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Bulgaria: New enhanced R&D deduction enacted

Effective retroactively from January 1, 2026

april 22, 2026

Legislation introducing a new enhanced deduction for qualifying R&D expenditure was published in the official gazette on March 27, 2026.

Key features of the measure include:

  • Taxpayers will be entitled to an additional deduction equal to 25% of qualifying R&D operating expenditure.
  • Capital expenditure in relation to eligible R&D activities will benefit from a deemed 25% uplift in their acquisition cost for tax purposes, which increases tax depreciation over the useful life of qualifying fixed assets.
  • The enhanced deduction is not applicable if taxpayers obtained public funding (from the EU or individual EU countries) relating to the expenses.

The new incentive is effective retroactively from January 1, 2026.

Read an April 2026 report prepared by KPMG’s EU Tax Centre

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