More and more freelancers and technology companies – especially SaaS businesses – are starting to accept payments in cryptocurrencies. The reasons are clear: fast transactions, global access to clients, and lower intermediary costs.
But behind this convenience lies a key question:
How are these revenues treated from a tax and accounting perspective in Bulgaria?
The answer is not complex, but there are several critical points that are often overlooked.
Core Principle: Crypto = Revenue
Regardless of whether you are:
- a freelancer
- a SaaS company
- a digital business
👉 if you receive payment in crypto, it is considered taxable revenue, just as if it were in EUR or USD.
his means:
- you must recognize revenue
- you must pay tax
How Value Is Determined
Crypto payments are valued at their market price at the moment of receipt.
Example (freelancer):
- You provide a service for 1 ETH
- On the day of receipt, 1 ETH = €2,000
👉 You recognize revenue: €2,000
Future price changes are irrelevant for this initial recognition.
Tax Treatment
For Freelancers (Individuals)
The income is treated as:
👉 income from business activity
- Tax: 10%
- Social security contributions may apply (depending on status)
- A 10% deemed expense deduction may be applicable For Companies (incl. SaaS)
The revenue is included in:
👉 company turnover
- Corporate tax: 10%
- VAT may apply (depending on the service and customer location)
Second Tax Event: When You Sell the Crypto
This is a key point that many overlook:
👉 Receiving crypto creates the first taxable event
👉 Selling it creates a second taxable event
Example (SaaS company):
- You receive payment:
- Later you sell:
👉 Additional gain: €1,000
👉 Tax on the gain: €100Accounting Treatment
This is where it becomes particularly important, especially for companies.
Crypto can be treated as:
- a financial asset
or
- inventory (for trading businesses)
👉 The choice depends on:
- business model
- transaction frequency
- accounting policy
Example:
A SaaS company accepts crypto payments but does not actively trade:
👉 most commonly:
- crypto is treated as a financial asset
VAT Aspect (Important for SaaS)
If you are a SaaS company:
👉 VAT depends on:
- where your customer is located
- the type of service you provide
Important:
Accepting crypto as a payment method does not change the VAT treatment of the service.
Example:
- You provide a SaaS service to a client in Germany
- The client pays you in USDT
👉 VAT is determined based on EU VAT rules—not on the fact that payment is in crypto.
Additional VAT Effect (Often Overlooked)
There is, however, an important point that many companies miss:
👉 After receiving crypto and later converting it into fiat:
- this is treated as a separate transaction
- typically falling under a VAT-exempt financial service
What This Means in Practice
If a company performs both:
- taxable supplies (e.g. SaaS services)
- VAT-exempt supplies (e.g. crypto-to-fiat conversions)
👉 this may lead to:
- a reduction in the VAT deduction coefficient
- meaning it is no longer 1 (100%)
- and you may not be able to fully recover input VAT on expenses
Example:
A SaaS company:
- €100,000 revenue from services (taxable)
- €50,000 from crypto-to-fiat conversions (VAT-exempt)
👉 In this case:
- a mixed activity arises
- partial VAT deduction applies
- part of the input VAT remains non-deductible
Why This Matters
This is not just a technical detail—it is a material tax effect.
Without proper planning:
- you may lose part of your VAT recovery
- your real costs may increase
- your margins may decrease
Key Takeaway
👉 Crypto payments themselves do not change VAT logic
👉 But what you do with the crypto afterwards does
This can significantly impact:
- your right to deduct VAT
- the overall VAT efficiency of your business
Most Common Mistakes
1. Not recognizing revenue upon receipt
Many freelancers assume tax is due only upon sale.
👉 Incorrect—revenue arises at the moment of receipt.
2. No valuation at the time of receipt
Failure to document:
- exchange rate
- transaction value
👉 leads to reporting issues
3. Mixing personal and business funds
Especially common with:
- freelancers
- small SaaS companies 4. Ignoring the second tax event and VAT-exempt transactions
(when converting crypto into fiat)
Practical Tips
- Always fix the value at the date of receipt
- Use a reliable exchange rate source
- Maintain a clear transaction history
- Consider automation tools
- Establish a clear accounting policy
Real Business Insight
Accepting crypto is not just a “new payment method.”
👉 It impacts:
- cash flow
- accounting
- tax obligations
For fast-growing SaaS companies, this can become a serious risk if not properly structured.
Conclusion
Receiving payments in crypto is a legitimate and increasingly popular model.
But from a tax and accounting perspective:
👉 crypto is not a special case—it is simply another form of revenue
- there is taxable income upon receipt
- there is a second taxable event upon sale
- it requires clear tracking
- it affects the VAT deduction coefficient
Companies and freelancers who build the right structure from the beginning not only avoid risks – they create a sustainable and scalable business model in the Web3 environment
