Tax Residency in Bulgaria for Israelis: the 183-Day Test, the 10% Flat Tax, Social Security and the Tie-Breaker Rule in the Treaty with Israel

The 10% flat tax is one of the main reasons Israelis look into moving to Bulgaria. But the low tax applies only to someone who is genuinely a Bulgarian tax resident, and only if their Israeli residency has ended or the treaty decides in Bulgaria's favour. This guide explains when Bulgarian tax residency arises, what is taxed, how social security works, and what happens on the Israeli side.

1When does an Israeli become a Bulgarian tax resident?

According to the PwC summary updated in August 2026, an individual is a Bulgarian tax resident, regardless of citizenship, if any of the following applies: they have a permanent address in Bulgaria and their centre of vital interests is there, they stay in Bulgaria for more than 183 days in any 12-month period, or their centre of vital interests is in Bulgaria, judged by their personal and economic ties.

• The day test is measured over any 12 months, not only a calendar year, and residency applies to the calendar year in which the 183rd day is passed.
• A permanent address alone is not enough: it creates residency only together with a centre of vital interests in Bulgaria.
• A residence permit is not tax residency: someone who holds a permit but actually lives in Israel is not necessarily a Bulgarian resident, and vice versa.
• Where there is a treaty, the treaty's tie-breaker rule prevails over domestic law.

2How much income tax does a resident of Bulgaria pay?

A flat rate of 10% applies to most types of individual income, and according to PwC the rate did not change in 2026. A Bulgarian resident is taxed on worldwide income, and a non-resident only on Bulgarian-source income. Bulgaria has no special regime for new residents, such as the non-dom regime in Cyprus or the flat tax in Italy. The advantage is that the ordinary tax itself is low.

3How is an Israeli freelancer or self-employed person who moves to Bulgaria taxed?

According to PwC, freelancers, providers of personal services and members of the liberal professions deduct 25% of gross income as statutory recognised expenses and pay 10% on the remainder, without having to prove actual expenses. They pay quarterly advance payments, even when their clients are outside Bulgaria. A registered sole trader is taxed under the corporate tax rules, and the mandatory VAT registration threshold is EUR 51,130 in a calendar year.

A common alternative is a Bulgarian company owned by the individual, with 10% corporate tax and 5% on dividends. The choice between personal activity and a company depends on the level of income, social security, and where decisions in the company are made. The formation itself is detailed in the guide to company formation in Bulgaria.

4How much does social security cost in Bulgaria?

According to PwC for 2026, social and health insurance contributions for an employee are 13.78% on the employee's share, and for the employer between 18.92% and 19.62%. Contributions are calculated on insurable income with a monthly ceiling: EUR 2,111.64 until 31 July 2026, and EUR 2,300 from 1 August 2026. The self-employed also have a minimum monthly base, EUR 620.20 from 1 August 2026. Because of the ceiling, the relative burden falls as income rises.

5In which country are you covered by social security?

Israel and Bulgaria have a social security agreement signed on 25 March 2008, which entered into force on 1 September 2009. In Israel the agreement covers old-age and survivors' insurance, disability and work injury, and in Bulgaria old-age, survivors' and disability insurance. Health insurance is, as a rule, not covered by such agreements.

• An employee is insured in the country where they work, regardless of where they live or where the employer is registered.
• A self-employed person resident in one of the countries is insured in the country where they live, even if they work in both.
• A posted worker of an Israeli employer sent to Bulgaria remains insured in Israel for up to 24 months, with the possibility of extension with the authorities' consent for up to three more years.
• Someone who does not work, for example a retiree, is subject to the law of their country of residence, unless the agreement provides otherwise.

In practice, someone who moves to Bulgaria as self-employed can expect to move into the Bulgarian system. Your status with Israel's National Insurance Institute (Bituach Leumi), and the implications for benefits and health insurance, should be checked with its international agreements department before leaving.

6What happens if I am treated as resident both in Israel and in Bulgaria?

This is common in the year of the move. This is where the Israel-Bulgaria tax treaty comes in, signed on 18 January 2000 and amended by the Multilateral Instrument (MLI). Article 4(2) of the treaty sets an order of tests for an individual resident in both countries, and it differs from the usual order in the OECD model: the first test is the centre of vital interests, not the permanent home.

7How does the treaty prevent double taxation of income from Israel?

• Credit method: under Article 22 of the treaty, as amended by the MLI, a Bulgarian resident with income that Israel may tax receives in Bulgaria a credit for the tax paid in Israel, up to the Bulgarian tax on that income.
• Salary: may be taxed in the country where the work is performed. Someone who physically works from Bulgaria for an Israeli employer is, as a rule, taxed in Bulgaria on the work performed there.
• A private pension for past employment is taxed under Article 18 of the treaty only in the country of residence. A government pension is, as a rule, taxed only in the paying country, under Article 19(2).
• Rent from a home in Israel remains taxable in Israel, and Bulgaria grants a credit for the Israeli tax.
• Interest from Israel: under the treaty, Israeli tax is generally limited to 10%; dividends and royalties are detailed in the guide to Israel's tax treaties.

8What happens on the Israeli side?

Moving to Bulgaria does not automatically end Israeli residency. Under the Israeli Income Tax Ordinance, the main test is the centre of life. Alongside it are two presumptions: someone who stayed in Israel for 183 days or more in a tax year, or for at least 30 days in the year and 425 days or more over that year and the two preceding years, is presumed to have their centre of life in Israel. The presumptions are rebuttable, by the taxpayer and by the assessing officer, so even someone who passes the day count may be treated as an Israeli resident if their ties have remained here.

• An Israeli resident who has moved to Bulgaria remains taxable in Israel on worldwide income, with a credit for Bulgarian tax, until residency ends.
• Israeli-source income, such as rent from a home in Israel, remains taxable in Israel even after residency has been ended.
• A Bulgarian company controlled by Israelis may be treated in Israel as a controlled foreign company (CFC), or as an Israeli-resident company if it is managed from here.
• Reporting: reporting obligations on holdings in a foreign company and on income from abroad, as long as you are Israeli residents.

Ending Israeli residency, including exit tax on assets, deadlines and declarations to the Israel Tax Authority, will be detailed in our general guide on ending Israeli tax residency on relocation. In the meantime, the Israeli side of a company and property abroad is explained in the information hub on reporting to the Israel Tax Authority, and the status of a Bulgarian company in the guide to taxation of a foreign project company. The year of the move should be planned together with an Israeli accountant.

9Comparison: what changes when you become a Bulgarian tax resident?

10What do you do in the first year? A practical timeline

1. Before the move: map your income, assets and companies, and check the centre-of-life test and the implications of breaking residency with an Israeli accountant.
2. Before the move: arrange a suitable residence permit, because without lawful status there is no continuous residence.
3. First month: register your address, open a bank account and register with the National Revenue Agency (NRA).
4. First months: decide on the structure of your activity: self-employed, a Bulgarian company or a remote employee, and check whether VAT registration is required.
5. During the year: count days in both countries and keep evidence of your centre of life: lease, children's school, insurance, accounts.
6. After 183 days: check whether Bulgarian residency has arisen and request a tax residency certificate, if you need to present it in Israel or to payers.
7. By 30 April of the following year: file an annual return in Bulgaria and pay the tax. Filing online and paying by 31 March earns a 5% discount, up to EUR 255.65.
8. In Israel: file the reports for the year of the move, and deal with the declaration of change of residency as your accountant advises.

Tax rates and rules in Bulgaria and Israel change, so verify the current figures before every step. This guide is general information, correct as of November 2026, and every case requires individual review.

More on relocating to Bulgaria: Residence routes and status in Bulgaria · Ending Israeli tax residency · Moving abroad with an Israeli company or business · The family legal checklist

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