Welcome to the world of professional accounting for guest houses, family hotels and properties rented through Booking and Airbnb in Bulgaria. The accounting and consulting firm “Elan Consulting” is your trusted partner who provides expert services and advice in the management of your properties. We understand how important it is to have accurate and timely information regarding your tax obligations and accounting requirements so that you can focus on your core business and achieve maximum results.
Clients often ask us: “When should patent tax be paid for short-term rental and how is it calculated?”, “What are the requirements for filing a patent tax return 2024?”, “What is the amount of patent tax for 2024 and who are the persons who need to pay it?”. Pirsgirêkên hesabkirina baca patentê û awayê tomarkirina milkê ji bo kirê jî hevpar in. We at Elan Consulting have the necessary knowledge and experience to answer all these questions and help you navigate the complex requirements of Bulgarian legislation.
Whether you manage a guest house in Sunny Beach, a family hotel in Sozopol or rent properties through platforms such as Booking and Airbnb in Sofia, Burgas, Pomorie, Karnobat, Aytos, Nessebar, Primorsko and all of Bulgaria, we are here to offer you customized accounting solutions. Our services include preparation of returns, calculation of taxes, maintenance of accounting books and much more.
In the dynamic environment of short-term rental, it is essential to comply with all legal requirements and optimize tax costs. With our professional services, you will be assured that your business complies with all regulations and that your tax obligations are correctly calculated and declared.
Come to us and let us together make your business more successful and sustainable. Contact Elan Consulting today and benefit from our expert knowledge and experience in the field of accounting and tax consulting for guest houses, family hotels and rental properties in Bulgaria.
How is the accounting of a guest house in Bulgaria?
The accounting of a guest house in Bulgaria requires careful compliance with regulatory enactments and the correct accounting of income and expenses related to the management of the object. According to the Tourism Act, a guest house is a low-rise residential building that offers up to 10 rooms for accommodation and is managed by hosts living in the same or in an adjacent building (§1 of the Supplementary Provisions, item 27).
When leasing is carried out as part of an economic activity, the person must be registered as a trader within the meaning of the Commercial Law or as a legal entity that has the right to carry out business activities (Art. 113, para. 1). This also includes the requirement not to be in bankruptcy or liquidation proceedings and to have qualified personnel to manage the site. If the person is not a merchant, but rents out guest rooms, guest apartments or guest houses as part of the dwelling occupied by him, this is also permissible, but requires registration (art. 113, para. 2).
Renting is a commercial activity when a property is offered as a tourist service through electronic platforms, such as Booking or Airbnb. In these cases, the object must necessarily be categorized or registered (Art. 113, para. 3). Categorization is also mandatory for all tourist sites that provide services to guests and meet the specified categories according to the Tourism Act (Art. 123, para. 1).
The categorization of guest houses is carried out by the mayor of the municipality or by a person authorized by him, for which an application-declaration is submitted. It declares the name of the person, the name of the accommodation, address, telephone and e-mail, as well as documents proving the right to use the object (Art. 129, para. 1 and para. 2). A temporary certificate for an open categorization procedure is issued for a period of three months, during which an on-site inspection is carried out and the category of the object is determined (Art. 130, para. 4 and para. 5).
To ensure correct accounting, it is necessary to account for income from accommodation, expenses for maintenance and management of the site, as well as to file a tax return for patent tax if the activity is subject to patent tax. The patent tax is calculated according to the GDPR and depends on the location of the object and the number of rooms (Art. 61h and Art. 61r, para. 1 of the GDPR).
Persons who carry out hotel business in guest houses must provide tourist services in a categorized or registered tourist site (Art. 114, para. 1). They must also place a sign with information about the company, head office, address of management and the name of the manager near the entrance to the site (Art. 114, para. 3).
Accounting of a guest house also requires maintaining all financial documents and accounting for income and expenses, compliance with tax requirements, and maintaining a register of accommodated tourists. It is important to comply with all legal regulations and requirements in order to avoid administrative sanctions and ensure sustainable and legal management of the tourist site.
What are the different options for choosing a company form and what are the advantages and disadvantages of taxation?
The choice of company form for a guest house business in Bulgaria depends on various factors, including the size and nature of the business, the number of owners and their responsibilities, as well as the preferred taxation regime. The main types of companies include sole proprietorship (ET), limited liability company (LTD), variable capital company (LDC), but you should know that guest houses can also be managed by individuals without a registered company. Each species has its advantages and disadvantages in terms of taxation.
In the case of a sole proprietorship (ET), as well as in the case of an activity as a natural person without a company, the business owner is a natural person who manages the business and bears full responsibility for its obligations. The only difference between the two forms is whether the individual acts in his capacity as a trader or not, which entirely depends on the nature of the services offered.The taxation of ET is carried out on the basis of the taxable income of the individual, and the income from the activity is included in the general tax return and is subject to personal income tax (Personal Income Tax). The advantage of this type of company is the relatively easy and inexpensive registration and management. The disadvantage is that the owner bears unlimited liability for the obligations of the business and is subject to progressive taxation and insurance burden, which depend on the amount of income.
A limited liability company (LLC) is a popular choice for small and medium-sized businesses. This company has a minimum of one and a maximum of 50 partners, and they are liable up to the amount of the capital contributions paid. The taxation of the LLC is carried out at the corporate level, and the profits are taxed with corporate tax at the rate of 10% (Art. 18 of the CPA). Distributed dividends are subject to additional taxation with a dividend tax of 5% (Art. 194 of the CPA). The main advantage of an LLC is the limited liability of the partners, while the disadvantage includes more complex registration and reporting.
What is patent tax, what is its amount in 2024 and can guest houses pay patent tax?
Patent tax is a specific type of tax that applies to certain activities carried out by individuals, including sole proprietors, and is provided for in the Local Taxes and Charges Act (ZMDT). It is paid annually and replaces the obligation to pay personal income tax or corporate income tax, which facilitates taxation for small businesses and individuals engaged in these activities.
The amount of the patent tax for 2024 for accommodation with no more than 20 rooms, categorized with one or two stars, is determined according to the location of the object and ranges from 25 to 250 leva per room (Art. 61h of the ZMDT). This allows local authorities to adapt the tax to the specific conditions in their region.
Guest houses can benefit from the payment of patent tax, provided they meet the following criteria: have no more than 20 rooms and be categorized with one or two stars or registered under the Tourism Act. This requirement is important, since the patent tax is aimed at small entrepreneurs and individuals who do not reach a significant turnover. It is also important that the person carrying out the activity is not registered under the Value Added Tax Act, except in specific cases such as supplies of services under Art. 97a and intra-community acquisition under Art. 99 and Art. 100, para. 2 of the same Act (Art. 61z, para. 1).
The main advantage of the patent tax is the simplified administration and the fixed annual amount, which facilitates the planning and management of the financial obligations of small businesses. In addition, individuals and sole proprietors who pay patent tax are exempt from the obligation to file an annual tax return under the GDPR for income from this activity (Art. 61h, para. 2).
The disadvantages of the patent tax include the limitation in turnover, which may be inadequate for enterprises with a growing business. If the person's turnover exceeds BGN 100,000 for the previous year, it will be taxed in accordance with the general procedure of the Personal Income Tax Act or the Corporate Income Tax Act (Art. 61i, para. 2). In addition, patent tax is due even if the enterprise has low or no income during the year, which can be financially burdensome in unfavorable periods.
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