EOOD and all associated costs

Welcome @Arnair to the expat.com forum!

The low Bulgarian tax (10% flat rate) does make Bulgaria a popular option for residence and/or company incorporation.

Incorporation is quite inexpensive (in the order of 300 euros), and accounting/filings should not be expensive either. But depends on exactly what's needed.

As well as standard accounting, you may need to register for VAT.

Normally you would have a company bank account and a separate personal bank account. Additionally, you might have separate Euro/Lev accounts.

The minimum monthly wage in Bulgaria is 650 leva, a bit over 300 euros. So you can gauge how much of a salary you need to live well. Probably 2,000 euros (approx. 4,000 leva or nearly 7x minimum) would not be necessary... hence there may be more cost-effective ways to do it. For example, smaller salary + dividends (or retained earnings).

Plus you might be able to allow more expenses (travel, company car, private pension, private health care plan, computer, phone, etc.) compared to being a regular employee. Your salary too is a legitimate expense. Such expenses lower the company profit. You should discuss this with your accountant.

The company trades... and will (hopefully) make a profit. And it will pay 10% for corporate income tax.

You can leave the profit in the company. Or you can allocate some/all of it to the shareholders (you, probably). I believe the tax on dividends is 5%, but I'm not too sure about this area. But usually more in dividends and less in salary is recommended.

Being an employee is usually good so that you are paying your social security contributions. This helps with free state health care, EHIC card, possible unemployment/sickness benefits (although small here).

If you get salary x, then approx 15% is your social security contribution. The employer approximately pays another 20%. Your net (85%) is subject to personal income tax (10% rate again). So your net net is about 76% of your gross. And the total cost (to the company) is about 120% of your gross.

If you were to pay 2,000 euro salary then your would receive about 1,600 euros net. But, as above, I don't think this is the best option.

Bulgarian residence is easy for EU citizens. However, of course, you can operate a Bulgarian company / business without being a Bulgarian resident.

There's a payroll calculator here:
https://kik-bg.com/en/payroll-calculato … ss-to-net/

Thank you very much for the effort and your kind reply!! I really appreciate it!

As there is an agreement about double taxation between Bulgaria and Croatia, does it mean that after paying 5% on divident in Bulgaria I am not required to pay anything in Croatia (Croatia has dividend tax of 10%)...

Another question is regarding per diems...due to business nature I will travel a lot, meaning I will have a right for per diems. Where can I find a list of countries and how much of daily allowance is employee entitled for?

Regarding the salary, I agree it can be done more efficiently but I would also like to have a good amount of money needed for private life. Is it possible to be paid on the Croatian bank account (EUR) or I have to open local bank account in Bulgaria?

Thank you once again for the great help!

Bulgaria has DTTs with most countries, I think, including Croatia.

Here's a list:
https://taxsummaries.pwc.com/bulgaria/i … x-treaties

Well, I'm not a tax expert, but usually the way it works is that the tax paid in lower tax country gets you a credit against your tax bill in the higher tax country. And you pay the difference. The lower dividend rate is an advantage for Bulgaria. But if you live in Croatia, I don't know how they will treat your dividend income from another country... there might be additional taxes due.

If it's your company, and you want a per diem, I think you can do it. But you need to discuss with your accountant what (and how much) is allowable. It may be that you have to be reimbursed for actual expenses incurred, rather than getting a per diem.

To run a BG company, you will usually have a BG company bank account, but I'd imagine it would be feasible without it. An employee's salary can usually paid to the account he/she specifies, which could be outside BG. But there might well be extra tax implications by doing this.

BG has a low corporate and personal tax rate. If you have a BG company, and you become a BG resident, it's great. And EU law supports having a European enterprise based in whichever EU country you want. But you have to be very careful about the tax issues if you operate a low tax corporation, but want to carry on living and working (and/or being resident) in a higher tax location.

Thank you very much for your reply and assistance!