Art. 35 Personal Income Tax Act: other income in Bulgaria
Art. 35 ЗДДФЛ analysis: which other income is taxed in Bulgaria, advance tax under Art. 44a, the annual tax base under Art. 36 and Annex No. 6 (2025).
Income from other sources is the “residual” category of the Personal Income Tax Act (ЗДДФЛ), and that is exactly why consultants mix it up most often. Free online references are in practice frozen in 2016 and reflect neither the repeal of Art. 35, item 2, nor the addition to item 6, in force from 1 January 2025. The result is that in practice income that is already taxed with an alternative tax gets classified under Art. 35, and the other way round.
This analysis has been updated to the 2025 amendment and follows the full life cycle of income under Art. 35: which income is covered, who withholds the advance tax, how the annual tax base is formed under Art. 36 and where exactly the income is declared in the annual tax return. It is addressed to lawyers, tax consultants and accountants who need a quick but accurate reference.
❓Which income is taxed under Art. 35 of the ЗДДФЛ?
Source: ЗДДФЛ, Art. 35
What income under Art. 35 ЗДДФЛ is
Art. 35 ЗДДФЛ works as a residual provision. It covers the taxable income of individuals that does not fall within the special chapters of the law (employment relationships, other business activity, rent, transfer of rights or property). Taxable income is the gross amount of the listed types acquired during the tax year, without deducting expenses at this stage.
Personal Income Tax Act (ЗДДФЛ)
Art. 35
Official Bulgarian text
„Облагаемият доход е брутната сума на облагаемите доходи, придобити през данъчната година от: 1. обезщетения за пропуснати ползи и неустойки с такъв характер; 2. (отм. - ДВ, бр. 98 от 2018 г., в сила от 01.01.2019 г.); 3. (доп. - ДВ, бр. 94 от 2012 г., в сила от 01.01.2013 г., изм. - ДВ, бр. 17 от 2022 г., в сила от 01.04.2022 г.) лихви, в т. ч. съдържащи се във вноските по лизинг; 4. производствени дивиденти от кооперации; 5. упражняване на права на интелектуална собственост по наследство; 6. (доп. - ДВ, бр. 26 от 2025 г., в сила от 01.01.2025 г.) всички други източници, които не са изрично посочени в този закон и не са обложени с алтернативен данък по чл. 41а и/или с окончателни данъци по реда на този закон или с окончателни данъци по реда на Закона за корпоративното подоходно облагане.“
Item 2 has been repealed: a common mistake
The six categories of income: what is in and what is not
Drawing the exact line between income under Art. 35 and income governed by other chapters has a direct effect on how it is taxed and documented. The table below sets out the items of Art. 35 that are in force and the typical borderline cases.
| Item | What it covers | What does NOT fall under Art. 35 |
|---|---|---|
| Item 1 | Compensation for lost profits and penalties of that nature | Compensation for losses actually suffered (damnum emergens), which is in principle not taxable income |
| Item 3 | Interest, including interest contained in leasing instalments | Interest on the bank accounts of resident individuals (taxed with a final tax under Art. 38) |
| Item 4 | Production dividends from cooperatives | Dividends from commercial companies (final tax under Art. 38) |
| Item 5 | Income from intellectual property rights acquired by inheritance | Copyright and licence fees from one's own activity (other business activity, Art. 29) |
| Item 6 | All other sources not expressly mentioned | Income taxed with the alternative tax under Art. 41а or with final taxes |
Categories of income in force under Art. 35 ЗДДФЛ and what they cover
The distinction for prizes and in-kind winnings deserves particular attention. When these are provided by an employer or a commissioning party in connection with an existing legal relationship, they are taxed under the rules of that relationship, not under Art. 35. For income in kind, the taxable value is determined at the market price on the date of acquisition.
The 2025 change: excluding the alternative tax under Art. 41а
By State Gazette (ДВ) issue 26 of 2025, in force from 1 January 2025, item 6 of Art. 35 was supplemented. To the existing text “all other sources not expressly mentioned in this law” the legislator added an express exclusion of income taxed with the alternative tax under Art. 41a. The aim is to avoid treating the same income twice.
Personal Income Tax Act (ЗДДФЛ)
Art. 41а
Official Bulgarian text
„Алтернативен данък върху доходите на физически лица, които не са търговци, от събиране на диворастящи гъби и плодове. Данъкът е в размер 30 лв. на месец и се удържа и внася от държавните горски предприятия по реда на чл. 163, ал. 1 от Закона за горите.“
Art. 41а is new, introduced by State Gazette (ДВ) issue 106 of 2023, in force from 1 January 2024. It introduces an alternative tax (final in nature) on income from gathering wild mushrooms and fruits by persons who are not traders. After the 2025 addition, this income is expressly excluded from the scope of Art. 35, item 6, which ends any possible double classification.
Practical consequence for classification
Advance taxation under Art. 44а
Advance taxation of income from other sources was introduced by Art. 44а ЗДДФЛ (new, State Gazette (ДВ) issue 95 of 2015, in force from 1 January 2016). The key limitation concerns the person: advance tax is withheld only when the payer of the income is an enterprise or a self-insured person. For a payment between two individuals who do not have that status, no advance tax is due and the income is taxed only annually.
Personal Income Tax Act (ЗДДФЛ)
Art. 44а(1)
Official Bulgarian text
„Паричните доходи по чл. 35 се облагат авансово с данък, когато платецът на дохода е предприятие или самоосигуряващо се лице. Размерът на данъка се изчислява, като облагаемият доход се умножи по данъчна ставка 10 на сто.“
Advance taxation under Art. 44а when the payer is an enterprise or a self-insured person
Check the status of the payer
Advance tax is due only if the payer is an enterprise or a self-insured person. In all other cases the income is taxed only annually.
Cash income only
Only cash income under Art. 35 is subject to advance tax. Income in kind is not subject to advance taxation and is included only in the annual tax base.
Calculating and withholding the tax
The payer calculates the tax as 10 per cent of the taxable income and withholds it when paying it out.
Paying over and declaring
The advance tax withheld is paid over and declared within the deadlines and in the manner set out in Art. 65 and Art. 66 ЗДДФЛ.
Issuing a certificate
The payer issues the person a certificate under Art. 45(7) (form No. 4), which documents the income paid and the advance tax withheld.
Ask Pravko and get an answer with citations from the law.
Relief for persons with reduced working capacity (Art. 44а(3))
For persons with permanently reduced working capacity, Art. 44а(3) provides a threshold below which advance tax is not due. This is a practically important provision, which payers sometimes forget to apply when withholding.
❓When does a person with reduced working capacity owe advance tax under Art. 35?
Source: ЗДДФЛ, Art. 44а(3)
Certifying the status to the payer
Annual tax base under Art. 36
The annual tax base for income from other sources is formed under Art. 36 ЗДДФЛ. Taxable income under Art. 35 is reduced by the health insurance contributions the person owes, where these are due at their own expense under Art. 40(5) of the Health Insurance Act (ЗЗО) (on the annual adjustment of the insurable income).
Personal Income Tax Act (ЗДДФЛ)
Art. 36
Official Bulgarian text
„Годишната данъчна основа за доходите от други източници се определя, като облагаемият доход по чл. 35, придобит през данъчната година, се намалява с вноските, които лицето е задължено да прави за данъчната година за своя сметка по реда на чл. 40, ал. 5 от Закона за здравното осигуряване.“
The annual tax due is 10 per cent of the annual tax base determined in this way. The advance tax already withheld during the year under Art. 44a is deducted, so in the annual taxation only the difference is paid in addition (or the overpayment is refunded). An illustrative example:
Example of how the annual tax under Art. 35 is formed (illustrative)
Taxable income under Art. 35 for the year
10,000
Reduction by contributions due under Art. 40(5) ЗЗО (example)
Only if such contributions are due at the person's own expense
-400
Annual tax base under Art. 36
9,600
Annual tax 10%
960
Advance tax deducted under Art. 44а(optional)
Based on a certificate under Art. 45(7)
-700
Total
BGN 260 to pay in addition
The figures are examples and serve only to illustrate the mechanism. The actual values depend on the person's tax and insurance status.
Declaring: Annex No. 6 to the annual tax return under Art. 50
Income under Art. 35 is declared in Annex No. 6 (form 2061) “Income from other sources under Art. 35” to the annual tax return (ГДД) under Art. 50 ЗДДФЛ. The duty to declare arises regardless of whether the payer has withheld advance tax. This is an essential point: the absence of advance taxation (for example because the payer is an individual who is neither an enterprise nor a self-insured person) does NOT relieve the person from declaring.
Scope of the duty to declare
Declaring income under Art. 35 in the annual tax return
Collecting the certificates
Obtain the certificates under Art. 45(7) (form No. 4) from all payers who paid income under Art. 35 and may have withheld advance tax.
Completing Annex No. 6
Declare the gross taxable income under Art. 35 in Annex No. 6 (form 2061) to the annual tax return under Art. 50, even when no advance tax has been withheld.
Deducting contributions and advance tax
Show the reduction under Art. 36 for contributions due under Art. 40(5) ЗЗО and deduct the advance tax already withheld.
Filing and paying on time
File the annual tax return under Art. 50 and pay the tax due within the statutory deadline for the relevant tax year.
Checklist for correct declaring under Art. 35
Practical steps for the consultant when preparing an annual tax return with income from other sources.
The income is classified under an item of Art. 35 that is in force (item 2 is repealed)*
It has been checked that the income is not taxed with the alternative tax under Art. 41а or with a final tax*
A certificate under Art. 45(7) (form No. 4) is available from every payer*
Income in kind is included in the annual base (but not in advance taxation)*
The reduction under Art. 36 with contributions under Art. 40(5) ЗЗО has been applied, if such are due
The income is declared in Annex No. 6, even where no advance tax was withheld*
* Mandatory documents
Practical conclusions and common mistakes
Art. 35 is a provision where mistakes arise mostly from outdated information and from drawing the wrong line against the other chapters of the ЗДДФЛ. We summarise the typical omissions that lead to incorrect taxation or to administrative penalties.
Top mistakes when applying Art. 35
A cross-check against our consumer guide to the annual tax return for individuals may be useful when communicating with clients without legal training. For a related analysis of tax legislation, see also our material on the changes to the VAT Act (ЗДДС) for 2026.
The official text of the law is available on lex.bg, and the guidance and the form of Annex No. 6 are on the website of the National Revenue Agency (НАП).
Pravko provides legal information but does not replace advice from a lawyer. For important legal matters, consult a licensed lawyer.
⚠️ Important
Pravko provides legal information, but it does not replace advice from a lawyer. For important legal matters, consult a licensed lawyer.
