In many countries, seafarers enjoy preferential tax treatment, compared to those who work on-shore. Bulgaria is no exception. Since 01.01.2010 the Bulgarian legislation foresees different tax regime to seafarers for their income from employment relations. So let’s dig into the legal details below.
Point 54 of § 1 from the additional provisions of the Bulgarian law for taxation of private individuals gives us the legal definition of who is considered to be seafarer in Bulgaria.
“Seafarer” is a natural person holding a post as a crew member of a seagoing ship inscribed in the register of vessels of a Member State of the European Union, either on shore or on board of a vessel, holding a license and a certificate for additional and / or special training, obtained in accordance with the ordinance under Art. 87, para. 1 of the Merchant Shipping Code.
It is important to know who is considered to be a crew member of a ship and also what are the required licenses and certificates so the person can fit into the legal definition of “seafarer”.
The crew of the ship consists of the captain, the other members of the command staff and the ship’s crew entered on the crew list. The crew of the vessels sailing under Bulgarian flag shall be filled with the required number of qualified seafarers possessing the relevant qualification, in accordance with the Regulation on Seafarers in the Republic of Bulgaria, issued by the Minister of Transport, Information Technology and Communications.
The ordinance under Art. 87, para. 1 of the (Bulgarian) Merchant Shipping Code sets the rules of how the seafarers can obtain the required licenses and certificated in Bulgaria. It also sets the conditions and procedures for the recognition of seafarers’ licenses and certificates acquired in a Member State of the European Union and of the European Economic Area, in Switzerland and in third countries.
The tax base for seafarers for income received from labor contracts by Bulgarian law is set to be only 10% from the tax base that is applied to on-shore workers.
For on-shore workers, the amount of the advance tax (the tax that is levied on the monthly salary) is 10% on the received remunerations, after deduction of the social security and insurance contributions. In contrast, the tax levied for seafarers is only 1%.
The amount of tax that is levied on income from other sources (not from labor contracts under Bulgarian law) is 10%.
Paying taxes as seafarer in Bulgaria provides clear advantages if compared to those working on-shore. It is important to realize however, that the tax reliefs only apply for money received in form of a salary. The tax reduction doesn’t apply to income from other sources.