Taxes and Income Reporting for Ukrainians in Bulgaria: Employment, Sole Proprietorships, Remote Work, and Freelancing

For many Ukrainians, moving to Bulgaria begins with practical questions: where to live, how to open a bank account, how to enroll their children in school, and how to work legally. But almost immediately, a less obvious issue arises— Taxes for Ukrainians in Bulgaria. Do I need to pay taxes on my Ukrainian salary? What should a sole proprietor do if a client pays into a Ukrainian bank account? Can I continue freelancing without registering in Bulgaria? And how can I avoid ending up in a situation where I have income but its tax status is unclear?

There is no one-size-fits-all answer: much depends on the length of stay, source of income, type of contract, family and housing situation, status in Bulgaria, client base, and where the work is actually performed. This article is not a substitute for consulting an accountant, but rather a practical guide to possible solutions: what scenarios might arise, what to check, and what documents to prepare before speaking with a specialist or employer.

Important: Tax regulations and administrative thresholds are subject to change. Before filing a tax return, registering a business, or closing a Ukrainian sole proprietorship, it is advisable to check the current requirements with a Bulgarian accountant and, if necessary, a Ukrainian tax advisor.

Where to Start: Three Questions That Define Tax Logic

Before calculating taxes, it is important to understand not the amount of income, but the legal framework. For a Ukrainian living in Bulgaria, there are usually three key issues.

Where are you a tax resident? If a person becomes a tax resident of Bulgaria, the country may take an interest not only in Bulgarian income but also in foreign income. If the person retains Ukrainian residency, the situation may be different, but this does not always exempt them from obligations in Bulgaria.
Who pays the income? A Bulgarian employer, a Ukrainian company, a foreign client, a marketplace, or your own sole proprietorship or company—these all involve different accounting regimes.
Where is the work actually done? If you are physically located in Sofia, Varna, Burgas, or Plovdiv and provide services online, this may be relevant for tax purposes, even if the money comes from Ukraine or another country.

In practice, the mistake often begins with the statement: «The money is deposited into a Ukrainian bank account, so Bulgaria has nothing to do with it.» This is not always the case. The location of the bank account alone does not settle the matter. What matters are residency, actual business activities, contracts, permanent residence, and economic ties.

Tax Residency: Why 183 Days Is Not the Only Criterion

In many countries, including Bulgaria, the length of stay is taken into account when determining tax residency. A common benchmark is 183 days within a specific period. However, this is not the only criterion. The location of the center of vital interests may also be analyzed: residence, family, employment, children in school, medical care, regular expenses, and business activities.

For example, if a Ukrainian lives in Bulgaria for most of the year, rents an apartment, their child attends a local school, their primary work is carried out from Bulgaria, and their returns to Ukraine are short-term, a tax advisor will most likely consider Bulgarian residency to be a significant risk or an established fact. However, if a person has come for a short period, and their family and primary employment remain in Ukraine, the conclusion may be different.

There is a double taxation treaty in effect between Ukraine and Bulgaria, but this does not mean that taxes do not have to be paid anywhere. Its purpose is to allocate taxing rights and provide a mechanism for tax credits or exemptions in certain cases. Applying the agreement requires certain documents: proof of residency, tax payment certificates, contracts, and the correct classification of income.

Main Income Scenarios for Ukrainians in Bulgaria

Below is a practical table to help you determine which scenario to start your analysis with. It is not a substitute for an individual consultation, but it shows what questions an accountant will ask.

Script	What's Usually Important to Check	The Main Risk
Employment Under an Employment Contract in Bulgaria	Employment contract, registration with the employer, withholding of taxes and contributions	Informal employment or an incorrect type of contract
Remote Work for a Ukrainian Employer	Residency, place of work, withholding in Ukraine, contract	Double Taxation or Lack of Tax Records in Bulgaria
A Ukrainian sole proprietor residing in Bulgaria	Where the business operates, customers, accounts, and residency status	Recognition of Income as Taxable in Bulgaria
Freelancing for International Clients	Registration of self-employment or a business, invoices, and VAT obligations	There is income, but no registration or reporting
A Bulgarian-owned company	Accounting, Contracts, Expenses, Profit Distribution	Mixing personal and business funds

Employment Under an Employment Contract in Bulgaria

The simplest option is to work officially for a Bulgarian employer. Typically, the employer draws up an employment contract, calculates your salary, withholds income tax and social security contributions, and submits the necessary information to the Bulgarian authorities. For the employee, this is administratively simpler because the employer handles a significant portion of the paperwork.

However, employees should still check a few things:

Is there a written employment contract that clearly explains the terms of pay, the work schedule, and the probationary period?;
Does the actual salary match the amount stated in the documents?;
Do you receive pay stubs or another document that breaks down your earnings and deductions?;
Do you understand what social security and health insurance contributions are paid?;
Does the employer suggest replacing the employment contract with a civil contract without explaining the consequences?.

If you’re just looking for a job, it’s helpful to familiarize yourself with the local job market and employers’ requirements in advance. The website also features a separate article on working in Bulgaria for Ukrainians, which covers job searches, typical fields of employment, and practical aspects of finding a job.

Example

A Ukrainian woman lives in Varna and has been hired as an administrator at a local company. Her salary is paid into a Bulgarian bank account, her employment contract was drawn up by the employer, and deductions are listed on her pay stub. In this situation, the main tax process usually goes through the employer. However, if she also has income from a Ukrainian sole proprietorship or freelance work, that income must be analyzed separately.

Remote Work for a Ukrainian Company

A common situation: a person has moved to Bulgaria but continues to work for a Ukrainian employer. Their salary is paid into Ukraine, taxes and contributions are withheld in Ukraine, and the employment contract has not changed. At first glance, everything seems straightforward, but questions arise when it comes to long-term residence in Bulgaria.

If the work is actually performed from Bulgaria and the individual becomes a tax resident of Bulgaria, the Bulgarian authorities may consider such income to be reportable. In this case, taxes already withheld in Ukraine may be relevant for avoiding double taxation, but they do not automatically resolve the issue. Documentation and the correct classification of income are required.

What to prepare in advance:

an employment agreement or contract with a Ukrainian company;
statements of gross pay and taxes withheld;
bank statements showing incoming transactions;
proof of the period of residence in Bulgaria;
documents regarding your status in Bulgaria and your registered address, if available;
advice on whether you need to file an annual tax return in Bulgaria.

It is also important to consider the risks to the employer. In some situations, the long-term employment of a foreign worker may raise administrative or tax issues for the company. This is particularly important for managers, salespeople, business representatives, and individuals who enter into transactions on behalf of the employer.

Ukrainian Sole Proprietor: Is It Possible to Continue Working from Bulgaria?

Many Ukrainians already had sole proprietorships before moving and continued to receive payments from clients into their Ukrainian bank accounts. The mere fact of having an individual entrepreneur business in Ukraine does not prevent you from residing in Bulgaria. However, the tax situation becomes more complicated if the actual work, negotiations, order fulfillment, and client management take place from Bulgaria.

The main question is: where should income be taxed if an entrepreneur lives and works in Bulgaria? The answer depends on residency status, the type of business activity, the length of stay, the presence of an office or a permanent place of business, the client base, and the relevant documentation. If a person becomes a tax resident of Bulgaria, foreign business income may need to be reported in Bulgaria. At the same time, Ukrainian taxes paid by a sole proprietor should not be ignored: they may be important for tax credits, but only if properly documented.

Common Mistakes Made by Sole Proprietors After Relocating

To assume that the Ukrainian sole proprietorship fully covers the Bulgarian obligations. This isn't always the case, especially for long-term residents.
Do not keep source documents. Invoices, certificates, contracts, statements, and tax receipts are required not only in Ukraine.
Mixing personal and business payments. This makes it more difficult to explain the source of the funds to the bank and the accountant.
Do not review VAT-related matters. When working with clients from the EU or through online platforms, certain obligations may apply, depending on your revenue and the type of services you provide.
It's too late to consult an accountant. It's better to discuss the plan before the end of the year, rather than right before the tax return deadline.

A practical and sensible approach is not to close your sole proprietorship on a whim, but also not to view it as a permanent solution. First, you need to weigh your options: keep your Ukrainian sole proprietorship and file your taxes correctly, register your business in Bulgaria, set up a Bulgarian company, or change your contractual model.

Freelancing and Self-Employment in Bulgaria

If you find clients on your own, issue invoices, receive payment for your services, and are not a full-time employee, Bulgaria may consider this to be self-employment or a business. For freelancers, it is often important to register, keep track of income and expenses, pay social security contributions, file an annual tax return, and, in some cases, register for VAT.

In Bulgaria, there are various legal structures for conducting business: sole proprietorship, trader, limited liability company, and other options. The choice depends on turnover, risks, clients, expenses, plans for hiring employees, and the requirements of business partners. For example, an IT specialist with several foreign clients and a designer working through online platforms might receive different recommendations.

What a freelancer usually needs

a clear contractual framework with clients: a contract, order, invoice, or confirmation of terms;
separate accounting for revenues and expenses;
an understanding of which expenses can be claimed and which documents support them;
Regular verification of obligations regarding social and health insurance contributions;
monitoring VAT thresholds and rules, especially for EU customers;
Annual tax returns in Bulgaria, if required in your case.

A bank account also serves a practical purpose. Bulgarian banks may request information on the source of funds, contracts, invoices, and explanations for regular transfers. Therefore, it’s helpful to separate personal expenses, family transfers, and professional income in advance. It’s worth reading more about opening an account, cards, and transfers for Ukrainians in Bulgaria in a separate article, because banking compliance and tax reporting are closely linked.

When You Need a Bulgarian Company

A Bulgarian company can be a convenient option if you’re planning to run a full-fledged business: hiring employees, entering into long-term contracts, working with corporate clients, renting an office, developing a product, or reinvesting profits. But a company isn’t just a «way to pay less.» It involves accounting, banking services, reporting, corporate decisions, contracts, rules for withdrawing funds, and responsibility for documentation.

For a freelancer with only a few clients, setting up a company isn’t always the best option. Sometimes it’s easier and cheaper to manage your business on your own as an individual, if that’s allowed. In other cases, however, it is the company that reduces business risks and makes working with clients more transparent. The decision should be made after carefully calculating income, expenses, contributions, taxes, accounting costs, bank fees, and plans for growth.

Annual Tax Return and Documents: What to Prepare

In Bulgaria, individuals typically file tax returns based on their annual income during a specified period. You should check the specific deadlines and forms for the current year, but in practice, it’s best to start preparing in advance, especially if you have mixed income from Ukraine, Bulgaria, and other countries.

Minimum set of documents required for analysis:

passport information and documents regarding residency status in Bulgaria;
proof of residence, a lease agreement, or housing documents, if applicable;
employment contracts, civil contracts, contracts with clients;
invoices, certificates, platform reports, order confirmations;
bank statements for all accounts into which income was deposited;
documents confirming taxes paid in Ukraine or another country;
expense documents, if expenses are to be recorded;
information about the periods of actual stay in Bulgaria and departures.

If you are renting a place to live, your lease agreement may indirectly confirm the length of your stay and your center of vital interests. The website features a separate guide on renting housing in Bulgaria for Ukrainians: it’s useful not only for day-to-day matters but also for understanding which documents you should keep.

Health and Social Security Contributions: Do Not Confuse Them with Income Tax

Income tax and social and health insurance contributions are separate obligations. People may only think about income tax, but in Bulgaria, contributions are also important when you are employed or self-employed. They affect access to the healthcare system, pension rights, and your status in government registries.

For employees, the employer typically handles part of the administrative work. For the self-employed and freelancers, these obligations may apply directly to them. If a person has temporary protection, private insurance, Ukrainian documents, or another status, this does not always automatically resolve the issue of contributions when receiving regular income. In this case, a separate review of your status and type of activity is required. To gain a basic understanding of the system, it’s helpful to review the information on healthcare and insurance for Ukrainians in Bulgaria.

A Practical Guide: How to Stay Calm and Take Action

If you already live in Bulgaria and have an income, you shouldn't start by looking for the «cheapest option.» It's safer to take things step by step.

Please list all sources of income. Salary, sole proprietorship, freelance work, platforms, rent, one-time projects, and payments from companies—all treated separately.
Identify the periods of residence. How many days did you spend in Bulgaria, where your family lives, where your children go to school, and where you have your main job?.
Gather the documents. Statements, contracts, invoices, tax withholding certificates, and status confirmations.
Do not mix up future payments. Whenever possible, keep your personal translations separate from your professional income.
Check your residency status. Not only in terms of days, but also in terms of their main interests.
Compare the registration options. An individual entrepreneur in Ukraine, self-employment in Bulgaria, a Bulgarian company, or an employment contract.
Please verify the VAT and contributions. Especially if the clients are located in the EU or have a regular income.
Coordinate your actions with the two jurisdictions. When dealing with Ukrainian income, you may need the input of both a Bulgarian and a Ukrainian specialist.

Common Situations and How to Assess Them

Situation 1: «I live in Bulgaria, but all my clients are Ukrainian.»

Having clients in Ukraine does not mean that your income is exclusively a Ukrainian matter. If the work is performed from Bulgaria and you have become a Bulgarian tax resident, the income may need to be reported in Bulgaria. You need to review your contracts, your sole proprietor status, and the possibility of offsetting Ukrainian taxes.

Scenario 2: «I receive payments via Payoneer, Wise, or another platform»

A payment platform does not eliminate your tax obligations. What matters is not the name of the service, but the source of income, the contractual basis, residency, and business registration. You should keep statements from the platform just as carefully as you do your bank documents.

Situation 3: «My income is irregular, so I don’t need to register.»

One-time income and ongoing business activities are two different things. But if you regularly seek out clients, provide services, and receive payment, this may be considered a professional activity. Even if the amounts are small, it’s best to clarify the rules in advance.

Situation 4: «My employer is registering me as a contractor»

A civil service or contract agreement may be legal, but it changes tax and social security obligations. If there is, in fact, a work schedule, a chain of command, a workplace, and other indicators of an employment relationship, it is worth carefully evaluating the arrangement. For the employee, this may mean more self-reporting and fewer social security benefits.

This is especially important for those planning to buy real estate

For readers considering the purchase of an apartment or house in Bulgaria, transparency regarding income is particularly important. The bank, notary, seller, or real estate agents may request proof of the source of funds. If your savings come from self-employment, freelance work, or remote work, it’s best to prepare the necessary documents in advance: tax returns, certificates, bank statements, contracts, and payment confirmations.

Real estate is a major transaction, and an unclear tax history can cause delays in transfers, bank verifications, or subsequent account management. Therefore, tax compliance is not just about filing tax returns, but also about maintaining a good financial reputation in Bulgaria.

A Quick Checklist Before Consulting with an Accountant

Create a table listing all revenue for the year by country, customer, and account.
Please indicate separately where you were physically located while performing the work.
Please prepare copies of the contracts and invoices.
Download your bank statements in a convenient format.
Obtain proof of any taxes paid in Ukraine, if applicable.
Please describe your family situation: housing, school, health insurance, and length of stay.
Make a note of any questions you have about VAT, social security contributions, and the annual tax return.
Don't hide small or irregular sources of income: they help the specialist get an accurate picture of your situation.

Conclusion

Taxes for Ukrainians in Bulgaria depend not only on where the money comes from. More importantly, it depends on where you live, where you work, who pays your income, what kind of contract you have, and whether you have become a tax resident of Bulgaria. Official employment with a Bulgarian employer is usually easier to manage administratively, while remote work, Ukrainian sole proprietorships, and freelance work require more careful planning.

The best approach is not to wait until the end of the year or rely on advice from online chat rooms, but to gather your documents, outline your income model, and discuss it with a specialist. This will help you avoid double taxation, problems with the bank, errors on your tax return, and unpleasant questions during major transactions, including a purchase. real estate in Bulgaria.