Page 12 - Mazars Central and Eastern European tax guide 2023

Bulgaria 2. Delivery of books on physical or electronic media, VAT-exempt services include financial and insurance
services, transfer of buildings and certain plots of land
or both (including textbooks, educational books and
educational kits, children's books with illustrations, and rights related thereto, the letting of real estate
for drawing or colouring, printed or handwritten music to individuals for housing, postal services and postage
editions), periodical printed works – newspapers and stamps, educational services, gambling, supplies, culture,
religion, medical and social services and supplies for
Mazars OOD which no tax credit has been used.
3A Moscovska str., VAT options in Applicable / limits
1000 Sofia – Bulgaria Bulgaria VAT payers are required to submit monthly VAT returns,
Phone: +359 287 800 02 Distance selling EUR 35,790/year sales and purchase registers, VIES and Intrastat returns.
www.mazars.bg Other indirect taxes include excise duties (on mineral oils,
Call-off stock No
spirits, beer, wine, tobacco and tobacco products, natural
VAT group registration gas, electricity and solid fuels).
Cash accounting – yearly EUR 500,000/preceding 12 months
amount in EUR (approx.) Personal income tax / Social security system
Import VAT deferment No
Corporate taxes and other direct taxes royalties are paid in favour of an EU member state parent All types of waste (construction, Personal income tax is applied at a flat rate of 10% on most
company. household, production, hazardous); of the income. The tax rate for dividends or liquidation
Bulgaria has a flat corporate income tax rate of 10%, Local taxes are determined by each municipality within Local reverse charge services related to waste processing; shares paid in favour of a natural person is 5%.
which is applied on the annual tax profit. The tax profit the ranges stated in the Law of Local Taxes and Fees. Local various types of agricultural production The tax rate for amounts received from the expiry of life
may be reduced by tax losses carried forward within taxes and fees include: (seeds and grain). insurance, if its duration was more than 15 years, is 7%.
five subsequent financial years. Bulgaria applies thin • real estate tax – its ratio is in the range of 0.1% Option for taxation Income from employment and self-employment is subject
capitalization rules to interest expenses from loans to 4.5%. The base for taxation of non-living real estates letting of real estate ü to social security and health insurance contributions. In the
or leasing provided or guaranteed by related parties. of companies is the higher of the book value or the value case of employment, the employee’s contribution amounts
The financial results of collective investment schemes and calculated by municipality tax valuation. The base for supply of used real estate ü to 13.78% (10.58% social security and 3.2% health
enterprises with special purposes are not taxable through taxation of all living real estate is the municipality’s tax VAT registration approx. EUR 51,130/last 12 months insurance). For the employer, the contribution is 18.92%
corporate income tax. valuation; threshold (14.12% and 4.8%, respectively). For specific positions with
Advance tax payments should be made each month • transportation vehicle tax – determined as an exact magazines, on physical or electronic media or both, other higher risk (miners, pilots, workers in chemical and other
or quarter, based on the estimated tax profit for the amount, depending on vehicle type and power; than publications that are wholly or mainly intended for harmful production facilities, etc.) there are different rates
current year. • gift tax – applied to gifts of all kinds, with very limited advertising and other than publications that consist wholly for contributions.
Withholding tax rates are 5% for dividends and 10% exemptions. Applies also to forgiven payables. There or mainly of video content or audio-musical content; There is a minimal basis for social and health contributions
for interests and royalties (double taxation treaties are two ranges of rates applicable – between 0.4% and for each position (mostly distributed by sectors of the
between Bulgaria and other countries can also be applied 0.8% for gifts between siblings and their children; and 3. Supplies of food suitable for babies or small children, economy). The maximum assessment base for social and
in order to decrease the withholding tax rate). There between 3.3% and 6.6% for all other gifts; baby diapers and similar baby hygiene articles according health insurance contributions is BGN 3,400 (approx.
is no withholding tax if the dividends, interests and to application No. 4. EUR 1,739).
• tax on the acquisition of property for a consideration –
applies to real estate, vehicles and limited real estate
Transfer pricing in Bulgaria rights acquired for a consideration. The tax rate range Average wage
Arm's length principle ü Since 1989 is between 0.1% and 3% of the value of the property, Wage related taxes in Bulgaria Minimum wage in private sector
or in the value of the more expensive property in the
A TP local file is obligatory for Exchange rate BGN/EUR 1.96 in EUR in BGN in EUR in BGN
companies that have exceeded case of exchange;
at least two of the following • inheritance tax – exempt to a limited extent 399 780 881 1,723
indicators by 31 December (family members);
Documentation liability ü in the previous year: assets over Total wage cost 474 119% 1,048 119%
BGN 38 million, revenues over • patent tax – applied to micro entities or individuals Social security contribution - employer 56 14% 124 14%
BGN 76 million, whose activities are small services like tailoring, very
over 250 employees. small stores, carpentry, etc. There are fixed amounts, Health insurance - employer 19 5% 42 5%
APA No – determined by each municipality; Gross salary 399 100% 881 100%
• a wide range of other fees (such as tourist tax; tax on the
Country-by-Country – carriage of passengers by taxi; refuse collection fee) Employees' contributions 55 14% 121 14%
liability ü or other fees usually imposed for specific services, such Calculated personal income tax after employees' contributions 34 10% 76 10%
Master file-local file Where the company required as social services, technical and other services, rent Net salary 309 78%
to prepare a Local File
(OECD BEPS 13) ü is an MNE member, it must also 684 78%
applicable have a Master File. of plots for sale at marketplaces, pavements, etc.
Penalty
0.5% of the transaction amount VAT and other indirect taxes
- for lack of local file; BGN
lack of documentation ü 5,000 to BGN 10,000 penalty - For 2021, the standard VAT rate is 20% and the reduced
for lack of master file. rate is 9%. The tax rate is 9 percent for:
tax shortage ü BGN 1,500 to BGN 5,000 1. Delivery of an accommodation service provided
Related parties 50% < direct or indirect control in hotels and similar establishments, including the Iliya Tsvetkashki
or personally related
provision of holiday accommodation and the renting out
Safe harbours No – places for camping sites or caravans, with a venue for Chief Accountant
Phone: +359 287 800 02
Level of attention paid by Tax performance on the territory of the country; E-mail: iliya.tsvetkashki@mazars.bg
Authority 9/10

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