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Incidentally I have heard the CBS news about the Bulgarian president visit in US. The exact sentence was something like:

We can't be too specific about the president's schedule due to security concerns which are an issue for all visiting dignitaries.

What took me by surprise was that they used the word dignitary while in Bulgarian recently we tend to use the foreign word VIP for that no matter if it is a man with a specific (official) rank in the society or a famous singer. It pretty much sum up all these occasions, so my question is: what is the difference in meaning between dignitary and VIP and when and why should we use each?

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    "Dignitary" is based on "dignity". Madonna is a VIP; Nelson Mandela is a dignitary.
    – JeffSahol
    May 22, 2012 at 12:19

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Dignitary: person holding a high office

The party was attended by many dignitaries like XYZ.

No foreign dignitary was invited for the celebration.

VIP: very important person, a person of great importance or influence (informal)

These seats are reserved for VIPs.

VIP can be anyone (celebrities, sportsperson, politicians, etc.).

So "dignitary" can be considered a subset of VIP.

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As you say yourself, VIP can be used for a singer (or movie star, corporate CEO, or professional athlete). But dignitary is used almost exclusively for foreign visitors representing their country. The Bulgarian president is clearly one of the latter, so it makes sense to use the more specific term.

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