Feeling boxed in by high taxes and endless paperwork? If you’re an entrepreneur or digital nomad searching for a smarter, more flexible way to run your business in Europe, Bulgaria’s sole proprietorship status—known locally as Едноличен търговец (ET) or Sole Trader—offers a streamlined, low-bureaucracy solution. In this guide, we break down the facts, numbers, and practical steps you need to leverage Bulgaria’s ET status for optimal tax efficiency in 2025.
Understanding the Sole Proprietorship (ET) in Bulgaria
The Едноличен търговец (ET) is Bulgaria’s answer to the classic sole proprietorship. It’s a business status that allows individuals—both Bulgarian citizens and EU/EEA nationals—to operate as freelancers, small traders, or service providers without forming a separate legal entity. Instead, the business and the individual are legally one and the same, which means:
- Full personal liability: You’re responsible for all business obligations.
- Simple registration: Set up your ET at the Bulgarian Commercial Register.
- Direct taxation: Profits are taxed as personal income, not corporate income.
Key Features at a Glance
| Feature | Details (2025) |
|---|---|
| Status Name | Едноличен търговец (ET) / Sole Trader |
| Who Can Register? | Bulgarian citizens, EU/EEA nationals |
| Legal Entity? | No – the individual and business are the same |
| Personal Income Tax Rate | 15% flat rate on business profits |
| Social Security Contributions | Mandatory, based on declared income (with min/max thresholds) |
| Patent Tax Regime | Available for turnover ≤ BGN 50,000 (≈ $27,500) and certain activities |
| Registration Authority | Bulgarian Commercial Register |
Why Bulgaria’s ET Status Appeals to International Entrepreneurs
For those seeking to minimize state interference and maximize fiscal efficiency, the ET status stands out for its simplicity and flexibility. There’s no need to maintain a complex corporate structure, and the flat 15% personal income tax rate (as of 2025) is among the lowest in the EU. Social security contributions are required, but you have control over your declared income within legal thresholds, allowing for strategic planning.
Pro Tip #1: Registering as an ET in Bulgaria
- Check your eligibility: You must be a Bulgarian citizen or an EU/EEA national.
- Prepare your documents: ID, proof of address, and business activity details.
- Apply online or in person at the Commercial Register.
- Pay the registration fee (varies, but typically under BGN 100 ≈ $55).
- Receive your ET registration number and start invoicing clients immediately.
Pro Tip #2: Optimize Your Tax Burden with the Patent Tax Regime
If your annual turnover is below BGN 50,000 (≈ $27,500) and your business activity qualifies, you can opt for the patent tax regime. This means paying a fixed annual tax instead of the standard 15% on profits—a potential game-changer for low-overhead freelancers and micro-entrepreneurs.
- Check if your activity is eligible for the patent tax regime (see official list).
- Apply for the regime during registration or at the start of the tax year.
- Pay the fixed patent tax, which varies by municipality and activity.
Pro Tip #3: Manage Social Security Contributions Strategically
Social security is mandatory for ETs, but you can declare your income within set minimum and maximum thresholds. This gives you some flexibility to optimize your net income and future benefits.
- Review the current thresholds on the National Revenue Agency website.
- Declare your income accordingly when filing.
- Adjust your contributions as your business grows or contracts.
Concrete Example: Freelancer in Sofia
Imagine a web developer from Germany relocating to Sofia. She registers as an ET, invoices €40,000 ($43,000) per year, and pays 15% tax on her profits. If her turnover drops below BGN 50,000 (≈ $27,500), she could switch to the patent tax regime for even lower, predictable taxes—no corporate red tape, no double taxation.
Summary: Key Takeaways for 2025
- Bulgaria’s ET status is open to both locals and EU/EEA nationals.
- Flat 15% personal income tax on business profits (2025).
- Mandatory but flexible social security contributions.
- Patent tax regime available for small-scale activities and turnover under BGN 50,000 (≈ $27,500).
- Simple, fast registration process—no need for a separate legal entity.
For more details, consult the official resources: