Why it is better to do business in Bulgaria than in the Czech Republic: comparison of taxes and legislation

Why is it better to do business in Bulgaria than in the Czech Republic: comparison of taxes and legislation

If you're considering starting a business abroad, Bulgaria offers several key advantages over the Czech Republic, especially when it comes to taxes and legislation. In this article, we compare the tax burden in both countries, including dividend tax, and look at why doing business in Bulgaria is often more attractive to entrepreneurs.

1. Lower tax burden in Bulgaria

One of the main reasons why entrepreneurs choose Bulgaria is the significantly lower tax burden compared to the Czech Republic. Let's take a look at the individual taxes.

• Corporate income tax in Bulgaria is 10%, one of the lowest rates in the entire European Union. In the Czech Republic, the tax rate is 19%. This means that companies in Bulgaria pay almost half the tax of companies in the Czech Republic, which significantly increases net profits and allows for more investment in development.
• Personal income tax in Bulgaria is also 10%, while in the Czech Republic it is progressive and reaches up to 23% for higher income groups. This low rate in Bulgaria thus provides higher net income for entrepreneurs and employees.
• Dividend tax in Bulgaria is set at 5%, which is significantly more favourable than in the Czech Republic, where the rate is 15%. For entrepreneurs and investors, the low dividend tax is a great advantage, as it allows them to keep a larger part of the profits from the business.
• VAT (value added tax) in Bulgaria is 20%, which is 1% less than in the Czech Republic, where the basic rate is 21%.

Lower taxes in Bulgaria, including income tax, dividend tax and corporate taxes, mean that businesses can save a significant portion of their profits, which supports long-term sustainability and business growth.

2. Simpler legislation and business environment

Business in Bulgaria is not only advantageous due to low taxes, but also due to a more favourable legislative environment.

Setting up a business in Bulgaria is quick and easy, often taking only a few days. In the Czech Republic, the process of setting up a company can take longer and require more administrative tasks, which can be time-consuming for entrepreneurs.
Bureaucracy in Bulgaria is smaller than in the Czech Republic, which means fewer obstacles for entrepreneurs who want to react quickly to market changes and expand.
The Bulgarian government offers various tax breaks and incentives for new entrepreneurs and foreign investors, which makes doing business in Bulgaria even more attractive. Although similar support programs exist in the Czech Republic, obtaining them is often more complicated and administratively challenging.

3. Lower operating costs

In addition to tax advantages, Bulgaria also offers significantly lower operating costs compared to the Czech Republic. This includes lower labour costs, rent and other operating expenses.

The average wage in Bulgaria is lower than in the Czech Republic, which means you can hire skilled workers at a lower cost without sacrificing quality.
The cost of renting office and business space is significantly lower in Bulgaria than in the Czech Republic, allowing entrepreneurs to manage their finances more efficiently and invest more resources in business development.
4. Advantageous geographic location and EU membership
Bulgaria is a member of the European Union, which gives businesses access to the single European market. This means that there are no customs barriers to trade within the EU, making it easier to expand to other countries.

Because of its geographical location on the Balkan Peninsula, Bulgaria is also an ideal entry point to the markets of South East Europe and Asia, which can open up new business opportunities for entrepreneurs.

5. Encouraging foreign investors

 

The Bulgarian government encourages foreign investors through various incentives and tax breaks. Investments in strategic sectors such as technology, energy, manufacturing and others are often encouraged through tax benefits or exemptions from certain taxes.

These incentives make Bulgaria an attractive destination for foreign entrepreneurs seeking favourable conditions for their investments.

Why it is advantageous to do business in Bulgaria
Business in Bulgaria offers significant tax breaks and lower operating costs compared to the Czech Republic, making the country an attractive destination for entrepreneurs. Lower corporate income tax, dividend tax and progressive tax policies encourage business growth and allow entrepreneurs to maximise their profits. The combination of these factors with simpler legislation and less red tape provides an ideal environment for business and growth.

If you are considering international expansion or looking for a more favourable environment for your business, Bulgaria could be the right choice.