Bulgaria is becoming an increasingly popular jurisdiction for obtaining a crypto license due to its favorable tax regime
There is no need to obtain a crypto license in Bulgaria for transactions related to cryptocurrency. In addition, there is no cryptocurrency regulation in Bulgaria, because cryptocurrency is not considered a financial instrument or virtual money and does not fall under the supervision of the financial regulator.
Bulgaria has no special crypto license for crypto activities, as cryptocurrencies (bitcoins, altcoins) are perceived, verified, and declared as financial assets.
The regulation of cryptocurrency in Bulgaria at the moment does not fall under any of the provisions of the legislation. Based on this, it is possible to establish a cryptocurrency company without violating Bulgarian laws, while crypto activities are not subject to direct sanctions.
As of 2018, the cryptocurrency regulatory policy has not changed significantly but has been indirectly regulated by the "Anti-Money Laundering (AML) Act". Companies must exercise diligence, develop and implement verification rules and regulate transactions exceeding 15,000 euros.
Request more information about the Bulgaria Crypto License
To start operating, an entrepreneur only needs to register a company or, in some cases, obtain an ordinary financial license from the FSC. This applies to businesses that make transactions not only with crypto-assets but also with fiat currency. However, legal activities do not require a special Cryptocurrency license in Bulgaria, as in other jurisdictions.
Bulgaria has long been out of sight for the introduction of the cryptocurrency business but meets all investors' expectations of an ideal jurisdiction to start or scale existing projects. Advantages: stable development of foreign trade, economic security, the Bulgarian currency pegged to the euro, and access to the EU market. In addition, there is no currency control in the country, and company registration and opening a bank account can be done remotely.
Bulgarian taxation remains loyal to the business. Only company profits are taxed, the rate is 10% of annual income. In addition, the state has signed a bilateral treaty on the avoidance of double taxation with more than 60 countries.
Thus, Bulgaria is one of the most attractive jurisdictions for the introduction of the cryptocurrency business, which is not subject to strict cryptocurrency regulation in Bulgaria, unlike other countries.
Initial set up
Initial set up
Initial set up
Result: Acquiring basic details from the client; delivering an initial set of documents to proceed with a power of attorney (PoA); defining the project's scope and budgets
Result: The company has been registered under the chosen name and is now eligible to obtain a crypto license from the Bulgarian Trade Licensing Register
Result: The company has acquired a license for crypto-related activities and is now ready to commence operations
Result: The company is completely functioning with an open corporate account and meets the requirements of both the tax authorities (with an integrated accountant) and the supervisory authority as a virtual asset service provider
Currently, cryptocurrency companies can operate without a separate crypto license. The FSC (Financial Supervision Commission) does not license or regulate operations with virtual currency due to the lack of a legal framework
If your activity involves operations not only with virtual currency but also with fiat money or financial instruments, it is necessary to obtain a classic financial license from the FSC
Bulgaria has no official legal definitions of cryptocurrencies. The country is guided by the European Union policy in its legal approach.
However, unlike other jurisdictions, regulators do not require a crypto license because virtual currencies do not fall under the definition of financial instruments. Moreover, there is currently no law regulating crypto assets.
In 2018, the National Bank of Bulgaria warned of the risk of buying virtual currencies, noting that it was caused by increased volatility and also had signs of a price bubble. According to their statement, cryptocurrency is an unregulated product, not suitable as an investment, savings, or pension plan.
Despite this statement, the government has not appointed financial regulators and has refused to consider crypto-assets as electronic money or financial instruments. On this basis, Bulgaria's cryptocurrency regulation does not apply to cryptocurrency transactions.
However, contrary to the comments of the Bulgarian Central Bank that crypto-assets do not have the status of financial instruments, from the tax side - income from transactions related to cryptocurrency will be treated as income from sales of financial assets. This statement is in the conclusion of the National Revenue Agency. It states that income from the sale/exchange of cryptocurrencies must be declared in the tax return for the current year and paid the appropriate tax.
As of 2018, the policy of regulating cryptocurrencies has not changed significantly but has been indirectly regulated by a regulation of the "Anti-Money Laundering (AML) Act."
Virtual currencies are not issued or guaranteed by the central bank and have no legal financial status, but can be accepted by individuals or legal entities as means of exchange and sale and stored electronically.
The regulation of virtual currencies around the world is expanding every year. Many countries adopt special legislation and define a regulator and legal acts regarding cryptocurrency activities. Bulgaria is one of the few countries that has not yet introduced monitoring and cryptocurrency regulation laws in Bulgaria.
However, the FSC published a strategy for cyber business development, which notes 4 key provisions:
For now, this is at the level of development, but shortly, the government may activate the regulation of virtual currencies and pass a law on obtaining a cryptocurrency license in Bulgaria.
In 2020, the Council of Ministers of Bulgaria adopted a regulation containing a provision for the formation of a special register of companies that provide cryptocurrency services. Its main purpose is to separately designate the need to comply with AML regulations.
Later, the Ministry of Finance issued an Order establishing the procedure and conditions for the companies to be included in the public register, which is under the regulation of the National Revenue Agency (NRA). The creation of the registry limits the possibility of sponsorship of terrorism or money laundering.
Sections 10 and 4 of the Anti-Money Laundering Act apply to the activities of a cryptocurrency company.
Under Section 4 of the AML Act, companies must apply customer due diligence measures when:
When violations or suspicious transactions are detected, the company is required to:
Section 10 of the Anti-Money Laundering Act sets forth provisions for customer due diligence and possible penalties.
According to the NRA Law of 2018, cryptocurrency activities can be classified as a service that falls under the payment of VAT, in case the transaction is directly related to payment and is provided by a person subject to cryptocurrency tax in Bulgaria.
In taxation, all types of tokens are defined as financial assets because the NRA (National Revenue Agency) does not distinguish between types of tokens. From a tax collection perspective, crypto-assets would be treated the same as a gain on the sale of a financial asset. Government agencies in a tax situation do not maintain a distinction between cryptocurrency and financial transactions, which means both categories are subject to tax and should be included in the annual return.
Taxation of individuals. The Income Tax Law states that gains from the exchange/sale of assets are taxable. However, only profits are taxed, and losses and replacement assets are not taxed. The tax rate is 10% of the income received within one calendar year.
Taxation of legal entities. Each legal entity is liable to pay corporate tax at the rate of 10% of the realized income. When income is distributed to owners or partners, they must pay tax on dividends. The rate is 5% of profits after annual tax.
If the company has employees, wages under the employment contract must be paid only in fiat money.
If employees are paid by a foreign company, the company must register as an insured person in Bulgaria and pay all taxes and social security contributions.