Taxable entities
* Businesses and partnerships recognized beneath Bulgarian regulation
* Lasting institutions of non-resident entities in Bulgaria
Taxable financial gain
Financial result altered for tax applications.
Accounting principles
IFRS or regional Bulgarian GAAP (for tiny and medium-sized enterprises).
Tax adjustments
E.g., non-business enterprise relevant or not duly documented charges interest limited under the slim capitalization principles fees for impairment of property dividends been given from local or EU based organizations.
Tax depreciation principles
Optimum once-a-year tax depreciation charges between 4% and 50%, relying on the form of asset.
Thin capitalization
If the credit card debt to equity ratio of the corporation exceeds 3:1 (some of) the desire costs may well not be tax deductible in the present-day calendar year. On the other hand they could turn into tax deductible in the subsequent five consecutive a long time below sure circumstances.
Tax decline have ahead
Tax losses can be carried forward over the subsequent 5 consecutive years.
Tax returns and payment
The yearly company tax return has to be submitted by 31 March of the following calendar year. The tax year is the calendar 12 months.
The company tax has to be paid out also by 31 March. Quarterly or regular advance installments are thanks in the course of the year.
Distribution of dividends
Issue to 5% withholding tax when dispersed to people today, resident non-income entities and non-people (apart from for EU / EEA entities).
Dividends dispersed to resident providers are not incorporated in their taxable income besides for dividends dispersed by:
* Special function financial commitment providers
* Non-EU / EEA international entities
Withholding tax
Taxable profits
Withholding tax is thanks on the following kinds of profits when accrued to a non-resident entity:
* Dividends and liquidation quotas
* Curiosity, royalties, franchising and factoring service fees
* Specialized (which includes consultancy) and management companies fees
* Earnings from the use of movable or immovable residence
* Funds gains from transfer of serious estate
* Capital gains from disposal of economic assets issued by resident entities or the Condition and municipalities (exemption for funds gains from disposal of shares on a controlled Bulgarian / EU / EEA current market)
* Expert services charges, remuneration for the use of ideal and penalty or damages payments (except for coverage compensation) accrued to entities tax resident in small tax jurisdictions
Withholding tax costs
* 5% on the gross sum of dividends and liquidation quotas (% for distributions to EU / EEA entities)
* 5% on desire and royalties accrued to related bash authorized entities resident in the EU (below sure situations)
* 10% on the gross volume for all other taxable money
The withholding tax fees may be diminished less than an applicable tax treaty.
Refund alternatives
Entities resident in the EU could declare tax deductible expenses and declare a corresponding refund of the withholding tax paid out on a gross foundation. The declare is once-a-year and need to be filed by 31 December of the pursuing yr.
Payment
The tax ought to be withheld by the resident payer and remitted to the spending budget inside:
* Three months next the month of accrual of the profits when the receiver is tax resident of a country which has a tax treaty in drive with Bulgaria
* A person thirty day period subsequent the month of accrual in all other conditions
In circumstance of cash gains, it is their receiver which should remit the withholding tax because of in just the terms indicated earlier mentioned.
Tax treaty application
If accessible, double tax treaty aid may perhaps be applied by the income receiver instantly if the profits accrued for the calendar 12 months does not exceed BGN 500 thousand (close to EUR 255 thousand).
In all other cases a non-resident can profit from tax treaty relief if an progress clearance is received from the Bulgarian revenue authorities less than a certain course of action.
Fees subject to just one-off tax
* “Consultant” fees
* “Social” expenditures furnished in-variety to the workers (e.g. fringe rewards), besides for food items vouchers and voluntary insurance contributions (social, health and fitness and daily life insurance policy ) up to BGN 60 just about every per worker for every thirty day period
* Expenditures associated to the use of autos for administration functions
Tax fee
The tax price is 10% on the accrued bills. Both equally the respective cost and the one particular-off tax relevant to it are deductible for company profits tax applications.
Tax vacation
The amount of money of the once-a-year corporate cash flow tax owing by entities on their income from production, such as toll production, may possibly be partly or fully reduced.
The software of the tax holiday is subject to certain limitations and disorders, together with the EU point out assist restrictions.
Exemptions from company tax
Special goal expenditure businesses, near-ended licensed expenditure corporations and collective expenditure techniques approved for general public presenting in Bulgaria are not issue to company money tax.
Particular company tax regimes
Relevant to:
* Industrial maritime shipping and delivery companies
* Gambling businesses
* Some other (e.g., condition organs, etcetera.)
Transfer pricing regulations
The Bulgarian transfer pricing principles have to have that taxpayers implement arm’s length selling prices in their relevant party transactions. Arm’s size rates are individuals which unrelated parties would have agreed in comparable conditions. This prerequisite is imposed both equally to cross-border and domestic transactions.
Mainly primarily based on the 1995 OECD Rules, the Bulgarian transfer pricing regulations envisage 5 approaches for identifying arm’s length selling prices:
* The Comparable Uncontrolled Price Technique
* The Resale Minus Approach
* The Price tag Moreover Technique
* The Transactional Web Margin Method
* The Income Split Process
A taxpayer is obliged to show the arm’s size character of its relevant social gathering transactions throughout a tax audit by applying one particular of the above techniques.
The laws does not consist of particular prerequisites as to the format and contents of transfer pricing documentation which taxpayers can create as evidence for arm’s length pricing. However, a transfer pricing manual introduced by the Bulgarian revenue administration in February 2010 mentions the products that would show up suitable to contain in the documentation.
The handbook consists of a set of other handy suggestions relating to various transfer pricing subjects. For instance, with respect to intra-team services, the guide suggest unique gain mark-up ranges that have proved customary for Bulgaria.