* Corporations and partnerships founded beneath Bulgarian law
* Lasting institutions of non-resident entities in Bulgaria
Money end result altered for tax needs.
IFRS or community Bulgarian GAAP (for smaller and medium-sized enterprises).
E.g., non-small business similar or not duly documented costs desire restricted less than the slim capitalization regulations expenses for impairment of property dividends been given from local or EU primarily based firms.
Tax depreciation procedures
Greatest annual tax depreciation premiums amongst 4% and 50%, depending on the variety of asset.
If the credit card debt to fairness ratio of the business exceeds 3:1 (some of) the interest fees might not be tax deductible in the current year. Nonetheless they may well grow to be tax deductible in the following 5 consecutive several years under particular situations.
Tax decline have ahead
Tax losses can be carried forward above the subsequent five consecutive yrs.
Tax returns and payment
The once-a-year corporate tax return has to be submitted by 31 March of the pursuing year. The tax yr is the calendar yr.
The corporate tax has to be paid out also by 31 March. Quarterly or every month advance installments are because of for the duration of the calendar year.
Distribution of dividends
Subject matter to 5% withholding tax when distributed to people, resident non-revenue entities and non-citizens (except for EU / EEA entities).
Dividends dispersed to resident firms are not incorporated in their taxable cash flow except for dividends dispersed by:
* Unique goal investment firms
* Non-EU / EEA overseas entities
Withholding tax is thanks on the adhering to types of money when accrued to a non-resident entity:
* Dividends and liquidation quotas
* Curiosity, royalties, franchising and factoring expenses
* Technological (together with consultancy) and management expert services fees
* Money from the use of movable or immovable assets
* Capital gains from transfer of actual estate
* Cash gains from disposal of economic assets issued by resident entities or the State and municipalities (exemption for cash gains from disposal of shares on a controlled Bulgarian / EU / EEA marketplace)
* Services fees, remuneration for the use of appropriate and penalty or damages payments (apart from for insurance coverage payment) accrued to entities tax resident in low tax jurisdictions
Withholding tax costs
* 5% on the gross amount of money of dividends and liquidation quotas (% for distributions to EU / EEA entities)
* 5% on desire and royalties accrued to linked party legal entities resident in the EU (beneath certain disorders)
* 10% on the gross volume for all other taxable cash flow
The withholding tax charges may perhaps be decreased beneath an relevant tax treaty.
Entities resident in the EU may possibly declare tax deductible fees and declare a corresponding refund of the withholding tax paid out on a gross basis. The assert is annual and ought to be submitted by 31 December of the pursuing yr.
The tax must be withheld by the resident payer and remitted to the price range in just:
* Three months adhering to the thirty day period of accrual of the earnings when the receiver is tax resident of a region which has a tax treaty in drive with Bulgaria
* A single thirty day period adhering to the month of accrual in all other cases
In circumstance of funds gains, it is their recipient which really should remit the withholding tax owing within just the phrases indicated over.
Tax treaty application
If accessible, double tax treaty relief could be used by the income receiver directly if the cash flow accrued for the calendar calendar year does not exceed BGN 500 thousand (around EUR 255 thousand).
In all other conditions a non-resident can gain from tax treaty aid if an advance clearance is acquired from the Bulgarian revenue authorities below a particular course of action.
Fees subject matter to 1-off tax
* “Representative” fees
* “Social” costs presented in-variety to the workers (e.g. fringe benefits), other than for food vouchers and voluntary coverage contributions (social, health and fitness and existence coverage ) up to BGN 60 just about every per employee for each month
* Charges related to the use of autos for administration functions
The tax rate is 10% on the accrued expenses. Both equally the respective cost and the one-off tax relevant to it are deductible for company money tax reasons.
The amount of the once-a-year corporate profits tax owing by entities on their revenue from producing, which includes toll production, may perhaps be partly or absolutely decreased.
The software of the tax getaway is subject to sure constraints and situations, which includes the EU condition support constraints.
Exemptions from corporate tax
Special intent financial investment organizations, close-finished certified expense corporations and collective financial commitment strategies authorized for public presenting in Bulgaria are not issue to company cash flow tax.
Specific company tax regimes
* Industrial maritime shipping and delivery companies
* Gambling firms
* Some other (e.g., condition organs, etcetera.)
Transfer pricing procedures
The Bulgarian transfer pricing guidelines have to have that taxpayers implement arm’s length price ranges in their relevant get together transactions. Arm’s size price ranges are all those which unrelated parties would have agreed in very similar situations. This requirement is imposed both equally to cross-border and domestic transactions.
Mostly dependent on the 1995 OECD Suggestions, the Bulgarian transfer pricing procedures envisage 5 methods for analyzing arm’s length charges:
* The Equivalent Uncontrolled Value Process
* The Resale Minus Technique
* The Charge As well as System
* The Transactional Internet Margin Strategy
* The Gain Split Process
A taxpayer is obliged to establish the arm’s length character of its associated social gathering transactions during a tax audit by making use of just one of the over solutions.
The legislation does not include things like particular needs as to the format and contents of transfer pricing documentation which taxpayers can generate as proof for arm’s length pricing. On the other hand, a transfer pricing handbook introduced by the Bulgarian earnings administration in February 2010 mentions the items that would appear appropriate to contain in the documentation.
The handbook consists of a established of other practical guidelines relating to diverse transfer pricing matters. For instance, with regard to intra-group products and services, the guide recommend certain gain mark-up ranges that have proved customary for Bulgaria.