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Patent tax – who to use

Patent tax is a kind of lightweight net for small traders and artisans.

For their activities they pay a patent tax (patent), it is not taken into the calculation of the profit or loss. Patent tax is an annual tax. It is regulated by the Law on local taxes and fees (SMNS). A link to the law

This law established minimum and maximum
the size of the patent tax, and each Community sets specific dimensions
tax for different activities and for different areas in their territory.

What are the conditions necessary to fulfill to become
the payer of the patent:

– a natural person, including private entrepreneurs,

– carries out activities which are included in
Appendix 4 SMNS (patent activities),

– turnover for the previous year does not exceed 50 000 BGN,

and the person is not registered for VAT, with the exception
registration on the basis of article 99 and article 100, vol. 2 of the Law on value added

Persons engaged in patent activities, not
levied in the manner prescribed by the law on taxes on income of individuals.

So why is the payment of a patent can be very profitable?

Consider a simple example:

Entrepreneur is engaged in tailoring,
implements the annual turnover in the amount of 45 000 leva and has expenses in the year in
the amount of 5 000 leva. The patent tax is determined depending on the location
his Atelier, but if you calculate its maximum size from 840 m., it will be
less than accrued income tax of physical persons 15% (6000
LV.), also Supplement social security payments or, if we are registered as a LTD.
– payment of 10% tax and after 5% tax on the dividend.

What activities come under the patent tax?

They are described in Appendix 4 SMNS:

– places to stay, but not more than 20 rooms

restaurants, tearooms, bars,etc.

– retail trade up to 100 sq m net sales area

services (woodworking, sewing services, Shoe
services, hairdresser, typewritten, cosmetic services, watchmaker, upholstery
services, auto repair, glass and others),

– sale of Newspapers, magazines and other

games entertainment (mini football, table
tennis and other);

– pawnshops,

services entertainment (boats,
trains, carousels),

– training of voditeley cars;

– paid Parking,

– other.


Individuals who must pay a patent tax, served
tax return according to the pattern in which declare until 31 January of the current
years of circumstances that are associated with the determination of the amount of the tax. If you
starting the activity after this date, the tax return is filed
pre-start activities.

Link to the Declaration

Other features of the patent

When within 12 consecutive months
(note!!! consecutive months, not a year) one
a natural person has terminated patent activity and/or formed new
the company, which performs patent activity, and total turnover
the two companies more than 50 000 levs. for 12 consecutive months, for the current
the year the newly formed company is subject to the General conditions under the law on
income tax of individuals.

If in the current tax year the turnover of the person
exceed 50 000 BGN. or the person registers under the law on tax on
added value, you will be taxed on General terms under the law on
income tax of individuals.

In the above cases, patent tax for the current year shall be
payable until the end of the quarter before the quarter in which any of these
circumstances. Amended tax reduces the tax obligation under the terms
law on income tax of individuals.

If in the current tax year the person will be
zaregistrirovano according to the law on value added tax, then
taxation will be carried out on General conditions in the tax act
individuals ‘ income for the whole tax year.

If you have some patent activities,
the patent tax is paid for each separately.

If the activity is carried out in multiple sites
the patent tax is paid for each object separately.

The patent tax is paid every quarter – until the end
of the month following the reporting quarter or within 7-days term from filing
the Declaration of the beginning of patent activity.

The tax is paid in the community where the object or
the permanent address of the person.

If, before January 31 shall be paid all the tax for the patent
the whole year, the person has the right to use a discount of 5%.

Income from activities not listed in Appendix
4, shall be taxable on General terms according to the law on personal income tax