Bulgaria Guide

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  • Country:Bulgaria
  • Date:June 2019
  • Tags:tax, general informations


Bulgaria Guide

At a glance

Corporate Income Tax Rate (%) 10

Capital Gains Tax Rate (%) 10 (a)

Branch Tax Rate (%) 10

Withholding Tax (%)(b)

Dividends 5 (c)(d)

Interest 0/10 (e)(f)(g)

Royalties from Patents, Know-how, etc. 0/10 (e)(f)

Fees for Technical Services 10 (f)

Rent and Payments Under Lease, Franchising

and Factoring Agreements Derived from

Sources in Bulgaria 10 (f)

Net Operating Losses (Years)

Carryback 0

Carryforward 5

(a) Capital gains derived from the sale of shares, rights and government bonds through the Bulgarian stock market or stock exchanges in European Union (EU) or European Economic Area (EEA) countries are exempt from tax.

(b) An EU/EEA recipient of Bulgarian-source income that is subject to withholding tax may claim a deduction for expenses incurred in earning that income by filing an annual corporate income tax return. The return must be filed by 31 December of the year following the year of accrual of the income.

(c) This tax does not apply to payments to entities that are resident for tax purposes in Bulgaria or EU/EEA countries (no requirements for participation percentage and minimum holding period are imposed). However, under the general anti-tax avoidance rule provided in the domestic corporate income tax law, no exemption from withholding tax is granted to an arrangement or a series of arrangements that, taking into account all of the relevant facts and circumstances, are not genuine and result in tax avoidance.

(d) This rate may be reduced by tax treaties for dividends distributed to entities not resident for tax purposes in EU/EEA countries.

(e) The zero rate applies to Bulgarian-source interest or royalties income accrued to EU associated companies (a minimum holding of 25% of the share capital must be maintained for at least two years) if the income recipient is its beneficial owner. The exemption from tax does not apply to income accrued on hybrid financial instruments. The zero rate is disallowed if the Bulgarian source payment is, in substance, a profit distribution or capital decrease or aims at tax avoidance or tax evasion.

(f) This tax applies to payments to nonresidents only and may be reduced in accordance with an applicable tax treaty.

(g) Interest on debt (other than government or municipality bonds) extended to the Bulgarian state or a municipality is exempt from withholding tax. Interest income on bonds or other debt instruments issued by Bulgarian resident companies, the Bulgarian state or municipalities on a regulated EU/EEA market is exempt from withholding tax. The exemptions mentioned in the two preceding sentences are granted to all corporate investors, regardless of their tax residency. Interest income paid to nonresident issuers of bonds or other debt instruments is not subject to withholding tax in Bulgaria if all of the following conditions are met:

• The issuer of these bonds or debt instruments is a tax resident of an EU/EEA member state.

• The purpose for the issuance of the bonds or other debt instruments is that the proceeds will be used for granting a loan to a Bulgarian tax resident company.

• The bonds or other debt instruments are issued on a regulated market in Bulgaria or another EU/EEA member state.

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