If you freelance from inside the EU and bill more than about €50,000 a year, at some point someone tells you to "just open a company in Estonia" or "just open a company in Bulgaria". Both sentences skip the part that decides the bill: what you do with the money.
I run an accounting and company-formation practice in Bulgaria, so I see the three structures below side by side every month. Here is the arithmetic, with the honest parts left in.
The three structures
For a solo developer selling services or running a small SaaS, the realistic options are:
- Registered freelancer in Bulgaria (a "free profession", a personal registration, no company)
- Bulgarian EOOD (single-owner limited company)
- Estonian OÜ through e-Residency
Everything below uses 2026 rates. Bulgaria has been in the eurozone since 1 January 2026, so all figures are in euro.
Headline rates are not the bill
Most comparisons stop at the corporate tax rate. That is not enough. What you actually pay is three layers stacked on top of each other:
- tax at the company level (or on your personal income, if there is no company)
- tax when the money leaves the company and reaches you
- social contributions, which behave very differently in the three cases
| Freelancer (BG) | EOOD (BG) | OÜ (EE) | |
|---|---|---|---|
| Tax on profit kept in the business | n/a, it is all personal income | 10% | 0% |
| Tax on profit you take out | 10% on 75% of gross (7.5% effective) | 10% corporate, then 5% dividend tax (14.5% combined) | 22/78 of the net distribution (22% of the gross) |
| Social contributions | ~28%–31% of income, on a base capped at €2,300/month | Owner self-insures on a chosen base, minimum €620.20/month | 33% social tax on any salary, no ceiling |
| Personal income tax on salary | 10% flat | 10% flat | 22% |
| Standard VAT | 20% | 20% | 24% |
| Minimum capital | none | about €1 | €0.01 |
The freelancer row surprises people. Bulgaria lets self-employed professionals deduct a flat 25% of gross as statutory expenses, no receipts asked, and taxes the remaining 75% at the flat 10%. Contributions you paid are deducted as well. The catch is in the third row: contributions scale with income until the cap.
What that does to €60,000 and €120,000
Assume all the money is yours at the end of the year, which is how most freelancers operate. Contributions are taken at the rate without the sickness fund (27.8%) and rounded.
€60,000 gross, everything taken out
- Freelancer: contributions capped at about €7,700; income tax about €3,700; you keep roughly €48,600
- EOOD: corporate tax €6,000, dividend tax €2,700, owner contributions on the minimum base about €2,100, accounting roughly €1,200–€3,000 a year; you keep roughly €46,000–€48,000
- OÜ: distribution tax €13,200; contributions and accounting on top; you keep at most €46,800 before those
€120,000 gross, everything taken out
- Freelancer: contributions still capped at about €7,700; income tax about €8,200; you keep roughly €104,000
- EOOD: corporate tax €12,000, dividend tax €5,400, contributions about €2,100, accounting as above; you keep roughly €98,000–€100,000
- OÜ: distribution tax €26,400; you keep at most €93,600 before contributions and accounting
Two things fall out of this.
First, on pure tax, a Bulgarian company is not cheaper than being a Bulgarian freelancer. The contribution cap does the work. Above roughly €45,000–€50,000 the freelancer registration is the cheapest of the three for money you take out, and it stays that way as income grows.
Second, Estonia never wins on money you take out. It wins on money you keep in.
When Estonia actually wins
This section is not a straw man. There are four cases where the OÜ is the right answer and Bulgaria is the wrong one.
You reinvest. A company that earns €120,000 and keeps it pays €0 in Estonia and €12,000 in Bulgaria. If you are building a product and paying yourself little for two or three years, that is real money. The crossover is at about 57% distributed: take out more than that and Bulgaria costs less, take out less and Estonia does.
You will raise money. Investors know the OÜ. Standard documents exist, diligence is routine, and 0% on retained profit fits a company that will not distribute anything for years.
You want the whole thing online. e-Residency costs €150, the company is set up online and the share capital can be €0.01. A Bulgarian EOOD needs notarised documents, which a power of attorney can handle remotely, but it is not a web form.
You live in Estonia. Then the residence problem below disappears.
What e-Residency does not do: it does not give you the right to live in Estonia, it does not make you an Estonian tax resident, and it does not come with a bank account. Non-resident founders mostly end up with a payment institution rather than a bank.
The part both camps skip: where you sleep
None of the three structures work the way the calculator says unless your personal tax residence matches. The rules that bite:
- Personal tax residence in Bulgaria needs, among other tests, 183 days in the country in a 12-month period. Estonia and every other EU state have an equivalent test.
- If you run an Estonian or Bulgarian company from your sofa in Berlin or Amsterdam, your home country can treat the company as resident there, because that is where it is managed. Then you pay home rates plus a compliance bill for the foreign entity.
- Dividends from the foreign company are taxed where you live, at your home rate, with the treaty deciding what credit you get.
So the honest ordering is: decide where you will actually live, then pick the structure. A structure picked first and a residence found later is how people end up paying twice.
The freelancer registration is the most extreme case. It is a personal registration in the BULSTAT register, so it only exists if you are resident in Bulgaria. There is no remote version of it.
When a Bulgarian company beats the Bulgarian freelancer
Since the freelancer wins the pure tax comparison, the EOOD has to earn its keep somewhere else:
- Retained profit at 10% instead of everything being personal income
- Limited liability, which matters the day a client's production database goes down on your code
- Enterprise clients and marketplaces that will not onboard a private individual
- Hiring, subcontracting and later selling the business
- VAT registration and cross-border B2B reverse charge, which a company handles more cleanly (I wrote up how the same SaaS subscription gets taxed four ways in the EU in a previous post)
Which of those applies to you decides it, not the rate. I keep a longer breakdown of when a Bulgarian company makes sense for a freelancer and when it doesn't on our site, including the cases where we tell people not to incorporate.
FAQ
Is it true that Estonia has 0% corporate tax?
Only on profit that stays in the company. The moment you distribute, the company pays 22/78 of the net amount, which is 22% of the gross. Salary is taxed at 22% plus 33% social tax with no ceiling.
What is the real tax rate for a freelancer in Bulgaria?
10% on 75% of gross, so 7.5% effective, plus social contributions of roughly 28%–31% on a base capped at €2,300 a month. The total burden falls as income rises because the cap is fixed.
Can I open a Bulgarian company without living in Bulgaria?
Yes, the company can be formed by power of attorney. Whether it is taxed only in Bulgaria is a separate question and depends on where it is managed from and where you are resident.
Which is cheaper for a SaaS that reinvests, Bulgaria or Estonia?
Estonia, as long as less than about 57% of profit is distributed. Above that, Bulgaria's 10% plus 5% is cheaper. The full comparison with the crossover maths is in Bulgaria vs Estonia company comparison (2026).
Sources
- Estonian Tax and Customs Board, 2026 tax rates: https://www.emta.ee/en/private-client/taxes-and-payment/declaration-income/tax-rates
- Bulgarian social contribution bases and rates for self-insured persons, from 1 August 2026: https://ruskov-law.eu/bulgaria/article/social-security-contributions-self-insured-persons.html
- e-Residency application fee: https://www.e-resident.gov.ee/become-an-e-resident/
I run a company formation and accounting practice in Bulgaria, so Bulgaria is the jurisdiction I can write about at this level of detail, and Estonia is the one our clients most often compare it against. If your case is a software company rather than a personal freelance registration, the service page is IT company formation in Bulgaria. Rates change, the Bulgarian contribution bases moved mid-2026, and your home country's rules sit on top of all of this, so treat the numbers as a model, not as advice for your case.
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