Does Bulgaria or the Netherlands tax your remote income first?
The country that taxes your remote income first depends on where you are tax resident, not where your employer or client is based. In most cases, Bulgaria or the Netherlands will have primary taxing rights over your worldwide income based on your residency status, and the two countries have a double taxation agreement in place to prevent you from being taxed twice on the same earnings. The sections below address the most common questions that arise for remote workers navigating this cross-border tax situation.
Which country has the right to tax your remote income first?
Your country of tax residence has the primary right to tax your remote income. If you are tax resident in Bulgaria, Bulgaria taxes your worldwide income first. If you are tax resident in the Netherlands, the Netherlands claims that right. The country where your employer or client is registered is secondary: what matters most is where you are deemed to reside for tax purposes under each country’s domestic law and any applicable treaty.
This distinction is critical for remote workers who split their time between the two countries or who work for a Dutch company while living in Bulgaria, and vice versa. Both countries define tax residency through their own criteria, but the Bulgaria-Netherlands double taxation agreement provides a tiebreaker mechanism when both countries could otherwise claim you as a tax resident simultaneously. Establishing your residency clearly and documenting it is the first practical step any cross-border remote worker should take.
What is the double taxation agreement between Bulgaria and the Netherlands?
The double taxation agreement (DTA) between Bulgaria and the Netherlands is a bilateral tax treaty that allocates taxing rights between the two countries and prevents the same income from being taxed in full by both. Under the treaty, income is generally taxed in the country of residence, with specific provisions for employment income, self-employment income, dividends, royalties, and other categories. The DTA also provides mechanisms for tax credits or exemptions where one country has already taxed income that the other country would otherwise also tax.
For remote workers, the employment income article of the DTA is particularly relevant. As a general rule, employment income is taxable only in the country of residence unless the work is physically performed in the other country. This means a Bulgarian tax resident working remotely for a Dutch employer, without physically travelling to the Netherlands to perform work, should ordinarily pay income tax only in Bulgaria. However, the precise application depends on the nature of the arrangement, the number of days spent in each country, and whether a permanent establishment is triggered.
The DTA does not eliminate the obligation to file or report in both countries where required. It prevents double taxation, not double reporting. Remote workers should seek country-specific tax advice to understand their filing obligations on both sides of the treaty.
How does Bulgaria’s flat tax rate affect remote workers?
Bulgaria applies a flat income tax rate of 10% on personal income, one of the lowest in the European Union. For remote workers who are tax resident in Bulgaria, this rate applies to their worldwide employment or self-employment income, regardless of where their employer or client is located. Social security contributions are added on top, calculated on income up to a statutory ceiling, but the overall tax burden in Bulgaria remains significantly lower than in most Western European countries.
This rate structure makes Bulgaria an attractive base for remote professionals working for higher-paying markets such as the Netherlands. A remote worker earning a Dutch-market salary while residing in Bulgaria and being taxed there at 10% retains considerably more net income than a colleague doing the same job while residing in the Netherlands, where the top marginal rate reaches 49.5%.
The practical implication for companies is also relevant. Businesses engaging remote workers who are Bulgarian tax residents are not responsible for Dutch payroll taxes on those individuals, provided the workers are genuinely resident and employed in Bulgaria and no permanent establishment is created in the Netherlands. Getting the employment structure right from the outset is essential to maintaining that position.
How does the Netherlands tax remote workers employed abroad?
The Netherlands taxes individuals based on tax residency, not nationality or the location of their employer. A person who is not a Dutch tax resident is only subject to Dutch income tax on income that has a Dutch source, such as income from work physically performed in the Netherlands or income from Dutch real estate. A remote worker living and working outside the Netherlands, even for a Dutch employer, is generally not subject to Dutch income tax on their salary if they have no Dutch tax residency.
For Dutch tax residents, the situation is the reverse. The Netherlands taxes worldwide income and applies a progressive rate structure: income up to approximately EUR 75,000 is taxed at around 36.97%, and income above that threshold is taxed at 49.5% (rates applicable in 2026). Remote workers resident in the Netherlands who work for a foreign employer are fully subject to these rates, with potential relief available under the relevant DTA if the other country has also taxed part of that income.
One notable feature of the Dutch tax system relevant to internationally mobile professionals is the 30% ruling, a tax facility that allows qualifying expats to receive up to 30% of their salary tax-free for a limited period. Eligibility depends on being recruited from abroad and meeting specific salary thresholds. For remote workers relocating to the Netherlands, this can meaningfully reduce the effective tax burden during the initial years of Dutch tax residency.
What determines your tax residency when working remotely between two countries?
Tax residency is determined by a combination of domestic law criteria and, where both countries claim you as a tax resident simultaneously, the tiebreaker rules in the applicable DTA. The primary factors both Bulgaria and the Netherlands consider include your permanent home, the location of your centre of vital interests (family, social and economic ties), habitual abode, and nationality, assessed in that order of priority under the OECD model treaty framework that both countries broadly follow.
In practice, the most decisive factor is usually where your permanent home is located. If you maintain a home available to you in only one country, that country will typically be treated as your residence for treaty purposes, even if you spend significant time in the other country for work. Where homes exist in both countries, the analysis shifts to where your personal and economic life is more strongly centred.
Remote workers who split their time without a clear permanent base in either country face the greatest uncertainty. Days spent in each country, where bank accounts and registrations are held, where children attend school, and where the primary employment contract is registered all feed into the determination. Ambiguity in residency status creates risk of dual residency claims and potential disputes between tax authorities, a situation that is both costly and time-consuming to resolve.
Should remote workers register as self-employed or employed across borders?
Whether to register as self-employed or to work under an employment contract across borders has significant tax, legal, and compliance implications. Employment provides clearer tax treatment under most DTAs, as employment income articles are well-established and predictable. Self-employment introduces additional complexity, including the risk of triggering a permanent establishment in the client’s country and potential reclassification by tax authorities.
In the Netherlands specifically, the enforcement of rules against false self-employment has intensified since 2025. The Dutch tax authority actively scrutinises arrangements where a person operates as an independent contractor but in practice functions as an employee. If a remote worker based in Bulgaria provides services exclusively or predominantly to one Dutch client, that arrangement may be recharacterised as employment, exposing both parties to back taxes, penalties, and social premium liabilities.
The safest structures for cross-border remote work typically involve one of the following:
- A genuine employment contract in the worker’s country of residence, with the foreign company engaging them through a compliant local employer
- A properly documented self-employment arrangement with multiple clients, clear deliverables, and genuine independence
- An Employer of Record arrangement, where a specialist entity employs the worker locally and seconds them to the foreign company
The right choice depends on the specific arrangement, the volume of work, the degree of control exercised by the client, and the long-term intentions of both parties. Tax advisors in both jurisdictions should be consulted before the arrangement begins, not after it has already been running for months.
How Blue Lynx supports cross-border employment between Bulgaria and the Netherlands
For companies navigating the complexity of employing remote workers across Bulgaria and the Netherlands, Blue Lynx provides structured, compliant solutions that remove the guesswork. As an Employer of Record with offices in both The Hague and Bulgaria, Blue Lynx can legally employ staff on a client’s behalf in the Netherlands, handling all payroll, tax deductions, employment contracts, and social premium obligations in full compliance with Dutch law.
Key ways Blue Lynx supports cross-border employment include:
- Acting as the legal employer in the Netherlands, eliminating the need for a client to establish a Dutch entity
- Managing payroll and tax compliance so that workers are correctly registered and remunerated under Dutch employment law
- Providing expat guidance to internationally mobile professionals navigating Dutch tax regulations, including the 30% ruling
- Reducing misclassification risk by converting contractor relationships into compliant employment structures
- Supporting companies expanding into the Dutch market without the cost and delay of full entity setup
If your organisation is managing remote workers between Bulgaria and the Netherlands and needs a compliant, scalable employment structure, contact Blue Lynx to discuss how the Employer of Record model can be applied to your specific situation.