Dividend or salary
With a dividend, the total burden is 14.5% (10% + 5% on the remainder). Paying yourself as owner-manager under a management contract triggers ~32.7% social security up to the maximum income of €2,300 plus 10% tax — more expensive, but it gives social security entitlement and is a recognised company expense. The optimal combination is usually: self-employed social security on a chosen income, plus a dividend for the rest.
When a dividend can be distributed
After approval of the annual financial statements — for profit from prior years — or in the interim, based on an interim balance sheet. It cannot be distributed if net assets would fall below capital plus reserves as a result (Art. 133 of the Commerce Act). Distribution without documents and a formal decision is a hidden distribution, carrying a 20% penalty.
Deadlines and documents
| Step | Deadline | Document |
|---|---|---|
| Distribution decision | after approved annual statements or interim balance sheet | owner's minutes/decision |
| Withholding the 5% tax | at payment | payment order to the owner with tax withheld |
| Payment to the National Revenue Agency | by the end of the month after the quarter | payment code 11 00 00 |
| Declaring | same deadline | declaration under Art. 55 PITA / Art. 201 CITA |
| For foreign owners | under a double-tax treaty — a request to apply it | certificate of tax residence |
Frequently asked questions
How is dividend tax calculated?
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10% corporate tax is deducted from pre-tax profit. An individual then pays 5% dividend tax on the remainder, withheld by the company at payment. Total burden: 14.5%.
Is there tax if the dividend goes to a company, not an individual?
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No — a dividend to a Bulgarian company or an EU/EEA company is exempt from tax on distribution (0%); the burden remains only the 10% corporate tax.
Is it more efficient to pay myself a dividend instead of a director's salary?
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A dividend gives a larger net amount, but carries no social security entitlement and is not a deductible expense for the company. The usual practice is self-employed social security on a chosen income plus a dividend for the rest.
When must dividend tax be paid to the National Revenue Agency?
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By the end of the month following the quarter of the distribution decision — together with a declaration under Art. 55 of the Personal Income Tax Act (individual) or Art. 201 of the Corporate Income Tax Act (legal entity).
More on deadlines and hidden profit distribution: Dividend tax 2026: rate, deadlines, examples. All rates in one place: Taxes 2026.
Sources
Corporate Income Tax Act Art. 20, 194; Personal Income Tax Act Art. 38, 65; Commerce Act Art. 133. Verified 3 September 2026. Results are indicative.