Taxation of crypto asset transactions in Bulgaria
Today, we continue last week’s topic on crypto assets, this time briefly examining the issue from the perspective of their taxation.
The tax regime for transactions involving crypto assets depends on whether they are carried out by individuals or legal entities (companies). Different rules apply to each of these categories.
👤I. Taxes on crypto asset transactions by individuals
Taxation is governed by the Personal Income Tax Act (PITA).
💱1. Sale and exchange of cryptocurrencies
Income from the sale or exchange of virtual currencies is treated as income from the transfer of rights or property.
Determination of taxable income
Taxable income is calculated as follows:
For each transaction, the following is calculated:
Profit/loss = Selling price – Acquisition price
All profits and losses are added up for the year.
The result obtained is reduced by the normatively recognized expenses – 10%.
Tax base: (Profits – Losses) × 90%
Tax rate: 10%
Example
You buy bitcoin for 10 USD
You sell it for 100 USD
Profit: 90 USD
Regulatory expenses (10%): 9 USD
Taxable amount: 81 USD
Tax due:10% from 81 USD = 8.10 USD
📝2.Declaration and administration
Income is declared in the annual tax return under Article 50 of the Income Tax Act..
No advance tax is due.
No special documents are attached to the declaration..
Documents relating to transactions must be kept for 5 years.
🔒3. Income from staking for individuals
Income from staking is not treated as interest.
Taxation arises:
Not upon receipt of the tokens;
In their subsequent sale.
Tax is payable only when income is realized through the disposal of assets..
⛏️4.Mining of cryptocurrencies by individuals
When harvesting is carried out professionally and for profit, it is considered an economic activity.
When is a natural person considered a trader?
A person is considered a trader when:
Performs systematic activities;
Uses specialized equipment;
There is an intention for a permanent income.
It does not matter whether it is registered as a sole trader.
Tax regime
In these cases:
The income is taxed as income from economic activity;
Taxable profit is calculated in accordance with the Corporate Income Tax Act;
It is declared in Appendix No. 2 to the annual tax return.
The provisions for 10% standard expenses do not apply.
🏢II. Taxes on transactions with crypto assets by legal entities
All companies that trade or operate with crypto assets are taxed under the Corporate Income Tax Act (CITA).
💼1.Corporate tax
Companies pay:
10% corporate tax on profits.
Profit is calculated as the difference between:
Tax-recognized income;
Tax-deductible expenses.
Eligible costs
The following may be deducted, for example:
Transaction fees (gas fees);
Electricity costs;
Hardware;
Software;
Rents;
Administrative expenses.
💸2. Tax on dividends
When distributing profits to owners:
A 5% dividend tax is payable..
The overall tax burden
10% corporate tax
5% dividend
= approximately 14.5% effective weight (excluding insurance)
🛡️3. Social security contributions
Managers of crypto companies owe:
Mandatory social security contributions;
At least on the minimum social security income.
Exceptions:
Upon reaching the maximum social security income;
For pensioners.
🔄4. Revaluation of crypto assets
Due to high volatility:
Crypto assets are subject to annual revaluation;
Revaluation gains and losses do not affect the tax base.;
They represent temporary tax differences.
📈5. Staking for legal entities
For companies, income from staking is treated differently..
Reasons:
Tokens are accounted for as assets;
This leads to an increase in financial results;
Corporate tax increases upon acquisition.
Therefore, staking is more tax-efficient for individuals than for companies.
📌III. Summary
👤Individuals
| Activity | Taxation |
| 💱Selling crypto | 10% on 90% of the profit |
| 🔒Staking | Sales tax |
| ⛏️Mining (by occupation) | As an economic activity |
| ⏳Advance tax | Not due |
🏢Legal entities
| Type of tax | Rate |
| 💼Corporate tax | 10% |
| 💸Dividend tax | 5% |
| 🛡️Social security contributions | Mandatory |
| 📊The overall tax burden | ~14.5% + provisions |
✅Conclusion
Individuals are taxed relatively lightly – 10% on reduced profits.
Systematic activity or mining is subject to trader status.
Companies are subject to full corporate taxation and additional social security contributions.
Staking is more tax-efficient for individuals.
Proper documentation and storage of transaction information is essential.
👉 Your crypto assets deserve more than just a statement.
With Saad Consulting, you gain security and strategy. 🚀📊