In brief
An Israeli who is not a Bulgarian resident and rents out an apartment he owns personally in Bulgaria is liable in Bulgaria to a final tax of 10% on gross rental income, with no deduction of expenses. Short-term rental additionally requires registration under the Tourism Act and a registration number in every listing. In Israel the income is taxable, and the choice between the 15% track and the regular track with a credit for the Bulgarian tax changes the total tax considerably.
Key takeaways
- 1A non-resident who rents out a property in Bulgaria pays a final tax of 10% on gross rent; the 10% deduction that appears in many guides applies to Bulgarian residents.
- 2Renting through a Bulgarian company is taxed at 10% corporate tax on profit, after deducting actual expenses, and a 5% withholding applies to a dividend distribution.
- 3Short-term rental requires registration with the mayor under the Tourism Act, and the registration number must appear in every listing; from 20 May 2026 a European enforcement mechanism also applies.
- 4In Israel: under the 15% track there is no credit for the Bulgarian tax, so the total tax may reach about a quarter of gross rent; under the regular track expenses are deducted and a credit is received under the treaty.
- 5Intensive short-term rental may be considered in Israel as business income, in which case the 15% track is not available.
How much tax does an Israeli pay in Bulgaria on rental income?
An Israeli who is not a Bulgarian resident and rents out a property he owns personally is liable to a final tax of 10% on the gross rental amount, with no possibility of deducting expenses. This is how RSM Bulgaria describes it, and it also follows from the positions of the Bulgarian tax authority regarding foreign individuals (as of October 2026).
This figure differs from what appears in most guides. The familiar calculation - an automatic deduction of 10% from the gross and tax of 10% on the balance, i.e. an effective tax of 9% - is the regime for Bulgarian residents, who pay quarterly advances and file an annual return. According to the Bulgarian tax authority's positions, the option for a non-resident to request a recalculation of the tax as a resident is reserved for residents of EU and EEA countries, and is therefore not usually open to an Israeli resident.
When the tenant is a Bulgarian company, the company withholds the tax at source and remits it to the tax authority. When the tenant is a private person who is not obliged to withhold, the foreign landlord is required to pay the tax himself. According to RSM, the deadline is the end of the month following the quarter in which the income was received.
Renting through a Bulgarian company is taxed at 10% corporate tax on profit, after deducting actual expenses, and a 5% withholding applies to a dividend distribution.
Which is better - renting in a personal name or through a Bulgarian company?
The answer depends on the scope of expenses and on whether a company is required anyway (for example, when buying a house with land, which an Israeli cannot acquire in his own name). A concise comparison:
| Structure | Tax base in Bulgaria | Rate | Deduction of expenses |
|---|---|---|---|
| Non-resident individual (Israeli) | Gross rent | 10% final tax | No |
| Bulgarian-resident individual | Gross less a 10% statutory deduction | 10% (about 9% effective) | A fixed deduction only |
| Bulgarian company (OOD) | Profit after expenses, depreciation and interest | 10% corporate tax | Yes, actual expenses |
| Dividend distribution from the company to an individual | The amount of the dividend | 5% withholding | No |
A company allows deduction of depreciation (at a rate not exceeding 4% a year for buildings, according to RSM), interest, maintenance and management fees, so in cases of high expenses - for example a holiday apartment with significant management fees or a leveraged property - it may be more efficient. On the other hand, it has ongoing bookkeeping and reporting costs, and it adds a layer of tax in Israel on the dividend. The decision should be made before the purchase, because changing the structure after the fact is expensive.
What is required to rent out an apartment short-term in Bulgaria?
Renting to tourists requires registration under the Bulgarian Tourism Act. Guest houses must be classified, and guest rooms and guest apartments that are not classified are registered in an electronic register kept by the mayor. Filing is done on an application-declaration form, and the municipality issues a registration certificate or a reasoned refusal.
The registration number must appear in every listing on a rental platform. From 20 May 2026, Regulation (EU) 2024/1028 applies in the Union, adding oversight and information-sharing mechanisms between the authorities and platforms such as Airbnb and Booking. In Bulgaria the mechanism is implemented within the existing Tourism Act, and a listing without a valid registration may be disabled or removed.
- Make sure the unit is registered in the property register as a residential apartment and that the building has a valid use permit.
- Check the condominium rules or the management contract in the complex - some of them restrict short-term rental or set conditions for it.
- File a registration application with the mayor and obtain a registration certificate and number.
- Register for tax purposes in Bulgaria and arrange the collection of the tourist tax from guests.
- Include the registration number in every listing and keep documentation of every booking.
Which additional taxes and fees apply to short-term rental?
- Tourist tax: A nightly tax per guest, the amount of which is set by each municipality. The landlord collects it from the guest and remits it to the municipality.
- VAT: Accommodation services are a taxable supply for VAT, unlike long-term residential rental. The threshold for mandatory VAT registration in Bulgaria is 51,130 euros of annual turnover (as of 2026), and for accommodation services a reduced rate of 9% generally applies. Applicability to a foreign landlord not established in Bulgaria should be checked separately.
- Property tax and waste fee: An annual property tax set by each municipality in the range of 0.01% to 0.45% of the tax valuation, alongside a refuse collection fee.
- Management fees and platform commissions: They are not taxes, but under the non-resident individual track they are not deducted from the Bulgarian tax base.
Income from short-term rental that is managed intensively, with ancillary services, may be considered in Bulgaria as business activity and be subject to a different tax regime. It is worth checking this with a Bulgarian accountant before starting, and not after a year of bookings.
How do you report and pay tax in Israel on rent from Bulgaria?
An Israeli resident is liable to tax in Israel on his income from rent abroad. Under the tax treaty between Israel and Bulgaria (signed on 18 January 2000 and amended within the multilateral MLI convention), Bulgaria has the right to tax income from property located in it, and Israel grants a credit for the tax paid in Bulgaria up to the amount of the Israeli tax on the same income.
In practice, the Israeli landlord faces two main tracks:
| 15% track (Section 122A) | Regular track (marginal tax) | |
|---|---|---|
| Tax rate | 15% | According to the personal tax brackets |
| Deduction of expenses | Depreciation only | All expenses incurred in producing the income, including interest |
| Credit for the Bulgarian tax | None | Yes, under the treaty |
| Condition | The income is not from a business | - |
| Usually suitable | Low expenses, predictable income | High expenses, leverage, significant management fees |
The significance of the absence of a credit under the 15% track is important: on rent of 12,000 euros a year, the landlord pays in Bulgaria 1,200 euros (10% of the gross), and in Israel up to a further 1,800 euros (15% before deducting depreciation). The total burden may reach a quarter of the gross rent. Under the regular track the Israeli tax is calculated on the net income, and the Bulgarian tax is offset against it - so the comparison must be made on each case's merits.
As for reporting: the Income Tax Regulations (Advances on Foreign Income), 5764-2004, allow abbreviated reporting of income from sources abroad, and meeting the requirements may exempt from filing an annual return. In addition, under a National Insurance Institute circular, income from residential rental abroad that does not amount to a business is exempt from contributions. Short-term rental on the scale and management manner of a business may change both.
A checklist for an Israeli landlord in Bulgaria
- Decide before the purchase on the holding structure - personal or a company - according to the expected scope of expenses.
- Register for tax purposes in Bulgaria and make sure who withholds the tax - the tenant or you.
- In short-term rental: registration with the mayor, a registration number in every listing, collection of the tourist tax.
- Keep proofs of payment of the Bulgarian tax - they are the basis for the credit in Israel.
- Choose with your accountant in Israel between the 15% track and the regular track, and check the reporting obligation.
- Follow changes: tourist tax rates, the VAT threshold and enforcement against platforms change.
Before renting out: how we accompany you
Already at the purchase stage we check whether the property suits the rental you planned - registration of the unit, the use permit, restrictions in the rules or the management contract - and we draft the lease or the managed-rental contract. With the accountants in Bulgaria and in Israel we make sure the holding structure and the tax track are chosen together, so that the income is not taxed twice unnecessarily.
The contents of this article are general information only, as of October 2026, and do not constitute legal advice, tax advice or an investment recommendation. Before any decision, obtain advice tailored to the circumstances of the transaction.
Frequently asked questions
How much tax does an Israeli pay on rent in Bulgaria?
An Israeli who is not a Bulgarian resident and rents out in his own personal name pays in Bulgaria a final tax of 10% on gross rent, with no deduction of expenses. In addition, the income is taxable in Israel, with a credit for the Bulgarian tax under the regular track.
Is a license required to rent out an apartment in Bulgaria on Airbnb?
Registration under the Tourism Act is required. A guest apartment that is not classified is registered in the mayor's electronic register, and the registration number must appear in every listing. Since 20 May 2026 platforms are required to act against listings without a valid registration.
Can you pay only 15% in Israel on rent from Bulgaria?
Yes, under the Section 122A track, if the income is not from a business. But under this track only depreciation is deducted and there is no credit for the tax paid in Bulgaria, so the total burden may be higher than under the regular track. It is worth comparing both tracks with an accountant.
Is it worthwhile to rent out through a Bulgarian company?
Sometimes. A company is taxed at 10% on profit after deducting actual expenses, and a 5% withholding applies to a dividend distribution. When expenses are high it may be worthwhile, but there are ongoing costs and tax implications in Israel that must be weighed.
Read next · 10 min readReal Estate Development in Sofia: Planning and Construction, Permits and Legal Considerations for a ProjectAn Israeli developer in Sofia: holding land when a non-EU foreigner cannot buy it, the permit route to a use permit, contracts, off-plan sales and exit tax.Read the guideSources
- RSM Bulgaria - Direct holding of real estate
- RSM Bulgaria - Taxation of real estate (payment deadlines for non-residents)
- PwC Worldwide Tax Summaries - Bulgaria, Individual, Income determination
- PwC Worldwide Tax Summaries - Bulgaria, Individual, Other taxes
- Dimitrov, Petrov & Co. - Short-term accommodation rentals: the new EU framework and its implications for Bulgaria
- Israel-Bulgaria Convention for the avoidance of double taxation (synthesized text with MLI)
- Ben Shoshan & Co. - Taxation of rental income, Israeli tax aspects
The information in this guide is general in nature and does not constitute legal or tax advice on any specific transaction. Every transaction is assessed on its own facts.