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Can I buy Bitcoin and cryptocurrency in Bulgaria? The short answer is yes.
An introduction to Bitcoin and cryptocurrency trading in Bulgaria
Back when the Bitcoin and cryptocurrency phenomenon first came onto the scene and was being hastily assessed by governments around the world, Bulgaria’s main preoccupation was with anti-money laundering and fraud regulations before any really progressive legislation could be formulated. This was in common with many countries around the world that were deluged with a brand new currency that was unregulated – and not easy to understand. Of course, once Bitcoin took hold, taxation of gains was often the other prime consideration for nearly all developed countries too, but that’s another story.
Early on, Bulgarian banks and authorities were hesitant – to say the least – in providing their customers with help in trading or dealing with crypto exchanges – this is changing slowly. Currently, in Bulgaria Bitcoin and other cryptocurrencies, being categorised as financial assets, come within the jurisdiction of the National Revenue Agency NRA.
A Bulgarian CBDC?
Bulgaria has had some ambitious and progressive plans outlined for trialling some form of digital payments system through the use of a central bank digital currency. Such plans followed discussions with industry leaders and the Bulgarian National Bank concerning a crypto payment initiative. However, with the EC also looking at digital payment systems it’s likely that the outcome of these plans will depend on, or be influenced by Bulgaria’s future relationship with the EC.
Bulgaria’s digital and financial community
Cryptocurrencies are not defined as financial instruments or electronic money and no license is required to use them for business or do business with them. However, as in the EU, they are taxable and are treated in the same way as any income gained from the sale of financial assets. There is no specific crypto tax treatment, but the profits of trading are treated in the same way as income, subject to standard income and corporate tax, and declared with an annual tax return.
As Bitcoin becomes consolidated around the world, countries tend to either legislate for crypto gains separately or simply treat crypto profits as part of ordinary income. Bulgaria falls into the latter camp. As a casual or regular trader, you have the responsibility of complying with the tax laws and regulations in place at the time of your expected tax declarations. Having said, that, Bulgaria in line with most European countries that are guided by the decision of the European Court of Justice way back in 2015, appears not to levy VAT on crypto trading.
Bitcoin mining in Bulgaria
Cryptocurrency mining is not prohibited or illegal but does come with some legal and regulatory guidelines. The all-important NRA guidance states that if cryptocurrency mining is provided as a service then it is eligible for VAT consideration, this is provided that the mining is supplied as a service for remuneration to a paying party.
Bitcoin and blockchain education in Bulgaria
Bulgaria is an ambitious IT country and has several leading educational institutions and Universities offering a variety of Crypto and blockchain-related educational qualifications and study courses. One of the first to do this was the Varna University of Management which became the first leading education institution in the country to offer educational bursaries in Bitcoin.
Crypto regulation in Bulgaria
Although deemed a financial asset, this doesn’t mean crypto is given a legal status such as flat currency, instead, it is defined as a means of exchange which can be stored and traded electronically. As such most Virtual Asset Services Providers, VASPs, in Bulgaria need to register themselves prior to operation with the NRA under the country’s AML Act. With Bulgaria looking to join the Eurozone, it seems highly likely that it will take its lead from the EC’s directives on crypto.
Whilst EC countries have autonomy over their treatment of Crypto – especially with taxes – they nearly fall to a lesser or greater extent within the European Commission’s aims to create some form of unified crypto legislation across the whole community. This includes the 5th EU Anti-Money Laundering Directive which came into effect came into effect around 2020, which requires the registration of cryptocurrency exchanges with financial regulators – including the transfer of client wallet addresses; and also a Distributed Ledger Technology DLT Pilot, a framework for markets to trade and settle transactions in financial instruments in crypto-asset form. An even weightier draft of a new EU Regulation, Markets in Crypto-Assets Regulation – MiCA is also on the cards, bringing the EC closer to some form of community-wide legal and regulatory control.
Crypto Facilitation - Banks1
Crypto Services - VASPS1
Crypto Pensions / Investment Industry0
Business Community and Enterprise Funding1.5
Taxes in Bulgaria
Tax on crypto gains in Bulgaria
Bulgaria is an ambitious IT-driven country with a vibrant private enterprise sector. Aside from AML regulations and taxation, it has no specific crypto strategy, and even though it certainly does not consider Bitcoin to be legal tender, it leans towards being a light-touch regulatory system.
The country places a corporate tax of just 10% on profits from Bitcoin trading and exchanging.
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