Services in the field of digital marketing

Services in the field of digital marketing

Question:
Hello!
I need information on what my obligations are (taxes, insurances, registrations, accounting, etc.) when offering services in and outside the EU. I am currently employed on a contract, but soon I am considering starting an additional activity (services in the field of digital marketing). As income from this additional activity, I do not expect more than BGN 2,000 per month for the moment. I would be grateful if I could get information about what would be the most appropriate solution for this situation (whether it is company registration or something else).
Thanks in advance!

Answer:
Hello,
In short - with a monthly income of BGN 2,000.00, if you are self-employed, you will owe about BGN 10,800.00 in taxes and insurance on an annual basis, and if you work with a company, about BGN 5,500.00 in taxes and insurance on an annual basis. We would like to clarify that these figures are calculated on the basis of revenues only, without any possible expenses, since we have no idea what expenses you would expect to carry out your activity.

A little more detail:
From a tax point of view, things look like this:
- in the case of self-employment, you declare the amount of income for the year. From the amount received in this way, you deduct 25% of legally recognized expenses and the insurances paid during the year, and you owe 10% tax on the amount received.
- with an EOOD, you declare the amount of income and expenses related to your activity. If the income is more than the expenses, then you make a profit and this profit is taxed at 10%.
 
From an insurance point of view, the situation is as follows:
- if you are self-employed, you are insured monthly, and accordingly you must declare and pay insurance every month, and the minimum insurance income is currently BGN 710.00, which means minimum insurance in the amount of BGN 200.00 per month. At the end of the year when an annual tax return is submitted, an adjustment is made. In this equalization, the realized income during the year is considered. If its amount exceeds the amount on which you were insured, you must add insurance on the difference. The amount on which insurance is paid on an annual basis cannot be higher than BGN 40,800.00 for 2023.
 
- with an EOOD, the insurance contributions are again paid on the minimum insurance income for the year - BGN 710.00, the difference being that there is no annual equalization of the insurance contributions.
 
I.e. purely from a tax and insurance point of view, you will need to assess and make some kind of plan as to what income you expect to receive and what expenses you would have. Only by this you can determine which form of activity is economically more profitable for you (ie you would pay less tax and insurance).
 
Apart from the differences from a tax and insurance point of view, there are also several purely functional differences:
- the money you earn as a freelancer is actually your money and you can "spend" it whenever and on whatever you want. With an EOOD, the money the company makes stays with the company. If you, as the owner, want to have this money at your disposal, there are several options - to give yourself a salary, to give yourself a loan, or after the financial year is over and the company, if it has made a profit, to distribute the profit as a dividend (but you will have to pay an additional 5% dividend tax on this amount).
- if you exercise your activity as a freelancer, you will not have the obligation to issue a receipt when receiving cash. This exemption does not apply to an EOOD, and if you receive cash, you will need to have a previously purchased cash register from which to issue receipts.
- in order to register as a self-employed person, you need to provide a diploma or some other certificate with the set of documents (application and declaration) certifying your competence to provide the services you will perform. The registration itself is carried out by the Bulstat Register within 24 hours, and there is also a state fee of BGN 10.00. To register an EOOD, the procedure is a little longer and more complicated. To begin with, a set of documents is prepared (constitutional act, minutes of the founding meeting, management contract, several declarations and a sample signature). Some of the documents are notarized. After that, you need to find a fundraising account in a bank of your choice, to which you can deposit the initial capital. The minimum is BGN 2.00. The import note for the paid-in capital, together with the other prepared documents, is submitted to the Commercial Register, no later than 7 calendar days from the date of the founding act, and the registration takes place within 7 working days . The state fee is BGN 110.00. The notary fee will be BGN 8.00, and the bank fee will depend on the bank you choose, and it will vary from BGN 10.00 to BGN 50.00.
We hope we have been helpful!
Greetings!