The richest citizen of the Bulgarian city of Ruse, on the Danube, who earned BGN 3.12 M last year, has turned out to be a man from neighboring Romania, the national revenue agency announced.

The man, whose name has not been disclosed, is believed to have been lured to Bulgaria by the lower taxes, which the government has maintained at pre-recession levels.

However there is also a possibility that the Romanian is a tax fraudster as he submitted a tax declaration, but did not pay the taxes due that amount to BGN 187 000.

The income was received for royalties and consultations by a Romanian company.

The government in Sofia has been boasting that Romanian companies are moving in droves to Bulgaria attracted by lower taxes, which the government has maintained at pre-recession levels unlike Romania or Greece.

The profit tax amounts in Romania is 16%.  The tax on dividends amounts to 5% in Bulgaria and about 12% in Romania. The recent increase of the value-added-tax from 19% to 24% in Romania just came to further deteriorate the business climate, already strained by unskilled labor force, high social securities, bureaucracy and heavy indirect taxes.

Bulgaria has the lowest personal and corporate income tax in the EU at 10%, which was introduced at the beginning of 2008, replacing the previous system, which combined several different tax rates - between 20 and 24%, depending on income.

Bulgaria also has the lowest social security rates, which coupled with a 10% flat rate, makes it very attractive for physical entities, employers and potential investors.