Estonia vs Bulgaria taxes (2026): flat tax vs retained profits

Estonia vs Bulgaria tax rates at a glance

Tax	🇪🇪 Estonia	🇧🇬 Bulgaria
Income tax	Personal income tax: 22% Highest bracket tax: 22% Foreign income tax: 22% Tax on wages: 22% Employer social tax: 33% Unemployment insurance: 0.8% / 1.6%	Personal income tax: 10% Employment income: 10% Rental income: 10% Sole trader tax: 15% Foreign income: 10% Payroll social security: 32.7% - 33.4%
Corporate tax	Corporate profits tax: 22/78 Standard company tax: 22/78 Undistributed profits: 0% Dividend withholding tax: 0% DMTT: N/A	Standard CIT: 10% Dividend WHT: 5% Interest / royalties WHT: 10% Gambling tax: 25% Tonnage tax: 10% VAT: 20%
Capital gains tax	Capital gains tax: 22% Crypto capital gains tax: 22% Shares and securities gains: 22% Real estate gains: 22%	Capital gains tax: 10% Listed securities: 0% Residential property: 10% Non-resident WHT: 10%
Dividend tax	Dividend withholding tax: 0% Domestic dividend tax: 22/78 Foreign dividend tax: 0% / 22%	Dividend tax: 5% Dividend WHT: 5% EU / EEA company recipient: 0% Foreign dividends: 5%
Wealth tax	Net wealth tax: 0% Net worth tax: 0% Annual asset tax: 0%	Net wealth tax: 0% Net worth tax: 0% Property tax: 0.01% - 0.45% Transfer tax: 0.1% - 3%
Inheritance / estate tax	Inheritance tax: 0% Estate tax: 0% Gift tax: 0% Probate tax: 0%	Spouse and direct line: 0% Siblings and their children: 0.4% - 0.8% Other heirs: 3.3% - 6.6% Filing deadline: 6 months
VAT / GST / sales tax	VAT: 24%	VAT: 20%
Standard VAT	24%	20%
Corporate tax timing	Tax mainly on distributions	Annual profit tax

Who wins on each tax

Personal income taxBulgaria

Bulgaria's 10% flat personal income tax is lower than Estonia's flat personal rate.

Corporate taxEstonia

Estonia is better for reinvested profits because corporate tax is generally triggered on distribution.

Capital gains taxBulgaria

Bulgaria's 10% rate is lower for many ordinary taxable gains.

VATBulgaria

Bulgaria's 20% standard VAT is lower than Estonia's 24% standard VAT.

Digital administrationEstonia

Estonia is stronger for e-residency, online company administration and retained-profit planning.

The verdict

Bulgaria is the lower headline-tax country. A 10% flat personal income tax and 10% corporate income tax are hard to beat inside the EU, especially for people who want simple low rates on distributed profits and salaries.

Estonia's advantage is timing and administration. Companies generally pay corporate tax when profits are distributed, not as they are earned, so reinvested profits can compound inside the company. The trade-off is a higher personal tax rate and a higher VAT rate.

Choose Bulgaria if you want the lowest simple EU headline rates. Choose Estonia if you are building and reinvesting through a company, and digital administration matters more than the lowest personal rate.

How to read this comparison

Estonia and Bulgaria are two of the more practical EU tax bases, but for different reasons. Bulgaria is cheap on rates; Estonia is elegant for companies that keep profits inside the business.

Which one fits you

🇪🇪 Choose Estonia if you're a…

SaaS founders reinvesting company profits
Remote operators who value digital administration
Businesses that benefit from deferring tax until distribution

🇧🇬 Choose Bulgaria if you're a…

Residents wanting low flat personal tax
Companies distributing profits regularly
EU-based founders prioritising simple low headline rates

Frequently asked questions

Is Estonia or Bulgaria better for tax?

Bulgaria is better for low flat personal and corporate rates. Estonia is better for companies that reinvest profits because corporate tax is generally deferred until distribution.

Does Estonia tax retained company profits?

Estonia generally taxes corporate profits when they are distributed, not simply when earned. That makes it attractive for reinvestment, but distributions are still taxed.

What is Bulgaria's income tax rate?

Bulgaria generally uses a 10% flat personal income tax rate, with separate social security and health insurance contributions.