The European Commission is preparing to launch an excessive deficit procedure against Bulgaria, according to official Commission documents. Alongside the fiscal warning, Brussels is also urging structural economic changes, including a reassessment of the country’s 10% flat tax system, which it argues lacks fairness in its current form.
One of the Commission’s key criticisms is linked to tax progressivity. In its assessment, it states that “a flat tax of 10% without a tax-free threshold leads to weaker tax progressivity,” suggesting that the system places disproportionate pressure on lower-income groups. The EC argues that Bulgaria should focus on improving the fairness of its tax structure while also strengthening revenue collection and limiting the shadow economy.
The recommendations form part of a broader set of five policy directions for 2026 and 2027, prompted by rising fiscal risks and weaknesses identified in areas such as corruption control, education outcomes, and investment in research and innovation.
Among the fiscal measures, the Commission calls for tighter control over net expenditure growth and increased defense spending, alongside efforts to improve tax compliance and overall fiscal sustainability. It also points to Bulgaria’s comparatively low tax revenues within the EU context.
