Romanian seaside hotels follow Romanian tourists and 'migrate' to neighbor Bulgaria for lower taxes

Romania's neighbor Bulgaria is not only a destination for more and more Romanian tourists, but for Romanian hotels too. Hotel owners on Romania's seaside have started to open management firms in Bulgaria, to run their hotels in Romania. The reason? Much lower taxes, according to the Federation of Employers Unions in the Romanian Tourism, quoted by Mediafax newswire. It goes like this: the Romanian hotel owner opens a management firm in Bulgaria, and hires its Romanian staff via the Bulgarian firm. Taxes per employee in Romania are of 86 percent, while in Bulgaria, 43 percent, according to Dragos Raducan, vicepresident of the Federation, quoted by Mediafax. On top of it, profit taxes and the VAT are lower in Bulgaria, so hotel owners in Romania in fact manage to halve their costs with this strategic move, according to Raducan. The fiscal optimization move was first tried out by a few Romanian hotel owners last year, and this year more have followed in their footsteps. Raducan expects even more to do the same this year, going beyond hotel units on the seaside. But the Federation representative said they do not encourage such a move, even if it stems from the high taxes in Romania. Romania's seaside saw 10 percent fewer Romanian tourists, and 11 percent less foreign tourists in 2013. Meanwhile, many Romanians prefer to spend their spring and summer holidays on the Bulgarian seaside, taking advantage of the all-inclusive offers. Both Bulgaria and Romania have a Black Sea coast. editor@romania-insider.com