Expense policy: travel, fuel and entertainment — what's deductible in Bulgaria and how to document it
Disputed expenses are among the first things the NRA checks and one of the most common reasons for year-end corrections. A short written expense policy solves both problems — and saves everyone time.
- A cost is tax-deductible when it is documented and related to the business.
- Entertainment expenses are subject to a 10% tax on expenses.
- Using company assets privately can also trigger tax on expenses.
- Written rules — categories, limits, approval and a document deadline — reduce disputes and corrections.
The basic rule
To reduce taxable profit, a cost must meet two conditions: it must be supported by documents and related to the business. A document without a business link isn't enough — nor is a sound business reason without a document.
So a good expense policy isn't bureaucracy. It's how every euro spent stays deductible.
Common categories and how to document them
| Category | What you need |
|---|---|
| Business travel | A travel order, travel and accommodation documents, a report on return. |
| Fuel and vehicles | Invoices in the company's name, trip logs or another record of mileage and purpose. |
| Entertainment | Invoice, occasion and participants (who, with whom, why). Subject to 10% tax on expenses. |
| Training and conferences | Invoice, programme, link to the participant's role. |
| Phones, software, subscriptions | Invoice in the company's name, contract, who uses the service. |
| Consulting and marketing services | Contract, delivery protocol, evidence of the result. |
Private use of company assets
A car, phone or laptop that is also used privately is a frequent audit topic. When company assets are used privately, tax on expenses may apply or the cost may need to be split. The safest approach is a written rule on who uses the asset, how and for what — and recording actual use.
What a working policy looks like
You don't need a long document. For a small company one or two pages answering five questions are enough:
- Which expense categories are allowed and which are not (for example personal purchases, parking fines with a private car).
- What the limits are — for hotels, entertainment, purchases without prior approval.
- Who approves — and up to what amount.
- Which document is required — always an invoice in the company's name rather than a personal receipt where possible.
- When documents are due — for example within 3 working days of the expense and before the monthly deadline for the accountant.
Cash payments and company cards
- Keep cash payments to a minimum — a bank payment is evidence in itself.
- Payments above the statutory cash limit must be made by bank transfer.
- For company cards — reconcile every payment with a document monthly. A payment without a document is treated as the cardholder's personal expense until proven otherwise.
- Travel advances are settled with documents within the deadline set in the policy.
Checklist
- There is a written policy that employees know.
- Every invoice is in the company's name with the correct company and VAT numbers.
- Entertainment expenses record the occasion and participants.
- There are trip logs or another record for company vehicles.
- Company cards are reconciled monthly.
- Documents reach the accountant by the agreed date.
Frequently asked questions
Is fuel deductible?
Yes, if the vehicle is used for the business and the cost is documented — invoices plus trip logs or another way of recording mileage and purpose. Private use is treated differently.
What counts as entertainment expenses?
Costs incurred for representation — for example business lunches, gifts for partners and hosting client meetings. They are deductible but subject to a 10% tax on expenses.
Can the company pay the owner's personal expenses?
It shouldn't. Personal expenses paid by the company are not deductible and may be treated as a hidden profit distribution with extra tax.
How long should employees have to submit receipts?
Your policy decides. In practice a few days after the expense, and always before the monthly document deadline for the accountant.
