Paying Tax in BG under EU dual tax scheme

Income tax is a flat rate of 10%. http://portal.nap.bg/en/page?id=514 check out link to BGN inland revenue site.

SofiaCasa, I am very grateful for the reply and link which I will be checking out.   

Hi Anna,

The information about the 10% tax rate is correct. There is no personal allowance here, but pensions are not taxable in Bulgaria.

Many of the ex-pats here receive a pension. Most of them have their pensions paid into a UK bank account. This allows them to keep a visible connection with the UK, and thus avoid the 'Habitual Residency' problem if they have to return. It does mean paying 20% tax on anything above the UK personal allowance, but most pensions are not much higher than the allowance anyway. The main problem with this method is that the banks and building societies in the UK are now charging additional fees when you use one of their credit or debit cards overseas.

I believe that some pensioners have their UK pension money paid into a Bulgarian account, so that they do not have to pay any tax. But the Bulgarian Leva is not an international currency. This can cause problems with money transfer. For example, the pension money might have to be changed into Euro to be sent to Bulgaria, and then changed into BGN when it is withdrawn here. Some of the international banks might be able to transfer in Sterling, so that there will be only one currency change.

Regarding the UK government's plans to withdraw the tax allowance (and with reference to the link that you included), they are targeting people who live overseas and rent out their houses in the UK. Ex-pats whose pensions are based on previous government employment might also be affected, for example people who worked in the NHS or local government, or former civil servants. But the vast majority of pensioners should not be adversely affected by the changes.