Fiscal benefits, low cost of living and membership of the European Union are the watchwords that characterize Bulgaria, one of the favorite destinations for Italian retirees who want to enjoy their retirement abroad. THEn “competition” with Portugal. Indeed, in 2008 the Bulgarian government decided to amend the tax on natural persons (Income taxes on natural person act) by introducing a single flat tax of 10% into national legislation. While before the income tax consisted of three progressive rates (20%, 22% and 24%) since 2008 it has been decided to have only one rate at 10%.
In addition to the tax advantages (the 10% rate is not present in any other EU country) Bulgaria has a very low cost of living (even lower than Portugal). With a salary of 1.738 euros, one has the same standard of living as a person who earns 3.900 euros in Milan (the rent of a studio flat in the center of Sofia costs around 244,63 euros a month and a liter of milk 1 euro). . Another advantage is belonging to the EU, this makes travel easier and cheaper.
How you are considered a tax resident.
In order to take advantage of the tax advantages offered by the Bulgarian government, you must first of all be considered "tax residents abroad" by the Italian tax authorities. In order to have this status recognized, several conditions must exist. You must not be registered in the register of persons residing in Italy for 183 days, you must be registered with AIRE, you must not have a domicile in Italy for more than half of the year and there must be no habitable residence, for more than half of the year in Italy. If even just one of these conditions is missing, you are considered to be tax resident in Italy and therefore you cannot access preferential foreign tax regimes.
Once the "tax resident abroad" obstacle has been overcome, the second step must be taken: obtaining Bulgarian tax residence. Here the situation gets complicated, not so much for the documents, but for the language. But let's go in order.
How to get resident status in Bulgaria.
Residency in Bulgaria can be obtained by applying to the Bulgarian Immigration Office. The pensioner will therefore have to present himself to the immigration office with six documents:
- Application form completed in all its parts (document provided by the immigration office)
- Identity card
- Health insurance card
- Bulgarian rental agreement or a document proving ownership of a property
- Bulgarian Utility Agreement (may be electricity, gas, telephone line)
- Bank account balance.
Once in possession of the documents you can go to the immigration office, but be careful, because if you don't know Bulgarian it is better to be accompanied by a resident. The reason? Not all employees speak English and the application form to fill out is not fully translated into English.
Once the language obstacle has been overcome, the road is paved towards Bulgarian residence and a 10% pension tax. Once you have delivered all the requested documents, the employee of the immigration office will inform you, in fact, after how many days you can go to collect the Bulgarian residence certificate. The times, on average, vary from a few days to a maximum of two weeks.
Last step before enjoying your retirement in Bulgaria
Once residency in Bulgaria has been obtained, to avoid the pension being taxed twice (Italy and Bulgaria), the pensioner will have to ask INPS for the application of the convention to avoid double taxation. How you do it? Access the INPS website, Forms, International Conventions section and select the CI531-EP-I/1 Italian-English form. Once printed, it must be completed and delivered to INPS.
Giorgia Paciona's article and a Faldo