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Transactions in cryptocurrencies
Individual investors (tax resident in your jurisdiction)
1) Are individuals taxed on gains on the sale of cryptocurrencies?
Yes.
Under Bulgarian tax law, cryptocurrencies qualify as financial assets from a tax perspective. The taxable capital gain of а Bulgarian resident individual from the sale, exchange or other disposal of financial assets is the sum of the profits derived during the respective year, determined for each particular transaction, reduced by the sum of the losses incurred during the same year, determined for each particular transaction, applying a fixed deduction of 10%. The realised profit/ loss for each particular transaction is determined by reducing the selling price by the acquisition cost of the financial asset.
The taxable capital gain from the sale of cryptocurrencies by individual investors is subject to Bulgarian personal income tax at a flat rate of 10%.
The above rules do not apply if the crypto trading activity is conducted systematically and is structured as an independent business activity aimed at generating profits. In such cases the investor would be regarded as a sole trader for Bulgarian tax purposes and the taxable profits derived from the trade would be determined under the rules applicable to corporate investors, and taxed as business income at a flat rate of 15%.
Corporate investors (tax resident of your jurisdiction)
2) Is cryptocurrency subject to yearly mark to market valuation?
The accounting, reporting and valuation of cryptocurrencies are not regulated by Bulgarian law. Generally, any valuations, revaluations and/or impairment of financial assets included in a company's balance sheet are to be performed in accordance with the applicable accounting standards and accounting policy.
According to the non-binding guidelines of the Bulgarian tax authorities, cryptocurrencies should be included and evaluated in the company’s accounting records in accordance with their respective designation (e.g. as inventory, investment, etc. as the case may be).
3) Are corporates taxed on gains on the sale of cryptocurrencies?
Yes.
Any capital gain derived by a Bulgarian resident company from the sale, exchange or other disposal of financial assets is included in its corporate income tax base which is subject to Bulgarian corporate income tax at the rate of 10%.
Common questions around cryptocurrency and tax
4) Is payment for goods/services in cryptocurrencies a taxable event?
Yes, payment for goods/services amounts to a taxable event and where a capital gain is derived from the exchange of cryptocurrencies for goods / services, such capital gain would be taxable.
5) What is the tax treatment of cryptocurrencies received from mining?
Cryptocurrencies received from mining are taxed as business income at a rate of 15% (for individuals) or 10% (for companies).
6) What is the tax treatment of cryptocurrencies received by airdrop?
There is no guidance by the Bulgarian tax authorities on the tax treatment of cryptocurrencies received by airdrop.
7) What is the tax treatment of cryptocurrency received from staking?
According to the non-binding case law of the Bulgarian tax authorities, individuals are subject to income tax on their income derived from staking.
8) What is the tax treatment of lending in cryptocurrencies?
Individuals receiving cryptocurrencies (as interest in kind) for the lending of cryptocurrencies (as principal) are subject to income tax. The taxable base is the fair market value of the in-kind interest as at the date of receipt of the interest.
9) What is the tax treatment of a hard fork?
There is no guidance by the Bulgarian tax authorities on the tax treatment of a hard fork.
10) What is the tax treatment of employee salary in cryptocurrency?
Individuals receiving cryptocurrencies as remuneration under an employment agreement (as employment income in kind) are taxed on their employment income received in kind. The taxable base is the fair market value of the cryptocurrencies as at the date of receipt of the employment income.
11) How are gifts of cryptocurrency taxed, including in-game rewards?
According to the non-binding guidelines of the Bulgarian tax authorities, individuals are subject to income tax on their income derived from crypto rewards.
12) Is there a tax-deferral when exchanging cryptocurrency/assets?
No.
13) Is there any transfer tax on the acquisition of cryptocurrencies?
No.
14) Is it obligatory to declare cryptocurrencies to tax authorities?
There is no obligation to declare the acquisition of cryptocurrencies to the tax authorities. Any taxable income derived from mining, sale, exchange or other transactions involving cryptocurrencies is to be declared to the tax authorities.
15) Are there reporting obligations for cryptocurrency transactions?
The EU Council has adopted a directive amending EU rules on administrative cooperation dealing with the reporting and automatic exchange of information in relation to transactions in crypto-assets (DAC8). DAC8 imposes new tax transparency rules for all service providers facilitating transactions in crypto-assets for customers resident in the EU. The rules, which will come into effect in 2026, will require all service providers, of whatever size and wherever located, to report on crypto-asset transactions carried out by clients residing in the EU.
16) How are cryptocurrency transactions treated for VAT purposes?
In their non-binding guidance, the Bulgarian tax authorities follow the case law of the Court of Justice of the European Union stating that the exchange of fiat currency against bitcoins and vice versa is a VAT exempt transaction (supply of financial service). (cf. ECJ 22 October 2015, case C-264/14 – Hedqvist).
For VAT purposes, the turnover from VAT exempt supplies of financial services is taken into account for calculating the turnover threshold triggering mandatory VAT registration (currently EUR 84,874) for 12 consecutive months). A VAT registration obligation may arise for both individual and corporate investors.
Initial coin offerings or ICOS (by issuers tax residents in your jurisdiction)
17) What is the tax treatment of the ICOs for the issuers?
Bulgarian tax law does not regulate the tax treatment of ICOs and there is no guidance by the Bulgarian tax authorities in this respect.
18)What is the VAT treatment of the ICOs, including rules on vouchers?
Bulgarian tax law does not regulate the VAT treatment of ICOs and there is no guidance by the Bulgarian tax authorities in this respect, including in terms of the applicability of the VAT rules governing vouchers to ICOs.
19) Are ICOs liable to any stamp duty?
No.
Transaction in NFTs
Individual investors (tax resident in your jurisdiction)
20) What is the tax treatment for individuals of the creation of NFTs?
Bulgarian tax law does not regulate the tax treatment of NFTs and there is no guidance by the Bulgarian tax authorities in this respect.
Corporate investors (tax resident in your jurisdiction)
21) What is the tax treatment for corporates of the creation of NFTs?
Bulgarian tax law does not regulate the tax treatment of NFTs and there is no guidance by the Bulgarian tax authorities in this respect.
22) Are NFTs taxed differently to cryptocurrencies?
While there are no guidelines by the Bulgarian tax authorities on the taxation of NFT transactions, the majority view seems to be that they should be taxed as cryptocurrency transactions.
23) Can tax be deferred when exchanging NFTs for other NFTs/crypto?
No.
24) What is the tax treatment of gifted NFTs (incl. in-game rewards)?
According to the non-binding guidelines of the Bulgarian tax authorities, individuals are subject to income tax on their income derived from crypto rewards.
25) Is there any transfer tax when acquiring NFTs for consideration?
No.
26) Is it obligatory to declare NFTs to tax authorities?
There is no obligation to declare the acquisition of NFTs to the tax authorities. Any taxable income derived from sale, exchange or other transactions involving NFTs is to be declared to the tax authorities.
27) Are there tax reporting obligations specific to NFT transactions?
No.
28) How are NFT transactions treated for VAT purposes?
There is no guidance by the Bulgarian tax authorities on the VAT treatment of the sale of NFTs. The majority view seems to be that a sale of NFTs would be treated as a supply of service for VAT purposes.
This document (and any information accessed through links in this document) is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from any action as a result of the contents of this document.
