| almost 0 company expenses as I don't partake in dodgy
| wizardry.
|
| > at least compared to what I saw on olx.ro.
|
| one does _not_ rent property on OLX and there are only some
| areas that are desirable (i.e.: have to look and feel of
| central or western europe).
|
| try imobiliare.ro and look around baneasa, floreasca,
| aviatiei, herastrau, or pipera (voluntari). prices vary but
| generally speaking a new building, parking included,
| security is in the range above.
| sbacic wrote:
| > one does _not_ rent property on OLX and there are only
| some areas that are desirable (i.e.: have to look and
| feel of central or western europe).
|
| Interesting. Why not? The apartments look pretty legit.
| romaniatax wrote:
| If you like them then there is no issue, but usually i
| find them of lower quality. Not saying there aren't
| decent apartments, but anything <650/700 is not great
| IMO. Also the areas I mentioned look and feel like a
| different country hence willing to pay more. No trying to
| be sure or demeaning sorry if i come across that way.
| sbacic wrote:
| No, it's fine. I assumed that you meant that olx.ro was a
| scam or something. Only after I visited immobiliare.ro
| did I realize the difference in quality between their
| offerings.
| romaniatax wrote:
| There are some scams too around OLX, but the quality is
| indeed way below what you find on imobiliare as you can
| see. One of the other reasons is that expats usually use
| the latter, thus you are more likely to find better
| communities. In my building there are Spanish, Italian,
| Canadian, US, UK, Nigerian tenants among Romanians
| working either tech or blue collar. Plenty of cultural
| exchange and, naturally, beer tasting. However, it's
| still Romania and services are not something I am happy
| with, nor can i get used to the aggressive driving and
| generally speaking the occasional hostility (people just
| getting pissed off for no reason).
| AdrianB1 wrote:
| 120k EUR per year is less than 5% of people in Bucharest and
| probably less than 1% country wide.
| romaniatax wrote:
| It is. Worth noting that I know no one among locals that
| are permanent employees to earn < 2500 EUR after tax. Pre-
| tax as a permanent that's 45-50k EUR a year (with some
| margin of error). That's for senior level devs with > 10
| years of experience. Junior or mid is way less. BI/Data
| science or web dev. Game dev and other types of development
| are low paid, as in western europe. I had my first shock
| when Microsoft offered a salary of 70k + bens for someone
| from cluj napoca to relocate to London around 2014, and
| they flat out turned it out because cost of living adjusted
| they earned more in Cluj. Go figure that out. Tbh if you
| earn 2.5k in Romania after tax you are way way better off
| than someone earning 4k in London.
| AdrianB1 wrote:
| I know several people just out of college that earn 50k
| in Bucharest or Cluj, not after 10 years. The salaries
| increased a lot in the past 5 years, but still 120k is
| extremely rare, above director level for employee type of
| contracts.
| romaniatax wrote:
| That's impressive!
|
| 120k is a medium level contract in the UK, at least for
| my background, so I am technically speaking ... cheap.
|
| In Romania, from what I gather, a director can mean a low
| level manager. Pretty soon the market will adjust and
| learn that they are not worth the money. CTO/CEO director
| levels, yes. Experienced Product Managers that actually
| drive the product, sure. But management that does nothing
| but crack the whip and demand to be addressed as
| "dumneavoastra" to inflate their egos are a dying breed.
| dimonomid wrote:
| Could you elaborate? Of course I do have a local accountant,
| and if what you're saying is true, I am disappointed she didn't
| mention that; they just said, paying salary will end up being
| more expensive than dividends.
| saberdancer wrote:
| I'm not from Bulgaria but I think what was said is that you
| depending on profitability of your company you can pay out a
| part of the profit as a dividend (using the lower tax rate
| until the cutoff) and then the rest as a salary.
|
| It's not one or the other. As a company owner you can use
| both the dividend and pay yourself a salary.
| dimonomid wrote:
| While I def agree that those are not mutually exclusive and
| I considered paying myself a salary, but paying a salary
| still involves a bunch of extra taxes, which end up being
| more than the dividend's 5%. At least that's what I had
| from my accountant, but I'd be happy to know details of how
| to make the combination of salary+dividends to require less
| taxes than just dividends.
| atxbcp wrote:
| By paying yourself with a salary via your company, you'd pay
| 10% revenue tax + health insurance (ZO) + social insurance
| (DZPO, DOO)... except the insurance part is capped on a
| maximum revenue of 3000 BGN or something like that... so as
| you make more money, your total tax rate converges to 10%.
| Take these numbers with a grain of salt because I'm no
| accountant, but I know for sure your accountant is wrong,
| because I know how much tax I pay, and that's close to 11.5%
| total.
| dimonomid wrote:
| Thanks, I'll research more into that.
|
| In the meantime, I clarified in the article that as long as
| a company is concerned, the article only focuses on the
| dividends option, and added the link to your comment.
| nkmnz wrote:
| > Bulgarian national currency is BGN, and as of now, its value is
| pegged to EUR with the fixed ratio of 1.95583. So, 1 EUR is
| 1.95583 BGN, and it doesn't change over time, at least not yet.
|
| 1.95583 is EXACTLY the exchange rate between Euro and Deutsche
| Mark that I still remember from the switch in 2002. Indeed, after
| some research I've just learned that the Bulgarian Lev has been
| pegged to the DM since 1997.
| secondaryacct wrote:
| Yes dont you dare complain of your x2 rate, ours in France was
| 6.55957 (rmb it fondly, didnt even need to google it), so right
| in the middle of an integer multiplier, and go multiply
| everything by 6 and 7 and cut in the middle.
|
| We had lots of anti-german grievances due to that mismatch
| between x2 for the DM and 6.5 for the Frcs :D
|
| Some were saying we all got to see who our masters were, but I
| dismiss it as the simplistic german mind which saw an
| efficiency somewhere and forgot the price everyone else had to
| grudgingly pay hehe (and why not pull the rug to yourself when
| there s no global optimum after all)
| dimonomid wrote:
| Oh wow, I actually didn't know that about Deutsche Mark!
| sbacic wrote:
| Not all that unusual really. Before the EURO replaced the DM,
| many things in Croatia, such as cars and real estate were
| denominated in DM. This was due to rampant inflation
| (especially in the 80s and 90s) causing people to lose faith in
| the local currency.
| avrionov wrote:
| The big difference is that Bulgaria has a currency board,
| which was agreed to with the International Monetary Fund and
| the World Bank. This was done to stabilize the exchange rate
| and the economy in 1997. The exchange rate has been fixed for
| the last 24 years.
| SantiagoElf wrote:
| Bulgarian here. :)
|
| We like to be hush-hush about the benefits of living in Bulgaria.
|
| Nothing at the moment beats the taxes, location and potential of
| Bulgaria in Eastern Europe :)
|
| You can ask me any questions related to living cost, places,
| customs, etc or anything related to Bulgaria.
| bogdanu wrote:
| > Nothing at the moment beats the taxes, location and potential
| of Bulgaria in Eastern Europe :)
|
| I wouldn't be so sure, haha. I live in RO and this year I've
| paid less than 5% in taxes (half of them being pension fund and
| 25% health insurance).
| romaniatax wrote:
| Hold on I am also in Romania and pay 7%. Are you classed as
| PFA Consultant? If so then there's no programming "allowed"
| else it's the wrong category. Which tax code are you using so
| I can switch?
| bogdanu wrote:
| Yup, I'm a PFA with a fixed taxation rate (norma de venit)
| using 6202. Keep in mind that taxation rates differ by a
| lot for each county.
| romaniatax wrote:
| 6202 is strictly for consulting services (ie. no
| programming). was advised by anaf and my accountant not
| to use it as it would be, basically, fraud (since i also
| write code not just "advice" - which is what the romanian
| tax system defines as consulting). use it at your own
| risk as they can back-tax if they catch you.
|
| either way thanks for this!
| lostmsu wrote:
| How are Romanian taxes on capital gains? VAT?
| bogdanu wrote:
| Yes, I'm aware. I'm not worried because in my contracts
| it's mentioned that I offer consulting services.
| romaniatax wrote:
| Well that's great but I decided not to massage my
| contracts to accommodate for an _even_ lower tax.
| Oron7 wrote:
| In which cities do you think there is the most work in the IT
| sector? Also, how do you rent a place? With agencies, do they
| want a lot of documents and stuff? Thanks!
| SantiagoElf wrote:
| Sofia, without a doubt - the capital.
|
| Not much documents are needed in order to start working with
| an agency due to the fact that the market is starved for IT
| specialists.
|
| It's not uncommon a person with 0 experience to start at 2K
| BGN which is around 1K eur.
|
| Ranges are ( these are NET salaries after tax): - Super Jr ->
| 1k - 1.5k EUR
|
| - Juniour -> 1.5k - 2.5k EUR
|
| - Mid-Level -> 2.5k - 3.5k EUR
|
| - Sr. Dev -> 3.5k -> ~4-5k EUR without being a people manager
|
| It's full of collocation workspaces like:
|
| https://betahaus.bg/en/
|
| http://soho.bg/index-en.php
|
| https://cosmos.camp/
|
| http://cosharehive.com/
|
| https://trevorworkspaces.com/
|
| etc. etc.
| overfl0w wrote:
| The ranges mentioned are in BGN. Nobody will pay 1.5k -
| 2.5k EUR to a junior.
|
| source: I work there
|
| Also this: https://noblehire.io/salary-survey-2021/
| SantiagoElf wrote:
| Nope EUR. If you are making less than 3000 BGN as a
| juniour in Sofia, you are getting robbed.
| p2detar wrote:
| Can you provide any sources for these salaries? Thanks.
| [deleted]
| eloff wrote:
| I just want to throw out there that this is nice, but it's zero
| in Panama on foreign source income. The country uses the US
| dollar and is quite stable and modern. I used to live there, and
| I want to go back to that tax system as soon as I can.
| JacobAldridge wrote:
| My understanding of "foreign sourced" is that it usually
| applies to things like pensions, dividends, rental income. If
| you're working, the source of the income is where you do the
| work - not saying you can't fly under the radar and not pay
| tax, and each country has its own specific nuances and laws so
| Panama may allow it, but if you're living and working remotely
| in a territorial tax country then that's "locally sourced
| income" unless you can find laws or rulings to the contrary.
|
| "The general rule for sourcing wages and personal services
| income is controlled by *where the service is performed*. The
| residence of the recipient of the service, the place of
| contracting, and the time and place of payment are irrelevant."
| -
| https://www.irs.gov/pub/int_practice_units/ftc_c_10_02_05.pd...
| (my emphasis)
| dimonomid wrote:
| Thanks for that info!
|
| Yeah taxes in Bulgaria are lower than the average, but not
| lowest for sure. Good to know about Panama.
|
| What about social security though?
| eloff wrote:
| No social security to speak of. Health care is excellent and
| reasonably priced, so not too big a deal. Set aside some
| savings and get some basic insurance / critical illness
| insurance. No pension either, so plan for your own
| retirement.
|
| With what you save on taxes you can do that and take three
| months of awesome vacation a year anywhere you want and still
| save money over most countries.
| dimonomid wrote:
| So they literally don't take any tax for foreign income and
| don't require any social security payments? That's
| seriously awesome. Actually I specifically like it because,
| while I'm paying here those social security contributions
| for pension etc, I've no idea if I'm gonna be able to use
| them for the retirement, since I'm not a citizen, and not
| sure if I'm ever going to be one.
|
| By paying those I'm helping other people though, which is
| not a bad thing I guess. But I'd definitely prefer this to
| be more of a donation and less of a tax.
|
| Anyway, thanks again. You got me researching about Panama
| this evening.
| mdrachuk wrote:
| Simplified taxation for contractors in Ukraine (pe simplified
| system) is basically 5% + ~$500. You are allowed to make up to
| around $250,000 per year this way.
| phoronixrly wrote:
| Keep in mind that Bulgaria has just elected a reformist
| parliament for the first time in more than 10 years. Maybe wait a
| year or two before buying a one-way ticket as the government may
| raise taxes, especially on the unaffected by the anti-COVID
| measures. Or they could lower taxes even more if they manage to
| get on top of the rampant tax evasion and grey economy (one can
| hope).
|
| Also there are other small things to consider:
|
| * Healthcare in Bulgaria is severely underfunded _and_
| understaffed. Not only that, but the incentive system for
| hospitals is currently IMO completely broken, as they get paid
| per patient i.e. more sick people = more pay, not more _healthy_
| people. My current belief is that you need to live in a large
| city if you want to have a chance to survive an incident or a
| heart attack /stroke. Source: trust me, I live here, have lost
| several family members due to poor healthcare, and have had one
| receiving incompetent treatment so the hospital can receive more
| money from health insurance.
|
| * Same goes for childcare/education.
|
| * * There is currently a severe deficit of kindergartens in the
| large cities -- Sofia (~10k children left out), Plovdiv, Varna
| and Burgas.
|
| * * Bulgarian public education has been in a freefall for the
| last 10 years as evidenced by dropping results in state exams and
| international studies (https://gpseducation.oecd.org/CountryProfi
| le?primaryCountry=...). Private schooling is available in large
| cities and unsurprisingly is limited. Take into account potential
| need of home-schooling if you plan to start a family here.
|
| * The public institutions are (currently) not working or corrupt.
| There are issues with the judicial system, the prosecution, the
| police, etc. Tl; dr: better hope you won't have to deal with
| those before major reforms and definitely don't rely on having
| your rights protected by them. You are on your own here.
|
| Do not be under the illusion that Bulgaria is just like
| $western_european_country but with less taxes and cheaper
| housing. Everything comes at a price. You will not find many
| things you take for granted in your home country here.
| ostenning wrote:
| On the plus side Bulgarian food is excellent
| phoronixrly wrote:
| Ah yes, sorry for the negativity above. Just wanted to point
| out that moving here should be a well thought out decision
| and preferably not based on a single not-entirely-correct HN
| post. There are trade-offs and there's more to a country and
| to life than low taxes...
| romaniatax wrote:
| There is plenty of negativity surrounding east europe on HN
| so there is no need to remind people they won't get the
| same quality of life as in western europe, but it's not
| that bad. At least that's what i keep telling myself and
| counting invoices. I saved enough to buy a deeecent flat in
| London (>600kEUR).
| dimonomid wrote:
| > moving here should be a well thought out decision and
| preferably not based on a single not-entirely-correct HN
| post. There are trade-offs and there's more to a country
| and to life than low taxes...
|
| While I definitely agree with that (and in fact my own
| reasons to move to Bulgaria back in the day were not about
| taxes at all), could you elaborate on the not-entirely-
| correct part? What exactly is not correct?
| gcbirzan wrote:
| If by those unaffected by COVID you mean self-employed people,
| not sure that's really the case, as taxes for people that are
| employed by a Bulgarian company are not THAT much higher. Using
| the 10k BGN example, your net salary is 8627.94, and the
| employer (of course, excluding accounting and all that stuff)
| pays 10567.60.
|
| I don't remember exactly the numbers for self employed, but if
| his are correct (and they seem a bit off, maybe because of the
| missing health insurance), the difference is basically 5-600
| BGN, so 5-6pp.
| phoronixrly wrote:
| The plans are to raise the maximal social security income
| ("maksimalen osiguritelen dokhod"). This will arguably*
| disproportionately affect people with incomes above 3000 BGN.
|
| *) Arguably because (while they could easily afford to pay
| more tax) higher income employees usually get taxed on their
| _actual_ amount of income as opposed by the rampant tax
| evasion among employees with lower pay and their employers
| (so called grey economy: employers declare they pay a given
| employee the BG equivalent of the US 'minimum wage' which
| the employee receives monthly via bank transfer, while the
| rest of the salary is given in cash and not declared).
| gcbirzan wrote:
| Didn't they raise it? To be fair, I've always thought it's
| way too low.
| romaniatax wrote:
| > Do not be under the illusion that Bulgaria is just like
| $western_european_country but with less taxes and cheaper
| housing. Everything comes at a price. You will not find many
| things you take for granted in your home country here.
|
| Technically speaking you are right: there is almost no police,
| no public health care (quality is too low to even step foot in
| a public hospital), school are pretty low quality, and people
| tend to be rude. But for a temporary gig (I am in Romania due
| to taxes for a few years) it can be beneficial. It's not as bad
| as say India or Pakistan as east eu countries are orders of
| magnitude more developed, and if you can put up with the
| nuisance for a while then you can return to your western
| country and maybe afford a deposit to stop living with
| flatmates as an adult. Worth while in my case.
| otar wrote:
| I am a big believer in Flag Theory and stuff...
|
| I currently pay about 2,5% on my gross income ($100k+) as a
| software developer, which is more than most of EU/US developers
| are left after tax...
|
| In a short, if you're willing to make some trade-offs and
| optimize your taxes, you'll be legally retaining your hard earned
| $$$. Among the trade-offs, tax residency is the most important.
| Things are a bit complicated for US citizens as the government
| taxes their income regardless of their tax residency,
| citizenship-based.
|
| P.S. That 2,5% includes all the fees like accounting, legal
| consultations and banking fees (account maintenance,
| transfers...)
| tomcooks wrote:
| I'm all ears, if you want to explain how this is possible
| without breaking multiple laws and cross-country agreements
| bobcostas55 wrote:
| Go on...
| charlesdm wrote:
| Unless you're actually living in a tax haven or a third world
| country with no CFC laws, you're almost certainly breaking the
| law with this.
|
| The conversations I have had with people who have found the
| gold wheel is mind boggling, and they almost all get in trouble
| at some point.
| PaywallBuster wrote:
| US citizens can move to Puerto Rico and pay 5% tax, very
| legally
| refurb wrote:
| Based on my limited knowledge it seems possible. The US
| allows you to exclude $106k USD in foreign income if you're
| not a US resident. You can also add some housing costs to
| bump it up.
|
| Many countries won't tax you if you work there and a) all
| your income and work is outside the country, b) you do t
| spend enough time there to become a tax resident (I've seen
| 180 days for some).
|
| So if you're willing (and able) to split your time between 3
| countries, not go back to the US and get all of your income
| from outside those 4 countries, you could effectively pay
| little to no income tax and it would be legal.
|
| But please hire a CPA.
| AdrianB1 wrote:
| It may be possible; maybe not 2.5%, but total tax rate below
| 10% is possible =legally= in some places. Yes, it is a punch
| in the face from the governments to people that pay huge
| taxes like 50-70% in most of Europe, but this is what
| governments are very good at doing: discriminating.
| lowpro wrote:
| Plenty of first/second world country have more friendly tax
| laws. Many don't tax foreign income, and if you live outside
| the US for 300 days per year, you get a $100k tax write off
| up front.
|
| There are many legal ways to live in nice places and pay low
| tax.
| jakozaur wrote:
| Similar as in Poland:
|
| 1. Long-term remote contracting as software engineers is legal.
| No need to worry about being forced into being employee.
|
| 2. Regressive taxation at very low level (e.g. recently in Poland
| you can opt-in for 12.5% taxation of revenue).
| cromka wrote:
| Just moved back to Poland after 6 years in US, looking to work
| remotely for US-based contractors. Dare to elaborate, please?
| First time I hear of this.
| michalmj wrote:
| Google "ryczalt dla programisty". If you play your cards
| right in Poland you can get legally around ~10% tax total
| (this includes national insurance ~5% and IP Box 5% for
| programmers).
| cromka wrote:
| Thanks, much appreciated!
| lukasm wrote:
| If you are a "creative" person (software engineer, designer
| etc.) you can just pay a flat rate for all taxes and
| insurance. For example: 100k revenue will equal to 12k in
| income tax + medical insurance + social security. In total,
| it would be less than 20k (17-20% depending on a few
| factors).
|
| Another option would be to use IP BOX relief. If you are
| producing IP your tax will be 5%. If you fly to a customer,
| have a company car, you need a lot of equipment, your tax can
| be even lower.
|
| https://www.gov.pl/web/poland-businessharbour-en/tax-
| reliefs...
| cromka wrote:
| Thanks, much appreciated!
| lukasm wrote:
| you have to decide what kind of taxation scheme you have
| to you after your first invoice. It's for the whole year.
| You can change it next year.
| jwr wrote:
| If you are self-employed and running a SaaS, the rate is
| actually 8.5% of revenue (PKWiU 58.29.40). Source: I am self-
| employed and running a SaaS. With my cost structure my
| (calculated for comparison) _effective_ _income_ tax rate is
| 13.5%, and that includes all social security and health
| insurance payments. It 's unbelievably good, socially unjust,
| and I don't think it will last, but here we are.
|
| Poland also happens to be a really nice place to live, although
| if you don't speak Polish (or don't have a friend/spouse who
| does), dealing with government institutions can be a pain.
|
| Oh, we also have a terrible chaotic populist government and a
| bunch of other problems, but that seems to be the case
| everywhere these days, so.
| AdrianB1 wrote:
| Poland is really nice, except if you don't like cold weather
| and you like to swim in the sea. Even some of my native
| Polish colleagues complain about the cold, especially the
| older ones.
| mch0lic1 wrote:
| Getting an accountant is really one of the best decisions you can
| make especially if you make above average income or income from
| multiple streams no matter the place you live in.
|
| I've done my taxes for individual business for 8 years myself,
| but when I've moved abroad I needed help with setting up business
| as I was unfamiliar with local laws and regulations. I hired a
| great accountant who helped me with setting up both individual
| business and limited company. I'm getting schooled on how I
| should do things to take advantage of different opportunities and
| tax breaks - things I never though or did before.
| svilen_dobrev wrote:
| and you can compare some cultural stuff and see if you like it.
| https://www.hofstede-insights.com/product/compare-countries/
|
| .bg is pretty middle ground (culturally and societaly) between
| (very) east and (very) west, with all the pros/cons of that. A
| bit more towards the west.. as situated in south-east Evropa (the
| original Greek word of Europe) after all, but it depends. A
| little bit of south as well..
|
| As said elsewhere, Quite some things might be missing or not
| working but then.. you might not really need them. After being
| around the world, i am back here, for.. the vitality and variety
| of life that happens. Not that it is easy, but it is interesting.
| YMMV
| gcbirzan wrote:
| I am 100% sure long term residents also pay health insurance. Are
| you an EU citizen?
| dimonomid wrote:
| I'm not an EU citizen, no. And while I was living there as a
| long-term resident, I didn't pay 8% health insurance.
|
| Perhaps it's indeed different for EU citizens, I'm not sure. I
| should probably mention it there.
| tchalla wrote:
| The question is - Do you have to? You may have not paid it
| but that doesn't tell if one has to.
| dimonomid wrote:
| This was confirmed by at least two reputable accountants,
| so yeah, I'm 100% sure I didn't have to pay 8% health
| insurance while being a long term resident (and not an EU
| citizen).
|
| Actually, I _did_ pay some health insurance, but it had
| nothing to do with the business and it wasn't 8% or
| anything like that. It's like the same kind of health
| insurance that even tourists have to get.
| gcbirzan wrote:
| Ah, I see where the confusion comes from. I assumed you
| meant you don't have to pay any. Though, I'm curious, how
| much is it? I went to check in the "Ordinance on the
| General Terms and Conditions, the Minimum Insurance
| Amount, the Minimum Insurance Premium and the Procedure
| for the conclusion of the mandatory medical insurance of
| foreigners who reside shortly or prolonged in the
| Republic of Bulgaria or transit through the country"
| (such a title), it says the price of the premium is
| determined according to article 65 of the insurance code,
| but that one is referring to something else. Oh, well.
| dimonomid wrote:
| > Though, I'm curious, how much is it?
|
| I was buying just some bare minimum required insurance,
| and it was very low, less than 200 BGN per year.
| charlesdm wrote:
| It seems weird you are forced to distribute the dividend in
| BGN. Pay the withholding tax, yes. But the dividend itself?
| Most accountants can calculate the corresponding currency
| equivalent for the dividend being declared on the payout day.
| Worth looking into.
|
| Also, does Bulgaria support interim dividends? The loan set-
| up, while not an issue, can perhaps be avoided by use of
| interim dividends.
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