Estonian Company Run from Bulgaria: Tax Rules

Many Bulgarian entrepreneurs — and many people who moved to Bulgaria — form or buy an Estonian private limited company (OÜ), often as e-residents, and run it from Bulgaria. Bulgarian corporate income tax decides a company's residence by where it was incorporated, not by where it is managed: a company incorporated under Estonian law is a foreign legal person for Bulgaria. A foreign legal person is taxed in Bulgaria on the profit it makes through a place of business there. Bulgaria's rule on controlled foreign companies is written for Bulgarian taxable persons that control a foreign entity. And the Estonia–Bulgaria tax treaty gives a company resident in both countries the residence of the state under whose laws it was incorporated. This guide sets out these rules with the official texts, and what we do on the Estonian side.

The guide is general information, not tax advice. How your company and you are taxed depends on the facts of your case; ask a Bulgarian tax adviser before you form or buy the company. We read the Corporate Income Tax Act (Закон за корпоративното подоходно облагане) in the consolidated text published by the Bulgarian National Revenue Agency, with the amendments up to State Gazette no. 55 of 16 June 2026, and the Estonia–Bulgaria tax treaty in Riigi Teataja, on 23 October 2026; the English wording of the Bulgarian act below is our translation.

In Estonia: an Estonian company is Estonian

A company established under Estonian law is resident in Estonia for tax purposes (Income Tax Act § 6). Its profit is taxed when it is distributed, not while it stays in the company — the guide how Estonia taxes company profit explains the rule. The company keeps its Estonian duties wherever its owners live: accounts, an annual report to the commercial register and, if its address is abroad, a contact person in Estonia.

In Bulgaria: the company side

Residence by incorporation. Local legal persons are legal persons incorporated under Bulgarian law, and European companies and cooperatives with their seat in Bulgaria that are entered in a Bulgarian register (Corporate Income Tax Act, Article 3(1)). Local legal persons are taxed on their profits and income from all sources in Bulgaria and abroad (Article 3(2)).
Foreign legal persons. Foreign legal persons are those that are not local (Article 4(1)). They are taxed on the profits made through a place of business in Bulgaria or from disposing of property of such a place of business, and on the income with a source in Bulgaria that the act lists (Article 4(2)); they are taxable persons on that basis (Article 2(1), point 2).
Rate. The corporate tax rate is 10 percent (Article 20).

An Estonian OÜ is incorporated under Estonian law, so for Bulgaria it is a foreign legal person, even if you live in Bulgaria and run it from there. What can be taxed in Bulgaria is the profit of a place of business in Bulgaria — an office or another fixed place from which the business is carried on. Whether your work in Bulgaria creates one is the question your Bulgarian tax adviser answers with the facts of your case.

In Bulgaria: the owner side

Controlled foreign company. A controlled foreign company is a foreign entity whose profits are not taxed or are exempt in Bulgaria, when the taxable person, alone or with its associated enterprises, holds directly or indirectly more than 50 percent of the voting rights or of the capital, or is entitled to more than 50 percent of the profit, and the corporate tax the entity actually paid is lower than the difference between the corporate tax it would owe under the Bulgarian act and the tax it actually paid (Corporate Income Tax Act, Article 47v(1) — чл. 47в in the Bulgarian text).
What is added. The taxable person increases its own tax result for the year by the entity's undistributed tax profit for the same period (Article 47g(1) — чл. 47г).
The substance exception. This does not apply when the controlled foreign company carries on a substantive economic activity with the staff, equipment, assets and/or premises the activity needs, which the taxable person proves with the relevant facts and circumstances (Article 47g(7)).

The rule is written for Bulgarian taxable persons — companies. How an individual owner living in Bulgaria is taxed on what the Estonian company pays out is a question for your Bulgarian tax adviser.

What the Estonia–Bulgaria tax treaty says

Resident in both countries. If a person other than an individual is resident in both states, it is the resident of the state under whose laws it was incorporated (convention signed in Luxembourg on 13 October 2008, article 4(3); RT II 2008, 33, 100). For an Estonian OÜ that is Estonia.
Permanent establishment. A permanent establishment is a fixed place of business through which the business of an enterprise is wholly or partly carried on; it includes especially a place of management, a branch and an office (article 5(1) and (2)). The profit attributable to it may be taxed in the state where it is (article 7(1)).
Directors' fees. Fees a Bulgarian resident receives as a member of the management board or a similar body of an Estonian company may be taxed in Estonia (article 15) — see board member fee or dividend from abroad.
Dividends. Dividends paid by an Estonian company to a Bulgarian resident may be taxed in Bulgaria; if Estonia also taxes them at source, the treaty limits that tax to 0 percent of the gross amount for a company holding directly at least 10 percent of the capital, and 5 percent in all other cases (article 10(1) and (2)).

So, unlike most countries in this series, both the Bulgarian act and the treaty look at where the company was incorporated: an Estonian OÜ stays an Estonian company, and what Bulgaria can tax is a permanent establishment in Bulgaria. The multilateral convention on tax treaty measures (MLI) can change the rules of tax treaties; how it applies to your company is a question for your Bulgarian tax adviser — we do not give that ruling.

What to decide before you form or buy the company

Where the work is done. An office or other fixed place of business in Bulgaria can be a permanent establishment.
Who owns the company. A Bulgarian company holding more than 50 percent brings in the controlled foreign company rule.
How profits reach you. Dividends and board fees are covered by articles 10 and 15 of the treaty.

What we do on the Estonian side

online formation for an e-resident — €950 Registered address and contact person service for one year are included., or formation by power of attorney — €1,250;
a ready-made company bought remotely — €1,200 Registered address and contact person service for one year are included.;
accounting — from €150 / month and the annual report — from €450;
the registered address and contact person after the first 12 months — €350 / year.

Our accounting covers the Estonian company's Estonian obligations. Bulgarian tax returns and Bulgarian tax advice are not included. Owners in other countries: Estonian company run from abroad compares the rules side by side.

Prices exclude VAT. All communication takes place by email.

Ready to start? A new Estonian company — online for e-residents or by power of attorney; Bulgarian tax advice is not included. Order.

Official sources

The laws this article names, by the name of their official text, as read on 9 October 2026. For the Estonian acts we read the English translation in Riigi Teataja; the legally binding text is the Estonian one.

Income Tax Act — Riigi Teataja, English translation

Sources are named in the text, without links. To see which of our services your company needs, open the Business Navigator.

Frequently asked questions

Is my Estonian company taxed in Bulgaria if I run it from Bulgaria?

Only through a place of business there. Bulgaria counts as its own only companies incorporated under Bulgarian law (Corporate Income Tax Act, Article 3(1)); an Estonian OÜ is a foreign legal person, taxed in Bulgaria on the profit made through a place of business in Bulgaria (Article 4(2)). In Estonia the company is resident because it was established under Estonian law (Income Tax Act § 6), and under the Estonia–Bulgaria tax treaty a company resident in both states is resident where it was incorporated (article 4(3)). Bulgaria's controlled foreign company rule names Bulgarian taxable persons as the controlling owner (Article 47v). Ask a Bulgarian tax adviser before you form or buy the company; we handle the Estonian side.

Estonian company run from Bulgaria: what is taxed where