The Size of Inheritance Tax

The amount of inheritance tax in Bulgaria is determined based on the value of the inherited property and the degree of kinship between the deceased and the heirs. This tax is paid to the municipality where the inheritance is opened (the residence of the deceased).

Key Points About Inheritance Tax:

1. Exempt from Inheritance Tax
   • Closest Relatives – spouses, children (including adopted children), and grandchildren – do not owe inheritance tax. They are exempt from this tax, regardless of the value of the inherited property.
2. Heirs Who Owe Tax
3. Heirs of the second and third degree of kinship – for example, siblings, nieces, nephews, aunts, uncles, and more distant relatives, as well as individuals who are not related to the deceased, owe inheritance tax.

Inheritance Tax Rates:

• For heirs of the second degree of kinship (siblings, nieces, nephews):
  • The tax is 0.4% to 0.8% of the taxable value of the inheritance. The exact percentage is determined by the relevant municipality where the inheritance is opened.
• For heirs who are not relatives or are of more distant kinship:
• The tax is 3.3% to 6.6% of the taxable value of the inheritance. This percentage also varies according to municipal regulations.

Taxable Value of the Inheritance

• The inherited property is assessed to determine its taxable value, which includes:
  • Real estate.
  • High-value movable items (e.g., vehicles, artworks).
  • Cash, bank deposits, and other financial assets.
• Debts of the deceased (e.g., unpaid loans) are deducted from the total value of the inheritance.

Example:

• If an heir (e.g., a nephew) inherits property valued at 100,000 BGN and the tax rate in the relevant municipality is 0.6%, the owed tax will be:
  • 100,000 BGN x 0.6% = 600 BGN tax.

Exemptions from Tax:

• As mentioned, spouses, children, and grandchildren are completely exempt from this tax.
• Additionally, some specific cases of certain properties may also be exempt from taxation by law.

It is important to check the specific tax rate for the relevant municipality, as rates vary within the limits set by law.