Managing a real estate property in Bansko generates income, but also leads to specific tax obligations to the state and municipal budgets. One of the most common misconceptions among owners is the assumption that all rents are taxed in an identical manner.

In reality, the tax regime depends entirely on the nature of the rental - whether it is long-term residential use or short-term tourist accommodation (Airbnb/Booking type).

This article explains the basic requirements to be compliant with the National Revenue Agency (NRA) and Bansko Municipality.

1. Long-term rental: Personal income tax

When you rent out the property for permanent residence (for example, with an annual contract for ski instructors, staff or digital nomads), the income is treated as rental income within the meaning of Personal Income Tax Act (PITA).

  • Tax base: The income is not taxed in its full amount. The law automatically recognizes 10% statutory expenses (for depreciation and ongoing maintenance) that you do not need to prove with invoices.
  • Tax rate: The tax due is 10% on the tax base (i.e. on 90% of gross income).
  • Declaration and submission:
    • Advance tax: It is due for the first, second and third quarters of the year. It is declared with a Declaration under Art. 55 of the Personal Income Tax Act (deadline: by the end of the month following the quarter).
    • Annual equalization: An Annual Tax Return is submitted under Article 50 of the Personal Income Tax Act (deadline: by April 30 of the following year), which also includes the last quarter.

2. Short-term rental (Tourism): Patent Tax Regime

If you rent the property to tourists for overnight stays, the activity is classified as hotel business. For individuals and Sole Proprietors (ET) who have categorized properties (up to 20 rooms), the regime of Patent tax.

  • Applicable law: Law on Local Taxes and Fees (LTTF).
  • Essence: The patent tax replaces the standard income tax. You You do NOT pay 10% on actual turnover of overnight stays, but a fixed annual amount, regardless of the occupancy of the property.
  • Tax amount: The rate is voted by the Bansko Municipal Council and depends on the location (zone) of the property and the number of beds/rooms. The exact amount is determined by the Ordinance on Local Taxes and Fees of the Bansko Municipality.
  • Deadlines for payment: The tax is paid in four equal installments throughout the year. If you pay the full amount by January 31, you will receive a 5% discount.
  • Declaration: Before starting the activity, a tax declaration under Article 61n of the Tax and Customs Act is submitted to the municipality.

3. The Pitfall: VAT Registration

Many owners mistakenly believe that VAT (Value Added Tax) only applies to them when they reach high turnover. This is a risky misconception, especially when working with international platforms such as Airbnb и Booking.com.

There are two types of registration under the Value Added Tax Act (VAT):

A. Mandatory registration under Art. 97a (For services from abroad)

This is the most common omission. Even with minimal turnover, if you use intermediary services of a company registered in another EU country (such as Booking - Netherlands and Airbnb - Ireland), you are obliged to register for VAT on the basis of Art. 97a before receiving the first commission invoice.

  • Mechanism: You don't charge VAT on guest nights. You owe 20% VAT only on the amount of the commission, that you pay to the platform (the so-called “chargeback” mechanism).
  • Administration: Monthly statements-declarations and purchase diaries are submitted to the NRA.
  • Sanctions: The fines for failure to comply with this requirement are significant and start at 500 BGN, with the unpaid tax and interest also being charged.

B. General VAT registration

It becomes mandatory only if your taxable turnover (the sum of all overnight stays) exceeds the threshold for mandatory registration (the current threshold for the country is BGN 100,000, with a trend of increasing to BGN 166,000 from 2025).

  • In this case, you owe 9% VAT (the reduced accommodation rate) on the value of each night's stay.

4. Social security contributions

Taxes are not the only expense.

  • For long-term rental: As an individual, you do not owe social and health insurance contributions on rental income (unless you are registered as a self-insured person on another basis).
  • For short-term rental: Since this is interpreted as a business activity, the NRA often requires social security contributions. The practice and interpretations on this issue are dynamic, so consulting an accountant is highly recommended to determine your social security status.

Summary: Your financial obligations

For maximum clarity, here is the typical profile of obligations for a vacation property owner in Bansko (individual):

  1. To the Municipality of Bansko:
    • Real estate tax and household waste tax (annually).
    • Tourist tax (monthly, based on overnight stays).
    • Patent tax (annually, if the property is categorized and operates as an accommodation).
  2. To the NRA:
    • VAT on commissions (monthly, when working with foreign platforms – requires registration under Art. 97a).
    • Insurance contributions (depending on insurance status).

Important clarification: Tax legislation in Bulgaria is subject to change. This article is for informational purposes only and does not replace professional tax advice. For preparation of declarations and specific calculations, we recommend that you use the services of a qualified accountant familiar with the specifics of the tourism sector.