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Comment by atxbcp | Hacker News Reader

By paying yourself with a salary via your company, you'd pay 10% revenue tax + health insurance (ЗО) + social insurance (ДЗПО, ДОО)... except the insurance part is capped on a maximum revenue of 3000 BGN or something like that... so as you make more money, your total tax rate converges to 10%. Take these numbers with a grain of salt because I'm no accountant, but I know for sure your accountant is wrong, because I know how much tax I pay, and that's close to 11.5% total.

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My math still can't show how this is true.

If we take a gross income of 20K BGN (which is not a bad income for a software engineer), then with dividends, net income will be roughly this:

  20000*0.9*0.95-710*(0.148+0.05+0.08) = 16902, which means taxes are 15.59%.

And if it all goes as a salary, then net is roughly this:

  20000*0.9-3000*(0.148+0.05+0.08) = 17166, which means taxes are 14.17%. It's lower than dividends, but still far from the 11.5% that you mentioned.

To get to 11.5%, the gross income has to be around 50K:

  50000*0.9-3000*(0.148+0.05+0.08) = 44166, so the taxes are around 11.67%.

Could you clarify in which range your gross income is, is it closer to 50K BGN than 20K BGN?

I guess there can be some bonuses which aren't taxed, and this way one could reduce the tax, but paying large bonuses to myself smells too much to me since it's clearly done just to pay less taxes.

Thanks, I'll research more into that.

In the meantime, I clarified in the article that as long as a company is concerned, the article only focuses on the dividends option, and added the link to your comment.

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