Accounting for IT Companies & Freelancers

What we watch for

Topic	What matters
Invoices to EU companies	reverse charge under Art. 21(2) VAT Act; registration under Art. 97a; VIES return due by the 14th
Clients outside the EU (US, UK)	supply deemed performed outside the EU — no VAT, with the correct legal basis stated on the invoice
Upwork, Fiverr, Stripe, Payoneer	accounting for platform commissions, exchange-rate differences, reverse charge on platform fees
Salary or dividend	optimal combination of self-insured-person contributions + 5% dividend; comparison with an employment contract
Crypto assets	declaring income from disposals; accounting treatment as an asset
Software and subscriptions	expenses for cloud services from abroad — protocol under Art. 117 and VAT deduction

EOOD or freelance/sole-trader status?

At income up to about €25,000 a year and low expenses, freelance status is usually cheaper (25% statutory expense allowance, no annual financial statements). Between about €25,000 and €60,000 an EOOD whose owner is insured on the minimum usually costs less; above €60,000 freelance status is competitive again, because its contributions stop growing at the cap. An EOOD also gives limited liability and is easier if you plan to hire staff. See the full breakdown: legal-forms comparison.

How we work

Documents due by the 5th, VAT by the 14th, payroll and social contributions by the 25th, a monthly summary in plain language, and year-end closing at no extra charge. Full process description: Accounting services →

Frequently asked questions

Do I need VAT registration if I only work for US clients?

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Not under Art. 96 — the supplies are deemed to be performed outside the EU. If you receive services from the EU (e.g. Google Ads, Adobe), registration under Art. 97a is required.

How is income from Upwork taxed?

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As income from business activity, or through your company. The platform withholds a commission — the gross amount is revenue, and the commission is an expense. We keep the platform statements as the primary supporting document.

Can I pay myself only a dividend, without social contributions?

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Only if you perform no personal labour in the company. If you are actively working, the NRA requires you to be insured as a self-insured person. If you live in Bulgaria and have no health insurance on any other ground, you still pay the health contribution of €24.81 a month (Art. 40(5) of the Health Insurance Act).

Accounting for IT companies and freelancers