Bulgaria: Insurance Premium Tax

BulgariaUnited Kingdom

On 1 January 2011, a new Insurance Premium Tax will come into force in Bulgaria.

The tax has been introduced as part of Bulgaria’s response to the financial crisis and will apply at a flat rate of 2% on all insurance contracts where the risk is situated in Bulgaria, except for:

  • life insurance
  • cargo insurance in international transit where neither the place of shipment nor the final destination is in Bulgaria
  • property and third party liability insurance of aircrafts and vessels
  • reinsurance and retrocession contracts


The tax is payable monthly and insurance premium tax returns must be submitted quarterly. Insurers from other EU Member States providing insurance services in Bulgaria can appoint local representatives to pay the tax on their behalf who will be jointly liable with them for compliance with the new law.

Some insurers are unhappy about the tax, suggesting that it will have a negative impact on the market and that they will have to pass on part of the cost of the new tax on to policyholders. Insurance brokers and agents are expected to be most affected by the tax, which many hope will just be a temporary measure and will be abandoned in two or three years time.

The tax is permitted under EU law by Directive 2009/138/EC. The legislation introducing it was adopted by Parliament on 20 October 2010 and published in the State Gazette on 2 November 2010.

Law: Insurance Premium Tax Act; Directive 2009/138/EC