EOOD vs Freelance — Which Is More Profitable?
EOOD or Freelance Profession?
Short answer: At lower incomes (up to ~15,000 EUR/year), a freelance profession (свободна професия) may be more advantageous due to 25% normatively recognized expenses. At higher incomes, an EOOD usually wins due to 10% corporate tax + 5% dividend tax. The key factor is the level of income and the need for limited liability.
| Criterion | Freelance Profession | EOOD |
|---|---|---|
| Income tax | 10% (after 25% normative expenses) | 10% corporate + 5% dividend |
| Effective rate (low income) | ~7.5% | ~14.5% |
| Effective rate (high income) | ~10% | ~14.5% |
| Social security | Mandatory | Mandatory (similar) |
| Liability | Personal (unlimited) | Limited to capital |
| Administrative burden | Lower | Higher |
| Client trust | Lower | Higher |
Detailed Comparison
Taxes and Social Security
Freelance Profession:
- Tax: 10% on income after deducting 25% normatively recognized expenses (НПР)
- Effective tax rate: 7.5% of gross income
- Social security: based on a chosen insurable income (min. 933 BGN/month for 2026)
EOOD:
- Corporate tax: 10% on profit
- Dividend tax: 5% when distributing profit
- Effective rate with full distribution: 14.5%
- Manager's social security: similar to a freelance profession
Example Comparison at 30,000 EUR Annual Income
| Freelance Profession | EOOD | |
|---|---|---|
| Gross income | 30,000 EUR | 30,000 EUR |
| Normative expenses (25%) | -7,500 EUR | N/A |
| Taxable base | 22,500 EUR | 30,000 EUR (minus actual expenses) |
| Tax | 2,250 EUR (10%) | ~3,000 EUR (10% + 5% dividend) |
| Social security | ~2,700 EUR | ~2,700 EUR |
At a net income of 30,000 EUR with no significant actual expenses, the freelance profession is slightly more tax-efficient. But at higher incomes, the difference narrows, and an EOOD offers other advantages.
Liability
This is the most important difference for many people:
Freelance Profession: You are liable with all your personal assets for the obligations of your activity. If you accumulate debts, creditors can claim against your personal property.
EOOD: Liability is limited to the contributed capital (minimum 1 EUR). Your personal assets are protected from business risks.
When to Switch from Freelance Profession to EOOD
Typically, it's time for an EOOD when:
- Your income exceeds 30,000–40,000 EUR/year — tax optimization starts working in favor of the EOOD
- You work with corporate clients — many companies prefer to work with a legal entity
- You want to limit your liability — for riskier businesses
- You plan to hire employees — an EOOD is more convenient for hiring staff
- You want to reinvest profits — with an EOOD you can retain profits without additional tax
- You need better access to credit — banks more readily lend to legal entities
Frequently asked questions
It depends on income. At low income (up to ~15,000 EUR/year), freelance may be more efficient due to the 25% standardized deduction. At higher income, EOOD is usually more beneficial with 10% corporate tax + 5% dividend tax.
Yes, there is no legal obstacle. Many people start as freelancers and register an EOOD in parallel, gradually transferring their activities.
Self-insured freelancers pay contributions on a chosen income (minimum 933 BGN/month for 2026) — similar to an EOOD manager.
Usually when: your annual income exceeds 30,000–40,000 EUR, you work with corporate clients who require invoices from a legal entity, or you want to limit your personal liability.
All guides
- How to Register a Company in Bulgaria (2026 Guide)
- EOOD vs OOD in Bulgaria — Which to Choose?
- Company Registration Costs in Bulgaria (2026)
- VAT Registration in Bulgaria — When & How
- Corporate Tax in Bulgaria — 10% Flat Rate Guide
- How to Register an EOOD in Bulgaria — Full Guide
- How to Register an OOD in Bulgaria — Full Guide
- Check & Reserve a Company Name in Bulgaria
- Documents for Company Registration in Bulgaria
- Signing Documents for Company Registration — QES, Specimen, Firmify
- Signing Help — Evrotrust, PDF, B-Trust
- Sign PDF with QES Outside Firmify — Adobe Reader, Steps
- Signing with Evrotrust in Firmify — Steps
- B-Trust, Smart Card, and BISS for Signing
- How to Open a Company Bank Account in Bulgaria
- Annual Financial Report (AFR) in Bulgaria — Filing & Deadlines
- Company Registration & Maintenance Costs in Bulgaria
- Online Company Registration in Bulgaria
- Dissolving an EOOD/OOD in Bulgaria — Procedure & Timeline
- Share Transfer in EOOD/OOD — Procedure & Documents
- Company Amendments in the Commercial Register (A15)
- GDPR Policy & Legal Documents for Your Business
- Employment Contract & HR Documents in Bulgaria
- How to Find an Accountant or Lawyer for Your Company in Bulgaria
- Firmify Partner Program — How to Earn
- Business Documents — Quotes, Proforma Invoices, Contracts
- Do I Need a Lawyer to Register a Company in Bulgaria?
- How Long Does Company Registration Take in Bulgaria?
- What to Do After Receiving Your EIK?
- Do I Need a Notary for Company Registration?
- EOOD vs Freelance in Bulgaria — Which Is More Profitable?
- Manager Social Insurance for EOOD — Types & Obligations