In the EU, dividends are typically exposed to economic double taxation—profit is taxed at company level (corporate tax) and then taxed again when distributed as dividends to shareholders. EU countries use different approaches to reduce or manage this double taxation, and cross-border dividend flows can trigger withholding taxes and relief/refund procedures.

That’s why, when comparing “dividend tax,” it’s important to look at:

• Tax at source (withholding tax)
• Tax in the shareholder’s country of residence
• EU directives / double tax treaties that may reduce or eliminate withholding
  
  

Higher-tax examples (common in Western & Northern Europe)

• Belgium: 30%
• Germany: 25%
• Italy (individuals): 26%
• Denmark: 27%
• Spain: 19%
• Poland: 19%
• Czech Republic: 15%
• Netherlands: 15%
• Romania: 16% (with possible reductions in specific cases)

Bulgaria’s 5% rate places it among the most competitive dividend-tax jurisdictions in Europe—especially compared to the many countries clustering around 15%–30% withholding.

What “tax efficiency” looks like in practice:

• 10% corporate income tax, and
• 5% dividend tax (for individuals),

the “tax cost” of distributing profit can be very attractive.

Simple example:

If a Bulgarian company earns 100 in accounting profit (simplified):

1. Corporate tax (10%) → 10
2. Profit after CIT → 90
3. Dividend tax (5% of 90) → 4.5
4. Net dividend to the owner → 85.5

That’s an effective combined tax of ~14.5% in this simplified scenario.

Headline rates are only the starting point. Real tax efficiency depends on shareholder tax residence, treaty eligibility and paperwork, substance requirements.