Bulgaria is the closest thing to a real EU competitor Georgia's 1% has, because Bulgaria's flat 10% is genuinely the lowest income and corporate tax rate in the European Union. It is also the comparison where "just look at the headline rate" goes wrong fastest, because Bulgaria's 10% comes bundled with a mandatory social security and health contribution that most write-ups leave out entirely. Add in Bulgaria's move to the euro on 1 January 2026, and this is a closer, more honest fight than either country's marketing suggests.
What Bulgaria actually taxes
Bulgaria runs the simplest headline rate structure in the EU. Corporate income tax is a flat 10%, confirmed on PwC's Bulgaria corporate tax summary, with no bands and no distinction between small and large companies. Personal income tax is also a flat 10% on nearly all income types, one of the lowest rates anywhere in Europe.
Dividends paid out of a Bulgarian company are subject to a 5% withholding tax, confirmed on PwC's withholding tax page, though dividends paid to a genuine EU or EEA parent company are generally exempt entirely. VAT sits at 20% standard, and Bulgaria has been a full EU member since 2007. What none of that headline rate structure mentions is what a self-employed person or a company owner actually has to pay into the social system, which is where the real comparison starts.
The headline numbers, side by side
| Georgia | Bulgaria | |
|---|---|---|
| Headline small-business rate | 1% of turnover, Small Business Status, up to 500,000 GEL | No turnover regime; flat 10% on corporate profit or personal income |
| Standard personal income tax | 20% flat | 10% flat |
| Dividend withholding | 5% | 5%, often 0% to an EU/EEA parent |
| Mandatory social contributions, self-employed | None under Small Business Status | Roughly 32.7% to 33.4% of an income band, self-paid |
| Standard VAT | 18%, registration above 100,000 GEL turnover | 20% |
| Currency | Lari (GEL) | Euro, since 1 January 2026 |
| EU member | No | Yes |
| Stripe supported | No | Yes |
The number the "10% flat tax" pitch leaves out
Bulgaria's flat 10% is real and it is genuinely low. What gets left out of nearly every comparison is that a Bulgarian sole trader or registered freelancer is also required to pay into the national social security and health insurance system, and that bill is not small.
A self-employed person in Bulgaria pays mandatory social security and health contributions confirmed on PwC's Bulgaria individual tax summary at roughly 24.7% to 25.4% for social security plus 8% for health insurance, a combined 32.7% to 33.4%, calculated on a declared insurance base between a minimum of EUR 550.66 a month and a maximum of EUR 2,111.64 a month as of January 2026. On top of the 10% income tax, that is a real, mandatory, five-figure annual cost Georgia's Small Business Status has no equivalent to whatsoever.
The practical way most Bulgarian owners reduce this is by running the business through an EOOD, a single-member limited company, and paying themselves a modest formal salary that keeps the social security base near the minimum while taking the rest as dividends, which carry the 5% withholding but no social contribution at all. That structuring works, but it takes real accounting discipline to run correctly, and it still leaves a Bulgarian company owner paying meaningfully more than a Georgian Individual Entrepreneur at the same income, once the minimum contribution base and the 5% dividend tax are both counted.
Georgia's 1% against Bulgaria's real numbers
Take a solo consultant billing EUR 80,000 a year with low costs, run through both systems as they actually apply rather than compared on the headline rate alone.
| Georgia, Small Business Status | Bulgaria, sole trader or EOOD | |
|---|---|---|
| Income tax | 1% of turnover | 10% of profit |
| Mandatory social contributions | None | Roughly 32.7% to 33.4% of the declared insurance base |
| Tax on EUR 80,000 | EUR 800 | EUR 8,000 income tax, plus contributions on top |
| What is kept | EUR 79,200, minus real costs | Meaningfully less, once contributions are added to the 10% |
Even ignoring the social contributions entirely, Bulgaria's 10% is ten times Georgia's 1%, which our 1% tax pillar covers as the baseline every comparison in this cluster works from. Add the mandatory contributions, and the gap widens further for anyone operating as a genuine sole trader rather than optimising through an EOOD's salary-and-dividend split. Georgia's comparison is not close for a solo, high-margin service business, and being honest about the social contribution line is what makes that conclusion trustworthy rather than a rate quoted out of context.
Bulgaria just joined the euro, and that changes real things
On 1 January 2026, Bulgaria adopted the euro and became the eurozone's 21st member, confirmed by the European Central Bank's own changeover page, at a fixed conversion rate of 1.95583 lev to the euro. This is not a small development for anyone comparing Bulgaria against Georgia specifically.
A Bulgarian company can now hold euro accounts, invoice EU clients without a currency conversion step, and price in the same currency its biggest market already uses, all without the exchange-rate friction a Georgian lari-denominated business carries. Georgia is neither an EU member nor on any realistic path to the eurozone, and our payment processors guide covers what a Georgian company routes payments through instead of the native rails a euro-area business now has by default.
Where Bulgaria genuinely wins
EU membership and the euro, together. Bulgaria offers what Georgia structurally cannot: a genuine EU entity, now denominated in euros, that clients across the bloc treat as a domestic counterparty. That matters most for a business selling into the EU specifically, rather than invoicing a handful of clients wherever they happen to be.
Stripe and EU-grade banking. Bulgaria is a fully supported Stripe country, while Georgia has never appeared on that list. A Bulgarian company can put a Stripe checkout live immediately; a Georgian one has to route through Wise, Payoneer or a payment facilitator instead.
A lower rate than almost anywhere else in the EU, for a business that is not a pure sole trader. For a small company with employees or a genuine EOOD structure splitting salary and dividends carefully, Bulgaria's 10% plus 5% dividend withholding is a real, competitive number inside the EU, even once contributions are accounted for.
Where Georgia genuinely wins
Cost, once mandatory contributions are counted honestly. Small Business Status charges 1% of turnover with nothing else owed. A Bulgarian sole trader pays 10% income tax plus a mandatory social and health contribution of roughly a third of a declared insurance base, a structural cost Georgia's regime simply does not have.
No residency requirement, and a structure most CFC regimes do not reach. Georgia's 1% applies to a properly registered Individual Entrepreneur with no requirement to live in the country, which our Georgian tax residency guide covers as a genuinely separate question from holding the tax status. A Georgian IE is also a sole proprietorship rather than a company, which a meaningful number of controlled-foreign-company regimes do not reach the way they reach a Bulgarian EOOD.
Simplicity. One flat rate, one monthly declaration, no salary-and-dividend structuring exercise to keep the social contribution base down. Bulgaria's system rewards careful structuring; Georgia's 1% does not require any structuring at all to get the low number.
Bulgaria is not the only EU-adjacent option worth weighing here. Cyprus runs a materially different pitch built around non-dom status rather than the flat rate (Georgia vs Cyprus), Malta chases a similar high-earner audience through its refund system (Georgia vs Malta), and Estonia is the other flat-structure EU comparison most people put next to Bulgaria (Georgia vs Estonia). Outside Europe, Paraguay and Armenia (Georgia vs Paraguay, Georgia vs Armenia) run entirely different systems worth knowing about before settling on either of these two.
We'll model your actual income, whether you would run as a sole trader or a company in Bulgaria, and where you are tax resident today, then tell you honestly which one wins for your numbers. Thirty minutes, no cost.
See what it costs
Which structure and which residency, not just which rate
The rate comparison only means something once two separate questions are answered honestly: which legal structure you would actually use in Bulgaria, and whether your home country still taxes you regardless of where you register.
A Bulgarian sole trader and a Bulgarian EOOD owner paying themselves through salary and dividends face genuinely different total costs, which is not true of Georgia's Small Business Status, where the number is the same regardless of how the business is organised beyond the IE itself. On residency, Georgia's double taxation treaties guide covers the network of more than 55 agreements Georgia holds, including with Bulgaria, in force since 1 July 1999 and confirmed on the Ministry of Finance of Georgia's treaty page. That treaty matters once turnover moves past the 500,000 GEL cap and the standard Georgian rates, rather than Small Business Status, become the honest comparison against Bulgaria's flat 10%.
So which one actually wins
Georgia wins for a solo consultant, freelancer or small agency with wide margins who wants the lowest possible bill, does not need an EU entity specifically, and would rather avoid the salary-and-dividend structuring a Bulgarian company requires to keep its real cost down.
Bulgaria wins once EU membership, the euro and Stripe are genuine requirements rather than conveniences, and once the business is organised as a proper company rather than a pure sole trader, since that is where Bulgaria's 10% starts to look like the competitive EU rate it is marketed as. For many EU-facing businesses, that EU membership is worth more than the nine points of headline rate difference, once the real cost of a Georgian company's lack of EU access is counted against it.
Key takeaways
- Bulgaria charges a flat 10% on both corporate profit and personal income, the lowest combination in the EU, with a 5% dividend withholding.
- Bulgaria adopted the euro on 1 January 2026, becoming the eurozone's 21st member.
- A Bulgarian sole trader also owes mandatory social security and health contributions of roughly 32.7% to 33.4% of a declared income base, a cost most comparisons never mention and Georgia's 1% has no equivalent to.
- On EUR 80,000 of solo income, Georgia's 1% costs roughly EUR 800 against a materially higher Bulgarian bill once contributions are counted.
- Bulgaria is a full EU member with Stripe support and, now, the euro; Georgia is neither an EU member nor Stripe-supported.
- Georgia has no residency requirement and no mandatory social contributions under Small Business Status; Bulgaria requires genuine structuring to keep its real cost competitive.
Frequently asked questions
Is Bulgaria's tax really only 10%?
The headline income tax rate is a flat 10% on both corporate profit and personal income, genuinely the lowest combined rate in the EU. What that figure leaves out is mandatory social security and health contributions, roughly 32.7% to 33.4% of a declared insurance base for a self-employed person, which is a real and separate cost on top of the 10%.
Has Bulgaria adopted the euro?
Yes. Bulgaria adopted the euro on 1 January 2026, becoming the eurozone's 21st member, at a fixed conversion rate of 1.95583 lev per euro. The lev is no longer Bulgaria's currency for new transactions.
How does Georgia's 1% compare to Bulgaria's 10%?
For a solo, high-margin business, Georgia's 1% of turnover is far cheaper even before Bulgaria's mandatory social contributions are added, and considerably cheaper once they are. Bulgaria becomes more competitive for a business structured as a proper company splitting a modest salary and dividends, rather than a pure sole trader.
Do I have to pay Bulgarian social security if I am self-employed there?
Yes, if you register as a sole trader or freelancer. The contribution is mandatory, roughly 32.7% to 33.4% of a declared insurance base with a monthly minimum and maximum, and it applies regardless of how much of that income you actually keep after expenses.
Does Bulgaria have Stripe?
Yes. Bulgaria is a fully supported Stripe country, while Georgia has never appeared on Stripe's list. A Georgian company can still take card payments through Paddle, Wise, Payoneer or direct bank acquiring, covered in our payment processors guide, but none of them is a native Stripe integration.
Does Georgia have a tax treaty with Bulgaria?
Yes, in force since 1 July 1999, one of more than 55 double tax treaties Georgia holds, confirmed on the Ministry of Finance of Georgia's own treaty page. It matters mainly for structuring between the two rather than for someone simply choosing one over the other.
Which is cheaper to set up, a Georgian IE or a Bulgarian EOOD?
Broadly similar, both are inexpensive by European standards. Georgia's Small Business Status runs to roughly 600 GEL, about $220. A Bulgarian EOOD now requires as little as EUR 1 in minimum capital following the euro changeover, with total registration costs typically a few hundred euros including notarisation and a bank account.
Is Georgia or Bulgaria better for a business that needs EU clients?
Bulgaria, generally, if EU market access, a euro account or Stripe are genuine requirements. Georgia is not an EU member and has no path to becoming one, so a business whose clients specifically expect an EU counterparty usually fits Bulgaria, or a similar EU jurisdiction, better regardless of the rate difference.
Can I reduce Bulgaria's social security cost by using a company instead of a sole trader?
Partially. Structuring as an EOOD and paying yourself a modest formal salary while taking the rest as dividends keeps the mandatory contribution closer to the minimum insurance base, with the dividend portion carrying only the 5% withholding and no social contribution. It takes real accounting discipline to run correctly and does not eliminate the cost entirely.
Will my home country still tax me if I register in Bulgaria or Georgia?
Possibly, in both cases, and it is a separate question from either country's rate. Bulgarian and Georgian registration each depend on your own country's residency-breaking rules and any treaty in place, not on the rate you found while comparing the two.
At what income level does Bulgaria start to beat Georgia?
Rarely, on tax alone, for a solo service business. Bulgaria's case is built on EU membership, the euro and Stripe rather than on the number being lower, since Georgia's 1% remains far cheaper at almost any income under the 500,000 GEL Small Business Status cap once Bulgaria's mandatory contributions are counted honestly.