Date de publication : 06-10-1907
The following information are for the sole purpose of providing a general overview of the local taxation of the Corporate tax aspects of the country. In any case, the information provided below cannot be considered as comprehensive or deemed to constitute specific legal advice.
Yes we tax in Bulgaria
New tax reform: No specific information
New tax treaties:
- Tax treaty between Bulgaria and Saudi Arabia is under negotiation.
- Tax treaty between Bulgaria and Pakistan is under negotiation.
Local tax advisors
No specific information on the local tax advisors.
The domestic definition of Permanent Establishment follows the wording of article 5 of the OECD Model:
- Fixed place of business;
- Dependent agent who habitually concludes contracts in the name of a non-resident company ;
- Permanent execution of commercial transaction.
Resident companies are taxed on their worldwide income (« worldwide principle »).
Entities are considered to be resident for tax purposes in Bulgaria if they are incorporated under Bulgarian legislation.
Note: the definitions of permanent establishment and place of residence are subject to the relevant provisions of any applicable double tax treaty, if any.
Corporate Income Tax
The general CIT tax rate is 10%.
Non-taxable income includes the following:
- Dividends received from qualifying participations
Non-deductible expenses includes the following:
- Dividends benefiting from the participation exemption ;
- Interest in excess of the thin-capitalization threshold ;
- Expenses considered as hidden distributions;
- Fines and penalties.
Carry forward: Yes 5 years, but some restrictions may apply.
Carry back: No
Companies should submit the tax return annually before the 31 March of the following year.
Annual tax returns are established by the company on a self-assessment system.
Companies shall pay monthly advance payments (quarterly advance payments for small businesses); and the balance must be paid before 31 March of the following year (in the case where fiscal year coincides with calendar year).
Whithholding Taxes (payment to foreign companies)
The local tax rates in Bulgaria are the following, subject to the provisions of an applicable double tax treaty, if any.
There is no WHT on the profits paid from a branch to its foreign head office.
The general rate of WHT on dividends is 5% of the gross amount.
The general rate of WHT on interest is 10%.
The general rate of WHT on Royalties is 10%.
The general rate of WHT on management fees is 10%.
The general rate of WHT on technical services is 10%.
Generally, capital gains are taxed under the regular CIT as general income.
Standard VAT tax rate is 20%
Zero-rated supplies include, subject to certain conditions:
- exports of goods;
- International transportation;
- intra-Community supplies of goods;
Exempt supplies include, subject to certain conditions:
- Certain financial services
- Certain insurance services
Note: exempt transactions differ from zero-rated transactions in that the input VAT associated with exempt transactions is not deductible.
EU taxable companies may claim a VAT refund to their own tax authorities through on the basis of the 13th EU Directive.
In case where for a tax period, Input VAT exceeds Output VAT, certain non-resident companies (which are not required to register and incur Bulgarian-VAT in the course of their business activities in Bulgaria) may apply for a refund.
Refunds are subject to the reciprocity principle, which means that Bulgaria only refunds VAT to foreign companies in countries that offer similar refunds to Bulgarian companies.
No other specific information of VAT in Bulgaria.
The general statute of limitation is 5 years starting 1st January of the following year in which the tax return had to be filed.
There is foreign exchange control in Bulgaria. Income and capital could be repatriated subject to compliance with the Bulgarian National Bank requirements.
There are thin capitalization rules in Bulgaria. The interest derived from loans between related parties may not be deductible in case where interest exceeds some ratios (3 times the taxpayer’s net equity).
Furthermore, the interest rate shall comply with the market practice.
Do not hestitate to share your exeprience in Bulgaria with us in the comments below. Any comments are welcome !
Romain, poète dans l’âme, aime particulièrement le couscous et passe beaucoup de temps à glacer ses souliers. Profil LinkedIn