Bulgaria – United States Tax Treaty
The Bulgaria-United States tax treaty caps withholding on dividends at 10% for portfolio investors and 5% for qualifying direct investment, and interest at 5%. Royalties are taxed at a uniform 5% across all categories. Private pensions are taxable only in the country of residence, with no withholding at source. This is one of 3 active treaties in Bulgaria's network and one of 64 in United States's. The general dividend rate of 10% is below the median in both countries' treaty networks (Bulgaria: 15%, United States: 15%).
Verified data
IRS Table 1 - Tax Rates on Income Other Than Personal Service Income (Rev. May 2023)
Withholding Rate Summary
Source: IRS Table 1 (Withholding Rates)| Income Type | Treaty Rate | Statutory Rate (United States) |
|---|---|---|
| Dividends (general) Portfolio investors | 10%saves 20% | 30% |
| Dividends (qualified) Beneficial owner is a company holding >= 10% of voting stock | 5%saves 25% | 30% |
| Interest Bank interest, bonds, loans | 5%saves 25% | 30% |
| Royalties (avg) Patents, copyright, know-how, film/TV | 5% | — |
| Pensions Private pension distributions | 0% | — |
| Social Security Government social security benefits | 30% | — |
“Treaty Rate” is the maximum withholding permitted under this treaty. The actual effective rate may be lower if domestic law provides a more favorable rate independently. “Statutory Rate (United States)” shows the rate that applies when no treaty benefit is claimed. Qualified dividend rate requires: Beneficial owner is a company holding >= 10% of voting stock.
Dividends
The general dividend rate of 10% applies to portfolio investors. A reduced rate of 5% is available when beneficial owner is a company holding >= 10% of voting stock. Without the treaty, the statutory withholding rate on dividends is 30%.
Source: IRS Table 1 (Withholding Rates)
Interest
Interest payments (bank interest, bonds, loans) are subject to 5% withholding under this treaty, compared to the 30% statutory rate. This represents a 25% reduction from the statutory rate.
Source: IRS Table 1 (Withholding Rates)
Royalties
Royalty withholding rates vary by the type of intellectual property. This treaty distinguishes 4 categories, with rates ranging from 5% to 5%.
Source: IRS Table 1 (Withholding Rates)
Pensions & Social Security
Private pension distributions are taxable only in the country of residence, with no withholding at source. Government social security benefits are subject to 30% withholding.
Source: IRS Table 1 (Withholding Rates)
Comparative Context
🇧🇬Bulgaria's Network
Among Bulgaria's 3 active treaty partners, the 10% general dividend rate ranks 1st (median: 15%).
| Partner | Rate |
|---|---|
| United States (this treaty) | 10% |
| Canada | 15% |
| United Kingdom | 15% |
🇺🇸United States's Network
Among United States's 64 active treaty partners, the 10% general dividend rate ranks 6th (median: 15%).
| Partner | Rate |
|---|---|
| Hong Kong | 0% |
| Malaysia | 0% |
| Saudi Arabia | 5% |
| Bulgaria (this treaty) | 10% |
| China | 10% |
| Japan | 10% |
| Mexico | 10% |