Accounting for cryptocurrency and digital assets in Bulgaria

Trading and holding cryptocurrency is no longer a niche subject — more and more individuals and companies hold positions in digital assets. The difficulty is that Bulgarian accounting and tax law still has no fully dedicated regime for crypto-assets, so the general principles must be applied by analogy. At EU level, however, the regulation MiCA now governs the crypto-asset market.

The tax treatment for individuals

Income from the sale of cryptocurrency by an individual outside a trade is treated as income from the sale of a financial asset and taxed at 10% on the positive difference between the sale and purchase price — declared in the annual tax return. Losses on one transaction may offset gains on another only within the annual settlement period.

The accounting treatment in a company

Where a company holds crypto-assets, they are normally recorded as financial assets, measured at cost or at fair value, depending on the accounting policy and the applicable standards. The choice of method must be consistent and documented in the company’s accounting policy.

The VAT treatment

Under the case law of the Court of Justice (the Hedqvist case, C-264/14), exchanging traditional currency for bitcoin and back is treated as an exempt financial service for VAT purposes — no VAT is charged on the exchange itself. Mining services and the provision of technical infrastructure, however, may be treated differently and need individual assessment.

Mining and staking

• Mining income is normally treated as other income under the general rules for an individual, or as business revenue for a company, depending on the scale and regularity.
• Staking rewards must be declared when received, valued at market value on the date of receipt.
• Where the activity is systematic and carried on for profit (frequent trading, industrial-scale mining), the Revenue Agency may require registration as a trader rather than treatment as occasional income.

MiCA — the new EU regulatory framework

The MiCA Regulation (Markets in Crypto-Assets, Regulation (EU) 2023/1114) now applies and governs the licensing of crypto-asset service providers, the requirements on token issuers, and consumer protection. MiCA is not a tax measure, but it creates a clearer legal environment — and with it stricter expectations on transparency and documentation, which feed through into the accounting treatment. Companies working with crypto-assets should also monitor the licensing status of the platforms they use.

Conclusion

The absence of a fully dedicated tax regime does not mean the absence of obligations — the general principles of the income tax and corporate tax acts apply in full to crypto-assets, and MiCA adds a regulatory framework at EU level. Good documentation of every transaction is the single most important defence in any future tax inspection.

Common mistakes in declaring crypto

• Undeclared gains, on the assumption that “if it hasn’t been cashed out into euro, it isn’t taxable” — what is taxable is the realisation of the gain, including crypto-to-crypto trades.
• No documentation of the purchase price, which makes the real gain impossible to prove.
• Mixing personal and company wallets, which complicates the accounting treatment.
• Overlooking staking and airdrop income, which is also declarable.

Frequently asked questions