Bulgaria’s Personal Income Tax Act exempts capital gains on shares traded on an EU or EEA regulated market - no holding period, no cap on the amount. That single line, Art. 13(1)(3) ZDDFL, is the most valuable tax provision available to a Bulgarian investor in this entire treaty series. Whether it reaches shares bought on the New York Stock Exchange or NASDAQ is a genuinely disputed question right now, with two respected sources - PwC and a Bulgarian law firm citing the National Revenue Agency’s own published position - reading the same statutory language differently. This guide sets out both positions plainly, because guessing wrong on this one is the single most expensive mistake a Bulgarian investor holding US stocks can make.
Underneath that dispute sits the more mechanical part of the picture: a 10% treaty rate on dividends, a 5% Bulgarian dividend tax that a foreign tax credit largely absorbs, and the W-8BEN filing that makes the 10% rate apply in the first place.
How Bulgaria Taxes Foreign-Source Income, in Brief
Bulgaria taxes its tax residents on worldwide income - foreign-source income from US stocks is not treated differently in principle from Bulgarian-source income, though the specific rate depends on the type of income:
- Dividends (including US dividends): a flat 5% final withholding tax on the gross amount, under Art. 38(1) and Art. 46(3) of the Personal Income Tax Act - the same rate that applies to domestic dividends.
- Capital gains on shares: the standard flat 10% personal income tax rate applies, unless the Art. 13(1)(3) ZDDFL exemption for EU/EEA-regulated-market securities applies - and whether that exemption reaches US-listed shares specifically is the genuinely disputed question covered in detail just below.
- Interest: bank deposit interest is taxed at 8% in 2026; interest from bonds held as investment instruments is generally taxed as ordinary income at the 10% flat rate.
In every case, US tax already withheld under the treaty (covered fully below for each income type) generally credits against the matching Bulgarian liability on the same income, via Bulgaria’s ordinary foreign tax credit - so the two layers of tax don’t simply stack on top of each other.
The Art. 13(1)(3) ZDDFL Exemption: What Is Settled, and What Is Not
What is settled: capital gains realized by a Bulgarian tax-resident individual from disposing of shares, fund units, rights, or government securities on a regulated market in Bulgaria, another EU member state, or an EEA state (Iceland, Liechtenstein, Norway) are exempt from Bulgarian income tax under Art. 13(1)(3) ZDDFL. This applies to ETFs listed on Euronext, Deutsche Börse, and similar EU-regulated venues.
On the holding period: some older guidance suggested a minimum holding period applied to this exemption. Bulgarian law firm Innovires Legal’s current 2026 trader tax guide states plainly that there is “no holding-period condition, no per-transaction cap, and no aggregate limit” on the EU/EEA exemption. Treat the exemption as available regardless of how long a qualifying EU/EEA-listed position has been held, unless a Bulgarian tax advisor identifies a specific reason your situation differs.
What is genuinely disputed - and matters directly to anyone holding US stocks: whether the exemption extends to shares traded on NYSE or NASDAQ, as “equivalent third-country markets.”
- PwC’s Bulgaria Tax Summary states that, effective January 1, 2021, the exemption “has been extended to capital gains out of share disposal transactions performed on equivalent third-country stock markets as defined in EU Directives 2014/65/EU, 2011/61/EU, and 2002/92/EC” - wording that does not exclude US exchanges by name and, read on its own, could plausibly cover NYSE and NASDAQ as MiFID II-equivalent markets.
- Innovires Legal’s 2026 trader guide takes the opposite position and attributes it directly to the tax authority: “The NRA’s published position is unambiguous: transactions with shares carried out on a third-country market, including on a market considered ‘equivalent’ to an EU regulated market, fall outside” the scope of the exemption. On this reading, gains from NYSE- or NASDAQ-listed shares are taxed at the standard 10% flat rate regardless of holding period, and the firm describes the contrary assumption as “one of the most misreported points in online guides.”
These are two current, named, professionally-published sources reaching opposite conclusions from the same 2021 statutory amendment - one reading the directive-based “equivalent market” language literally, the other citing what it describes as the tax authority’s own administrative practice overriding that literal reading. Neither position can be dismissed as outdated commentary; both are dated 2026.
The practical guidance until this is resolved: treat gains from NYSE- and NASDAQ-listed shares as taxable in Bulgaria at 10% - the safer assumption if the NRA’s administrative position is as Innovires describes it, and no worse than correct if PwC’s reading turns out to govern. Do not file a return claiming the exemption on US-listed shares without a Bulgarian tax advisor confirming, in writing, which position applies to your filing. An incorrect exemption claim on Form 201 risks NRA review; an unnecessarily conservative 10% payment, if the exemption turns out to apply, is at least recoverable by amendment. For EU/EEA-listed holdings - Euronext, Deutsche Börse, and similar - the exemption is not in dispute and should be claimed.
Bulgaria: The Treaty in Summary - 10% on Portfolio Dividends
The Convention between the United States of America and the Republic of Bulgaria for the Avoidance of Double Taxation was signed on February 23, 2007, with an amending Protocol signed on February 26, 2008. The treaty entered into force on December 15, 2008.
| Income Type | Treaty Rate (US Withholding) | Bulgarian Domestic Tax | Notes |
|---|---|---|---|
| Dividends (portfolio, under 10% voting power) | 10% | 5% (gross amount) | Treaty caps US withholding at 10%; Bulgaria taxes the net |
| Dividends (qualifying: 10%+ voting power) | 5% | 5% | Company investor; relevant for EOOD owners holding US stocks |
| Interest | 5% | 8% (deposit interest) | Domestic BG rate reduced by treaty |
| Royalties | 5% | 10% | Reduced from domestic 10% |
| Capital gains (shares) | Residence country only | 10% flat (or exempt - see above) | No US withholding on sale proceeds for non-US persons |
Sources: US-Bulgaria Tax Treaty (February 23, 2007, force December 15, 2008); IRS Technical Explanation of the Bulgaria Convention; PwC Tax Summaries - Bulgaria (2026); Innovires Legal (2026).
For a visual comparison across all US treaty countries, the tax map tool lays out the rates side by side.
Dividends: Two Layers of Tax, One Credit
When a US stock or ETF pays a dividend to a Bulgarian resident, two tax systems apply in sequence.
US side: without a W-8BEN on file, withholding defaults to 30%. With a valid form claiming the treaty, withholding drops to 10% under Article 10.
Bulgarian side: under Art. 38(1) and Art. 46(3) of the Personal Income Tax Act, dividend income received by a Bulgarian resident individual is subject to a final withholding tax of 5% on the gross amount, regardless of source - the same rule that applies to Bulgarian dividends.
Bulgaria’s ordinary-credit foreign tax credit allows the US withholding to offset Bulgarian tax on the same income, capped at the Bulgarian tax actually due.
Worked example - with a valid W-8BEN:
| Amount | |
|---|---|
| US gross dividend | $2,200 |
| US withholding at 10% (treaty rate) | -$220 |
| Net received from broker | $1,980 |
| Bulgarian tax at 5% on $2,200 gross | $110 |
| Foreign tax credit (limited to BG tax due) | -$110 |
| Additional Bulgarian tax owed | $0 |
| Total effective tax | $220 (10% overall) |
The credit fully absorbs the 5% Bulgarian layer because the 10% US withholding already exceeds it. The extra 5 percentage points the US keeps beyond what Bulgaria would have taxed is not recoverable - it is simply the cost of the treaty rate being higher than the domestic dividend rate.
Without W-8BEN, the same $2,200 dividend: US withholding at 30% = $660; Bulgarian tax at 5% = $110; foreign tax credit capped at the Bulgarian tax due = -$110; the remaining $550 of excess US withholding is unrecoverable through the Bulgarian return - reclaiming it requires filing US Form 1040-NR, a process most retail investors find disproportionate to the amount at stake. Filing W-8BEN correctly from the start avoids the issue.
W-8BEN: Filing and Renewal
Form W-8BEN goes to the broker, not the IRS, and does two things: certifies non-US person status, and claims the treaty rate under Article 10.
Most brokers used by Bulgarian investors - IBKR, Firstrade, Saxo Bank - collect W-8BEN during account opening. If not completed then, it’s available through the broker’s document center. The broker finder tool and the guide to opening a US brokerage account as a non-resident cover the setup process if a broker hasn’t been chosen yet.
Check your dividend statement: 10% confirms the correct Bulgaria-specific rate is applied. 15% means the broker has defaulted to the generic major-treaty rate rather than Bulgaria’s 10% - this happens more often than investors expect and is worth catching, since it means overpaying by the same 5 percentage points as having no form at all, relative to what the treaty actually allows. 30% means no form is on file at all.
Validity: the year you sign plus the three calendar years after it - a form signed in January 2024 runs through 31 December 2027, not the end of 2026. Brokers revert to 30% automatically on expiry, and reminders are not guaranteed.
Interest Income
Article 11 of the treaty caps US withholding on interest at 5%, well below the 30% default, for a Bulgarian resident holding US Treasuries or US money market instruments directly with a W-8BEN on file.
On the Bulgarian side, deposit interest is taxed at 8% in 2026; interest from US bonds held as investment instruments is typically taxed as ordinary income at the 10% flat rate. The 5% US withholding credits against the Bulgarian liability on the same income.
For most retail investors this is a secondary concern: bond ETF distributions are usually characterized as ordinary dividends at the fund level rather than interest, in which case the 10% dividend withholding rate applies instead of the 5% interest rate - the classification depends on how the fund reports the distribution on Form 1042-S.
Filing with the National Revenue Agency
Bulgarian residents with investment income file an annual return by April 30 of the following year (April 30, 2027, for the 2026 tax year), via the NAP portal or in person. Filing and paying online before March 31 earns a 5% reduction on the tax due, capped at BGN 500 (roughly EUR 255) - worth the timing effort for anyone with meaningful capital gains.
What to report on Form 201:
- US dividends: the gross amount, with a claim for the foreign tax credit covering the 10% US withholding actually deducted.
- Capital gains from US-listed stocks: taxable at 10% under the conservative position described above, unless a tax advisor has confirmed the third-country exemption applies to your specific filing.
- Capital gains from EU/EEA-regulated market disposals: reported and the Art. 13(1)(3) exemption claimed - no holding period requirement applies.
Annex numbering on Form 201 has shifted between tax years; verify the current annex for foreign dividend income and capital gains on the NAP portal (nra.bg) before filing rather than relying on a specific annex number from a prior year’s guide.
Form 1042-S, issued by the US broker by March 15, documents gross US-source dividends and withholding - the primary record for the foreign tax credit claim. The foreign tax credit and the Art. 13 exemption must both be actively claimed on the return; the NRA does not apply either automatically.
The EOOD Structure
Some Bulgarian investors hold US stocks through an EOOD (single-member limited liability company) rather than personally. The tax chain differs meaningfully.
An EOOD pays 10% Bulgarian corporate income tax on trading profits. Dividends distributed from the EOOD to the individual owner face an additional 5% Bulgarian dividend withholding - a combined effective rate of 15%.
The entity files Form W-8BEN-E, not the individual W-8BEN, to claim the treaty rate on US dividends. The Art. 13(1)(3) exemption is only available to individuals under PITA - an EOOD’s capital gains from US stock disposals are taxed at 10% corporate income tax with no regulated-market relief, regardless of which reading of the third-country question is correct.
For pure US stock investing, the EOOD’s 15% combined dividend rate compares unfavorably to the 10% treaty rate for individuals, and it loses access to the Art. 13 exemption entirely. It may still make sense for unrelated business reasons - just not for the tax treatment of US investment income alone.
How the US-Bulgaria Treaty Compares
| Country | US Dividends (Portfolio) | Interest | Capital Gains |
|---|---|---|---|
| Bulgaria | 10% | 5% | Residence only |
| Australia | 15% | 10% | Residence only |
| Austria | 15% | 0% | Residence only |
| Czech Republic | 15% | 0% | Residence only |
| Denmark | 15% | 0% | Residence only |
| China | 10% | 10% | Residence only |
| United Kingdom | 15% | 0% | Residence only |
| Japan | 10% | 0% | Residence only |
Bulgaria’s 10% portfolio dividend rate matches Japan and China and beats the UK, Austria, Czech Republic, and Australia’s 15%. Combined with the 5% Bulgarian domestic dividend tax - which the foreign tax credit fully neutralizes - the total effective rate on US dividends works out to 10%, among the lowest in this treaty network.
The interest rate at 5% is worse than the 0% offered by Austria, Czech Republic, and the UK, but better than China and Australia’s 10%. On capital gains, Bulgaria’s real advantage over most of this table is not the treaty (residence-only taxation is standard) but the domestic Art. 13(1)(3) exemption - genuinely more valuable than any other country’s approach in this series, for the portion of a portfolio it clearly covers.
Where Investors Actually Lose Money
Claiming the Art. 13 exemption on US-listed shares without confirming which NRA position applies. This is the costliest possible error in either direction - underpaying if the exemption doesn’t apply invites NRA review; overpaying by treating a genuinely exempt gain as taxable costs 10% of the gain unnecessarily. Get this confirmed in writing before filing.
Not filing W-8BEN, or accepting the wrong rate. 30% means no form; 15% means the broker applied a generic rate instead of Bulgaria’s 10% - both cost money relative to the treaty rate you’re entitled to.
Assuming the EU/EEA exemption requires a minimum holding period. Current guidance states there is none. Don’t hold a position longer than intended based on an outdated 24-month assumption.
EOODs filing the individual W-8BEN instead of W-8BEN-E. The broker may not apply the treaty rate correctly, defaulting to 30% instead of 10%.
Not claiming the foreign tax credit on dividends. The 10% US withholding offsets the 5% Bulgarian dividend tax in full - skipping the claim means paying both in full.
The Bulgarian investor’s short list:
- Confirm W-8BEN shows 10% (not 30% or 15%) on dividend statements, citing Article 10
- Renew W-8BEN before the three-year expiry
- File Form 201 by April 30 (or March 31 for the early-filing discount)
- Claim the foreign tax credit for US dividend withholding
- Get written confirmation from a Bulgarian tax advisor on which NRA position applies to any NYSE/NASDAQ capital gains before filing
- Claim the Art. 13(1)(3) exemption on EU/EEA-regulated market disposals without hesitation - no holding period applies
Checklist - US citizen living in Bulgaria:
- File Form 1040 annually
- Claim Foreign Tax Credit (Form 1116) for Bulgarian taxes paid
- File FBAR if aggregate Bulgarian account balances exceed $10,000 at any point
- File Form 8938 above the applicable FATCA threshold
- If an EOOD owner: file Form 5471 annually - penalty for non-filing is $10,000
- Note that no US-Bulgaria totalization agreement exists as of 2026
What Bulgarian Investors Should Actually Do
The dividend mechanics here are among the best available in this treaty series: 10% US withholding, a Bulgarian 5% layer the credit fully absorbs, for a 10% total effective rate that beats most of Western Europe. That part is settled and just needs a correctly filed W-8BEN.
The capital gains side is where real judgment is required. The Art. 13(1)(3) exemption is unambiguous and valuable for EU/EEA-listed holdings, with no holding period attached. For US-listed shares specifically, PwC and a Bulgarian law firm citing the tax authority’s own administrative position disagree about whether the same exemption applies - and that is not a gap this guide can close from outside Bulgaria. Treating NYSE and NASDAQ gains as taxable at 10% is the conservative default until a Bulgarian advisor confirms otherwise in writing for your specific filing.
The above is an explainer on investing from Bulgaria, not professional counsel. Treaty rates are based on the Convention between the United States and the Republic of Bulgaria for the Avoidance of Double Taxation (signed February 23, 2007, in force December 15, 2008) and the amending Protocol (February 26, 2008). Bulgarian domestic tax rates reflect the Personal Income Tax Act (ZDDFL) and Corporate Income Tax Act (CITA) as in force for the 2026 tax year. The scope of the Art. 13(1)(3) ZDDFL exemption for third-country (including US) markets is genuinely disputed between current professional sources - consult a qualified Bulgarian tax advisor before relying on either position. Always consult a qualified cross-border tax professional before you commit real money.
Sources: US-Bulgaria Income Tax Convention and Protocols (US Treasury, 2007-2008); IRS Technical Explanation of the Bulgaria Convention; Innovires Legal - Bulgaria for Trading FX, Stocks & Financial Instruments: Tax Guide (2026); PwC Tax Summaries - Bulgaria, Individual Income Determination (2026); PwC Tax Summaries - Bulgaria, Corporate Withholding Taxes (2026); IRS Publication 515 (2026); FinCEN FBAR guidance (2025).
