Income Taxes on Natural Persons Act

 

Publication – State Gazette No. 94/24.11.2006, in force as of 01.01.2007;

Last Amendment – SG No. 94/30.11.2012, in force as of 01.01.2013

 

PART ONE

GENERAL PROVISIONS

 

Chapter One

SUBJECT MATTER, SCOPE OF TAXATION AND TAXABLE PERSONS

 

Subject Matter of Act

Art. 1. This Act regulates taxation of income accruing to natural persons, including income from activity in a sole-trader capacity.

 

Scope of Taxation

Art. 2. Taxation under this Act shall apply to income accruing to resident and non-resident natural persons.

 

Taxable Persons

Art. 3. Taxable persons under this Act shall be:

  1. any resident and non-resident natural persons, who are liable to taxes under this Act;
  2. any resident and non-resident persons, who are obligated to withhold and remit taxes under this Act.

 

Resident Natural Persons

 Art. 4. (1) “Resident natural person,” regardless of nationality, shall be any person:

  1. who has a permanent address in Bulgaria, or
  2. who is present within the territory of Bulgaria for a period exceeding 183 days in any twelve-month period, or
  3. who is sent abroad by the Bulgarian State, by bodies and/or organizations thereof, by Bulgarian enterprises, and the members of the family of any such person, or
  4. whose centre of vital interests is situated in Bulgaria.

(2) For the purposes of Item 2 of Par. (1), a person shall be deemed to be a resident during the year wherewithin the presence thereof [in Bulgaria] exceeds 183 days. The day of exit from and the day of entry into the country shall be treated separately as days of presence in the country.

(3) For the purposes of Item 2 of Par. (1), the period of residence in Bulgaria for the sole purpose of study or medical treatment shall not be deemed to be a presence in Bulgaria.

(4) For the purposes of Item 4 of Par. (1), the centre of vital interests shall be situated in Bulgaria where the interests of the person are closely related to the country. Upon determination of such interests, consideration may be given to family, property, the place from which the person carries out a labour, professional or economic activity, and the place from which the person manages the property thereof.

(5) Any person, who has a permanent address in Bulgaria but whose centre of vital interests is not situated in the country, shall not be a resident natural person.

 

Non-resident Natural Persons

Art. 5. “Non-resident natural person” shall be any person who is not a resident person within the meaning given by Art. 4 herein.

 

Liability for Tax of Resident Natural Persons

Art. 6. (1) Any resident natural person shall be liable to taxes in respect of any income acquired thereby from sources inside and outside the Republic of Bulgaria.

 

Liability for Tax of Non-resident Natural Persons

Art. 7. Any non-resident natural person shall be liable to taxes in respect of any income acquired thereby from sources inside the Republic of Bulgaria.

 

Sources of Income inside Republic of Bulgaria

Art. 8. (Last Amendment – SG No. 94/2010, in force as of 01.01.2011) (1) Any income derived from economic activity carried out through a fixed base within the territory of the Republic of Bulgaria or from disposition of the property of any such fixed base shall have its source inside the Republic of Bulgaria.

(2) Any income derived from work performed within the territory of the Republic of Bulgaria, or from services performed within the territory of the Republic of Bulgaria, shall have its source inside the Republic of Bulgaria.

(3) Any dividends and share in any liquidation surplus, arising from participating interests in resident legal persons and unincorporated associations, including agreements on joint activity, shall have their source inside the Republic of Bulgaria.

(4) Any income derived from transfer of the enterprise of a sole trader registered in the Republic of Bulgaria shall have its source inside the Republic of Bulgaria, regardless of whether the transferor is a resident person.

(5) (Last Amendment – SG No. 113/2007, in force as of 01.01.2008) Awards and remuneration for activity performed on the territory of the country by foreign natural persons – public figures, scientists, artists, cultural and sporting figures, including when the remuneration is paid/accrued through a third person such as impresario agency, producing agency and other intermediaries, shall originate from sources in the country.

(6) The following income, charged/paid by resident persons, by representative offices, as well as by a permanent establishment or a fixed base in the Republic of Bulgaria, shall likewise have its source inside the Republic of Bulgaria:

  1. any damages and indemnities accruing in lieu of or together with another income from a source inside the Republic of Bulgaria;
  2. any cash prizes and merchandise awards awarded at games, competitions and contests which are not provided by an employer or a commissioning entity;
  3. any remunerations other than remunerations under an employment relationship, paid to: an employee or a member of a management or supervisory body of a Bulgarian legal person, of a subsidiary wholly owned by a non-resident person, an employee of a representative office of a non-resident person, or to any other person who performs identical or similar functions;
  4. any interest payments, including interest within payments under a lease contract;
  5. any income from rent or other provision for use of movable or immovable property;
  6. any payments received under franchising agreements and factoring contracts;
  7. any copyright and licence royalties;
  8. any technical assistance fees;
  9. any compensations under management contracts.
  10. (New – SG No. 113/2007, in force as of 01.01.2008) scholarships for education in the country and abroad ;
  11. (New – SG No. 113/2007, in force as of 01.01.2008) income from social security and from insurance .

(7) (Last Amendment – SG No. 113/2007, in force as of 01.01.2008) Income under Par. 6, provided  by local legal entities and local sole proprietors through a place of economic activity or a certain base outside the country or paid by local natural persons, through a certain base outside the country, shall not originate from sources in the country.

(8) Any income derived from shares, interests, compensation instruments, investment vouchers and other financial assets, issued by the [Bulgarian] State, the municipalities, resident legal persons, unincorporated associations and other forms of joint activity, as well as from any transactions therein, shall have its source inside Bulgaria.

(9) Any income derived from agriculture, forestry, hunting ground management and fisheries within the territory of the country shall have its source inside the country.

(10) Any income derived from use, sale, exchange or other transfer of immovable property, including any such transfer of an undivided interest in or a limited right in rem to any such property situated within the territory of the country, shall have its source inside the country.

(11) (New – SG No. 94/2010, in force as of 01.01.2011) Incomes considered to be acquired from sources inside the Republic of Bulgaria are the following incomes, charged by local legal entities, local sole traders or foreign legal entities and sole traders through a commercial location or a fixed base in the country in favour of foreign natural persons, established in jurisdictions with preferential tax regime:

  1. remuneration for services or rights with the exception of the cases when the services and rights are actually provided;
  2. compensations and penalties of all kinds, with the exception of the penalties charged under insurance contracts.

(12) (Former Par. (11) – SG No. 94/2010, in force as of 01.01.2011) Upon determination of the source of income under this Art., the place of payment of the income shall be ignored.

 

Documenting and Accounting for Income

Art. 9. (Last Amendment – SG No. 99/2011, in force as of 16.12.2011) (1) The taxable persons shall be obligated to register and account for any sale of goods and services as effected by means of issuing a fiscal cash receipt according to a procedure established by an ordinance of the Minister of Finance, except where payment is effected by bank transfer or through an offset.

(2) Any taxable persons, who are not obligated to issue a fiscal cash receipt printed by a fiscal device according to Par. (1), shall issue a document on the income acquired thereby from sources referred to in Items 3 and 4 of Art. 10 (1) herein, containing the essential elements covered under Art. 7 (1) of the Accountancy Act.

(3) (Last Amendment – SG No. 99/2011, in force as of 16.12.2011)  The provisions of Par. (2) shall not apply to any income in respect of which, upon the acquisition thereof, the payer of the income issues a Statement of Amounts Paid or where a final tax has been levied on the income according to the procedure established by Chapter Six herein, as well as to income  under  Art. 13, par. (1), item 24.

 

Chapter Two

 INCOME AND TAXES

 

Types of Income

Art. 10. (Last Amendment – SG No. 113/2007, in force as of 01.01.2008) (1) Depending on the source, there shall be the following types of income under this Act:

  1. income from employment relationships;
  2. income from economic activity in a sole-trader capacity;
  3. income from other economic activity;
  4. income from rent or from other onerous provision for use of rights or property;
  5. income from transfer of rights or property;
  6. (Last Amendment – SG No. 113/2007, in force as of 01.01.2008) income from sources referred to in Art. 35 herein, as well as income whereon final taxes are leviable under this Act.

(2) Depending on the form of payment, income may be cash and non-cash.

(3) Any income derived in a foreign currency shall be translated into Bulgarian lev terms along the exchange rate of the Bulgarian National Bank as applicable at the date of acquisition.

(4) The non-cash income shall be translated into Bulgarian lev terms at market price at the date of acquisition.

 

Acquisition of Income

Art. 11. (Last Amendment – SG No. 94/2012, in force as of 01.01.2013) (1) Save as otherwise provided for by this Act, any income shall be deemed to be acquired on the date of:

  1. payment: in the case of cash payment;
  2. crediting the account of the recipient of the income or receipt of the cheque: in the case of non-cash payment;
  3. receipt of the consideration: in the case of non-cash income.

(2) In the cases of sale, exchange or other onerous transfer of rights or property covered under Art. 33 (3) herein, the income shall be deemed to be acquired as at the date of the transfer.

(3) Income shall furthermore be deemed to be acquired by a natural person where the payment or consideration is received by a third party on the order of the said natural person or under an agreement between the said natural person and the payer. For determination of the date of acquisition, Par.s (1) and (2) shall apply.

(4) (Last Amendment – SG No. 94/2010, in force as of 01.01.2011) Any income referred to in Art. 33 (11) herein shall be deemed to be acquired on the date of the court registration of the transfer with deletion of the sole trader.

(5) (New – SG No. 94/2012 in force as of 01.01.2013) In case of advance payment of the income under Art. 38 (13) the latter shall be considered acquired at the deposit’s due date or at the date of the ahead –of -term termination thereof.

 

 

Taxable Income

 Art. 12. (1) Taxability under this Act shall apply to income derived from all sources acquired by a taxable person during the tax year, with the exception of the income which is non-taxable by virtue of a law.

(2) Where deduction of expenses is provided for in this Act, the expenses determined under this Act shall be taken into consideration upon determination of the taxable income from the relevant source.

 

Non-Taxable Income

Art. 13. (Last Amendment – SG No. 94/2012 in force as of 01.01.2013) (1) Taxability shall not apply to:

  1. any income acquired during the tax year from the sale or exchange of:

(a) (Last Amendment – SG No. 95/2009, in force as of 01.01.2010) one residential immovable property, if between the date of acquisition and the date of sale or exchange more than three years have elapsed;

(b) up to two immovable properties, as well as any number of agricultural and forest properties, provided that more than five years have elapsed between the date of acquisition and the date of sale or exchange;

  1. any income accruing from the sale or exchange of movable property, with the exception of:

(a) means of transport by road, air and water, provided that the period from the date of acquisition to the date of sale or exchange is less than one year;

(b) works of art, collectors’ items and antiques;

(c) shares, interests, compensation instruments, investment vouchers and other financial assets, as well as the income accruing from trade in foreign exchange;

(d) movable property delivered to persons who have the right to carry out collection, transport, recovery or disposal of waste in accordance with the Waste Management Act;

  1. (Last Amendment – SG No. 106/2008, in force as of 01.01.2009) incomes from disposal of financial instruments within the meaning of § 1, pt. 11 of the additional provisions;
  2. any profit or another source of owners’ equity distributed in the form of new interests and shares in commercial corporations, as well as any profit or another source of owners’ equity distributed in the form of an increase of the nominal value of the previously issued interests and shares;
  3. any income accruing to persons indemnified according to the procedure of a statutory instrument from the sale or exchange of compensation instruments and investment vouchers received as indemnity;
  4. any income accruing from compulsory social insurance in Bulgaria or abroad;
  5. any income accruing from supplementary voluntary social insurance received after attainment of entitlement to supplementary pension; any income accruing from investment of the technical provisions received under contracts of insurance; and income accruing from investments of the assets of the supplementary retirement insurance funds, apportioned to the individual accounts of the insured persons;
  6. (Last Amendment – SG No. 94/2012 in force as of 01.01.2013) the interest income from bank accounts, save for interests on deposits, in local commercial banks and branches of foreign banks established in Member State of the European Union or in another country – party to the Agreement on the European Economic Area;
  7. (Last Amendment – SG No. 32/2009, in force as of 01.01.2010) interests and discounts of Bulgarian state, municipal and corporate bonds, and of such bonds issued in compliance with the legislation of another Member State of the European Union or of a State Party to the Agreement on the European Econimic Area;
  8. any interest on claims established by a court of law, which are not subject to taxation, and any indemnities awarded for court costs;
  9. any compensations and other such payments awarded for medium and grievous bodily harm, occupational disease or death;
  10. any compensations for property taken by eminent domain for state and municipal needs;
  11. any compensations for damage to property and personal injury, with the exception of the compensations for lost profit;
  12. any insurance benefits, when an insured event has incurred;
  13. any social assistance allowances and benefits received in pursuance of the Integration of Persons with Disabilities Act, the Child Protection Act, the Family Allowances Act or of another statutory instrument, as well as any unemployment benefits and allowances received in pursuance of a statutory instrument;
  14. any assistance from organizations with social activity, established by a law, and from not-for-profit legal entities registered for pursuit of public benefit activities;
  15. any amounts received in pursuance of the Family Allowances Act, as well as any alimony and child support payments received by entitlees according to the provisions of the Family Code;
  16. any scholarships in favour of natural persons for the study thereof in Bulgaria and abroad;
  17. any sums of money and merchandise awards received in pursuance of a statutory instrument by donors of blood, blood components and biological products for human purposes;
  18. any winnings and merchandise awards received through participation in games of chance within the meaning given by the Gambling Act;
  19. (Last Amendment – SG No. 113/2007, in force as of 01.01.2008) monetary and object profits obtained from participation in games other than those under Subpar. 20, where the profit is determined on a casual basis;
  20. (Last Amendment – SG No. 94/2012 in force as of 01.01.2013)  the State and national awards granted to authors in the field of culture and sportsmen, and the awards granted to winners in competitions under programmes and projects which are either wholly or partially financed by the “Culture” National Fund, as well as the financial awards granted by the state for special contribution to the Bulgarian state and nation;
  21. (Last Amendment – SG No. 106/2008, in force as of 01.01.2009) amounts obtained for business trips, travel and accommodation expenses under business relations other than employment, which are at the account of the assignor and are documentary proven in accordance with the effective legislation, as well as the daily traveling expenses, not exceeding their double amount, determined for the persons under employment relations;
  22. any income derived from ground rent, rent charge or from other onerous provision for use of agricultural land;
  23. any remunerations drawn by: the members of the staff of diplomatic missions in accordance with the Vienna Convention on Diplomatic Relations; the members of consulates in accordance with the Vienna Convention on Consular Relations; the employees of inter-state and inter-governmental organizations according to the international treaty concluded with the respective organization, and the members of the family of any such persons, insofar as this is provided for in the relevant international treaty;
  24. any income accruing from the sale or exchange of any property acquired by legal or testamentary succession, as well as of any property restituted according to the procedure established by a statutory instrument;
  25. any consumer dividends distributed by cooperatives established under the Cooperatives Act.

(2) (Last Amendment – SG No. 95/2009, in force as of 01.01.2010) Property which is obtained as a result of inheritance, devise or endowment as well as the property ,obtained as a result of reinstatement of ownership by virtue of law is not deemed as an income.

(3) (Repeal – SG No. 95/2009, in force as of 01.01.2010).

(4) (New – SG No. 95 of 2009, valid from 01.01.2010) Taxable income is not determined at the date of acquisition of shares and stakes received in exchange for in-kind contributions made into the commercial companies.

(5) (Last Amendment – SG No. 31/2011, in force as of 01.01.2011) The provisions of Pars. (1), (2) and (4) shall not apply to any income accruing from economic activity in a merchant capacity within the meaning given by the Commerce Act, including in a sole-trader capacity as well as natural persons registered as tobacco producers and agricultural producers, which determine their taxable income under Art. 26 of the Income Taxes on Natural Persons Act.

 

Taxation of Income

Art. 14. (Last Amendment – SG No. 31/2011, in force as of 01.01.2011) (1) (Last Amendment – SG No. 31/2011, in force as of 01.01.2011) The income under Chapter Five, acquired throughout the fiscal year shall be subject to taxation upon the total annual tax base, with exception of income gained from economic activity as a sole proprietor and incomes from other economic activity under Art. 29a.

(2) (Last Amendment – SG No. 31/2011, in force as of 01.01.2011) Subject to taxation upon the annual tax base under Art. 28 shall be the income gained from activity as a sole proprietor and incomes from other economic activity under Art. 29a.

(3) Subject to final taxation shall be the income under Chapter Six.

(4) Natural persons, inclusive of sole proprietors, shall be subject to patent taxation for income gained from patent activities, in accordance with the provisions of the Local Taxes and Fees Act. For income gained from other activities the persons shall be subject to taxation under this Act.

 

PART TWO

AGGREGATE ANNUAL TAXABLE AMOUNT

 

Chapter Three

GENERAL PROVISIONS

 

Tax Year

Art. 15. (1) The tax year shall be concurrent with the calendar year.

 

Determination of Taxable Income and of Taxable Amount

Art. 16. (Last Amendment – SG No. 113/2007, in force as of 01.01.2008) (1) The taxable income and the taxable amount shall be determined for each source of income separately according to the provisions of this Act.

(2) (Last Amendment – SG No. 113/2007, in force as of 01.01.2008) Any income subject to levy of final taxes according to the procedure established by this Act or of final taxes according to the procedure established by the Corporate Income Tax Act shall be excluded upon determination of the taxable income. The same applies to the income subject to taxation under the Local Taxes and Fees Act.

(2) (Last Amendment – SG No. 113/2007, in force as of 01.01.2008 ) Any income subject to  final taxes according to the procedure established by this Act or of final taxes according to the procedure established by the Corporate Income Tax Act or subject to taxes under the Local Taxes and Fees Act shall be excluded upon determination of the taxable income.

 

Aggregate Annual Taxable Amount

Art. 17. (Last Amendment – SG No. 113/2007, in force as of 01.01.2008) The total annual tax base shall be the sum of the annual bases under Art. 25 , 30 , 32 , 34 and 36, reduced by the tax relief specified in this act .

 

Chapter Four

TAX RELIEFS

 

Tax Relief for Persons with Reduced Working Capacity

Art. 18. (Last Amendment – SG No. 113/2007, in force as of 01.01.2008) (1) The sum of the annual tax bases under Art. 17 for persons with 50 and over 50 per cent reduced capacity for work, determined by virtue of an effective decision of a competent authority, shall be reduced by 7920 BGN, including for the year of occurrence of the incapacity for work and for the year of expiration of the validity of the decision .

(2) The monthly tax base under Art. 42, Par. 2 for income from employment relations of persons with 50 and over 50 percent incapacity for work shall be reduced by 660 BGN, including for the month of occurrence of the incapacity for work and for the month of expiration of the validity of the decision.

 

Tax Relief for Personal Voluntary Social and Commercial Insurance Contributions

Art. 19. (Last Amendment – SG No. 113/2007, in force as of 01.01.2008) (1) (Last Amendment – SG No. 113/2007, in force as of 01.01.2008) The sum of the annual tax bases under Art. 17 shall be reduced by the personal contributions effected throughout the year for additional voluntary social security, totally up to 10 percent of the sum of the annual tax bases under Art. 17, as well as by the personal contributions effected throughout the year for voluntary medical insurance and premiums/contributions under contracts for life insurance totally up to 10 per cent of the sum of the annual tax bases under Art. 17.

(2) (Last Amendment – SG No. 113/2007, in force as of 01.01.2008) The monthly tax base under Art. 42, Par. 2 for income gained from employment relations shall be reduced by the personal contributions for voluntary social security, effected through the employer for the relevant month, totally up to 10 percent of the monthly tax base under Art. 42, Par. 2 , as well as by the personal contributions for voluntary medical insurance effected at the account of the person for the relevant month, as well as premiums/contributions for contracts for life insurance, totally up to 10 per cent of the monthly tax base under Art. 42, Par. 2.

(3) The tax relief referred to in Par.s (1) and (2) shall be enjoyable where, according to the contract concluded with the commercial insurance company or social insurance company, the natural person who is liable for the tax is commercially or socially insured.

(4) The tax relief referred to in Par.s (1) and (2) shall furthermore be enjoyable where, by agreement with the persons, the commercial insurance company or the social insurance company is replaced and the resources raised theretofore are moved by bank transfer

 

Tax Relief for Personal Contributions for Contributory Service upon Retirement

 Art. 20. (Last Amendment – SG No. 31/2011, in force as of 01.01.2011) The sum total of the annual taxable amounts under Art. 17 shall be debited with the social insurance contributions remitted during the year for the account of the person under Art. 9a of the Social Security Code.

 

Tax Relief for Children

Art. 21. (Last Amendment – SG No. 31/2011, in force as of 01.01.2011) Tax relief under Art. 18, Par. 1, Art. 19, Par. 1 and Art. 20, shall be used in the following sequence:

  1. from the sum of the annual tax bases under Art. 25 , 30 , 32 , 34 and 36;
  2. (Last Amendment – SG No. 31/2011, in force as of 01.01.2011) from the annual tax base under Art. 28, Par. 1.

 

Tax Relief for Donations

Art. 22. (Last Amendment – SG No. 51/2011) (1) The sum of the annual tax bases under Art. 17 shall be reduced by the amount of donations made throughout the year as follows:

  1. up to 5 per cent, when the donation is in favour of:

(a) health care establishments under Art. 21, Par. 2, Subpar. 1-3 of the Healthcare Act;

(b) Medical Institutions;

(c) (Last Amendment – SG No. 51/2011) Specialized institutions for social service rendering in accordance with the Social Support Act, as well as to the Social Support Agency and Social Protection Fund at the Ministry of Labour and Social Policy;

(d) Specialized children’s institutions in accordance with the Children Protection Act, as well as to nursing homes for raising of children deprived of parental care, in accordance with the Public Education Act;

(e) Creches, kindergartens, schools, high schools and academies;

(f) Budget enterprises under the meaning of the Accountancy Act;

(g) Religious establishment registered in the country;

(h) Specialized enterprises or co-operations of disabled persons, entered into the register under Art. 29 of the Integration of People with Disabilities Act, as well as in favour of the Agency for Disabled Persons;

(i)The Bulgarian Red Cross;

(j) Cultural institutions, community centres, as well as for the purposes of the cultural, educational or scientific exchange under an international contract, to which the Republic of Bulgaria is a party;

(k) any not-for-profit legal entities, registered in the Central Register of Not-for-Profit Legal Entities for carrying out of public benefit activities, with the exception of organizations supporting culture within the meaning of the Financial Support for Culture Act;

(l) (Last Amendment – SG No. 35/2011, in force as of 03.05.2011) Power Efficiency and Renewable Sources Fund;

(m) Communes for treatment of drug-addicts;

(n) (New – SG No. 106/2008 , in force as of 01.01.2009) United Nations International Children’s Emergency Fund (UNICEF).

  1. up to 15 per cent for a donation for culture;
  2. (Last Amendment – SG No. 99/2011, in force as of 01.01.2012) up to 50 per cent, where the donation is in favour of the Fund for Medical Treatment of Children Centre and/orAssisted Reproduction Fund Center.

(2) The aggregate amount of the tax relief for donations may not exceeding 65 per cent of the sum total of the annual taxable amounts referred to in Par. (1).

(3) Where the donation is a non-cash asset, the amount thereof shall be the cost of acquisition as shown in the documents on acquisition of the gift by the donor, provided that the said acquisition occurred within three months before the date of donation. In the rest of the cases, the amount of the donation shall be the market price at the date of provision of the gift.

(4) The date of acquisition of the donation by the donnee within the meaning given by Art. 11 herein shall be deemed to be the date on which the donation was made.

(5) (New – SG No. 32/2009, in force as of 01.01.2010) Tax relief for donations is also used for donations made in the benefit of identical or similar to the persons referred to in Par. (1) settled in another Member State of the European Union or in a State party to the  Agreement on European Economic Area.

 

Tax relief for young families

Art. 22a. (Repeal – SG No. 95/2009, in force as of 01.01.2010; New – SG No. 99/2009, in force as of 01.01.2010) (1) Young families tax relief may be benefited by tax resident individuals through deduction of the sum of the annual tax bases under Art. 17 for home purchase mortgage loan interest payments provided the following conditions have been observed:

  1. the mortgage loan is concluded by the tax liable individual and/or his/her spouse with whom she/he has contracted marriage.
  2. the tax liable person and/or the spouse to have been under 35 years of age at the date of entering into the mortgage contract.
  3. the mortgaged property to be the only home of the family during the tax year.

(2) In the cases where the amount of the mortgage loan is more than 100 000 BGN, the tax relief under Par. 1 may be benefited for the interest payments on the first 100 000 BGN of the mortgage loan principal.

(3) The tax relief may be benefited to the amount of the annual tax bases under art.17 and upon the condition that the tax liable individual submits a written declaration from his/her spouse that she/he is not going to benefit from the tax relief for the respective tax year.

(4) The terms and conditions upon Pars. 1-3 are declared by the individual in the annual tax declaration under Art. 50.

 

Enjoyment of Tax Reliefs

Art. 23. (Last Amendment – SG No. 40/2012) The tax reliefs shall be enjoyed by submission of a tax return under Art. 50 herein, attaching thereto:

  1. (Last Amendment – SG No. 40/2012) a copy of a valid decision of the Territorial Medical Expert Board/National Medical Expert Board: in respect of the tax relief referred to in Art. 18 herein;
  2. copies of the documents certifying the contributions made: in respect of the tax relief referred to in Art. 20 herein;
  3. (Repeal – SG No. 113/2007, in force as of 01.01.2008).
  4. (Last Amendment – SG No. 32/2009, in force as of 01.01.2010) copies of documents certifying that the donee is among the persons listed in Art. 22, Par. 1 herein and that the gift has been received: in respect of the tax relief covered under Art. 22, Par. 1 herein.
  5. (Repeal – SG No. 95 /2009, in force as of 01.01.2010; New – SG No. 99/2009, in force as of 01.01.2010) a document issued by the creditor bank, certifying the amount of interest payments on the first 100 000 BGN of the home purchase mortgage loan principal made during the year are enclosed for tax relief under Art. 22a.
  6. (New – SG No. 32/2009, in force as of 01.01.2010) An official legalized document certifying the status of the recipient of the donation,and issued or endorsed by a competent authority of the certain foreign country, and its translation into Bulgarian is made by a chartered translator in the cases referred to in Art. 22, Par. 5.

 

Chapter Five

ANNUAL TAXABLE AMOUNTS

 

Section I

Income from Employment Relationships

 

Taxable Income

Art. 24. (Last Amendment – SG No. 100/21.12.2010, in force as of 01.01.2011) (1) The taxable income accruing from employment relationships shall comprehend the labour remuneration and all other payments in cash and/or in kind from an employer or for the account of an employer with the exception of the income covered under Par. (2).

(2) (Last Amendment – SG No. 16/2010, in force as of 26.02.2010) The taxable income from employment relationships shall exclude:

  1. the value of:

(a) the free food and/or food additives, provided in kind under Art. 285 of the Labour Code;

(b) the free preventive food and antidotes provided in kind according to the procedure established by other laws;

(c) the free food provided in kind to: members of ships crews for the days of service, fishermen for the days of catch, and divers for the days of diving, to the duty personnel working 12-hour shifts at medical-treatment facilities, to surgical teams, emergency medical care teams and to blood collection teams;

(d) (Last Amendment – SG No. 16/2010, in force as of 26.02.2010) free food provided to soldiers and civilian employees under Art. 224, Par. 1, Item 3 and Art. 286, Par. 1, Items 1 and 2 of the Law on Defense and Armed Forces of the Republic of Bulgaria and employees under Art. 74, Par. 2, Section 1 of the State Agency for National Security;

(e) (Last Amendment – SG No. 16/2010, in force as of 26.02.2010) portsionnite money paid under the Civil Aviation Act, the Law on Execution of Punishments and Custody Act, the State Agency for National Security Law on Defense and Armed Forces of the Republic of Bulgaria and the limits of Art. 204, Para. 1 of the Ministry of Interior;

(f) the food vouchers received in the amount and according to the procedure established by the Corporate Income Tax Act;

  1. the value of the special working clothes and individual protective means which are provided in kind under terms and according to a procedure provided for in a statutory instrument;
  2. the value of the working clothes, uniforms and presentable clothing provided under terms and according to a procedure provided for in a statutory instrument;
  3. (Last Amendment – SG No. 28/2008)the general supplies and accoutrements ensured in pursuance of the Ministry of Interior Act, the Defence and Armed Forces of the Republic of Bulgaria Act and the National Security State Agency Act;
  4. the value of:

(a) any travel and accommodation expenses, where documented according to the procedure established by effective legislation;

(b) any per diem expenses, but not more than the double amount thereof as stated in a statutory instrument;

  1. 6. (Last Amendment – SG No. 113/2007, in force as of 01.01. 2008) the  additional expenses on food which are paid in lieu of traveling expenses to the workers and employees in the auto transport and railway transport sphere, in dining – cars, in movable postal offices, immovable security and other related activities in which office work is performed while traveling to another urban area or site – up to the double amount of the minimum amounts of the additional expenses, as specified in a legal act;
  2. (Last Amendment- SG No. 16/2010, in force as of 26.02.2010) the compensation amounts referred to in Art. 226c (1) and Art. 298a of the Defence and Armed Forces of the Republic of Bulgaria Act, in Art. 210 of the Ministry of Interior Actand the National Security State Agency Act;
  3. (Last Amendment – SG No. 95/2009, in force as of 01.01.2010) any compensations covered under Art. 200, Items 1 and 2 of Art. 216 (1), Art. 216 (2) and (3), Art. 222 (2) and (3) and Art. 226 (3) of the Labour Code, any compensations covered under Art. 227, 229, 232 of the Defence and Armed Forces of the Republic of Bulgaria Act, under Art. 204 (4) and Art. 252 of the Ministry of Interior Act, under Art. 74 (4) and 117 of the National Security State Agency Act, under Art. 225, Art. 277 (3) and Art. 354 of the Judicial System Act, and any compensations covered under Art. 78, Art. 81b (4), Art. 82 (5), Art. 85 (5), Art. 104 (3) and (4) and Art. 106 (3) of the Civil Servants Act;
  4. any expenses on fringe benefits for the account of the employer, as taxed according to the procedure established by the Corporate Income Tax Act, as well as any expenses on transport from the place of residence to the place of work for the account of the employer, which are not subject to taxation according to the Corporate Income Tax Act;
  5. the lump-sum allowances for medical treatment, provided by the employer for the account of the expenses on fringe benefits: up to the value of the treatment;
  6. (Last Amendment – SG No. 113/2007, in force as of 01.01. 2008) the amount of single-time allowances granted by the employer at the account of the social expenses in the following cases: childbirth, conclusion of a civil marriage or death of a member of the family – totally up to 2400 BGN;
  7. (Last Amendment – SG No. 113/2007, in force as of 01.01.2008) the social security expenses incurred by the employer of up to BGN 60 monthly for each insured person on payments/premiums for supplementary voluntary social insurance, voluntary health insurance and/or life assurance, as reported by the enterprises and the representative offices, regardless of whether they carry out economic activity;
  8. the expenses incurred by the employer on any commercial insurances defined as compulsory by a statutory instrument;
  9. (Last Amendment – SG No. 100/21.12.2010, in force as of 01.01.2011) the benefits and allowances covered under Part One of the Social Insurance Code, including those under Art. 40 (5) of such Code;
  10. the cash prizes and merchandise awards received in pursuance of and according to the procedure established by a statutory instrument;
  11. (Last Amendment – SG No. 16/2010, in force as of 26.02.2010) the cash resources referred to in Art. 226h and Art. 298a of the Defence and Armed Forces of the Republic of Bulgaria Act, and under the Art. 76 (1) of the National Security State Agency Act, in Art. 204 (5) of the Ministry of Interior Act.

 

Annual Taxable Amount

Art. 25. (Last Amendment – SG No. 95/2009, in force as of 01.01.2010) (1) (Former text of Art. 25, SG No. 95/2009, in force as of 01.01.2010) The annual tax base for the income from employment relations shall be determined by reducing the taxable income under Art. 24, gained by the tax liable person throughout the fiscal year, by the mandatory social security contributions deducted by the employer, which are at the account of the natural persons, according to the provisions of the Social Security Code and of the Medical Insurance Code, as well as by the mandatory social security contributions transferred from abroad, which are at the account of the natural person.

(2) (New – SG No. 95/2009, in force as of 01.01.2010) The annual tax base for a self-securing person, gained income as a result of employment relations under Par. 1, Section 26, letter “I” and as a result of the additional provisions, is deducted also with the security contributions which the self-securing person is obliged to pay for the relevant tax year under the procedure set in the Social Security Code and the Health Insurance Act.

(3) (New – SG No. 95/2009, in force as of 01.01.2010) The annual tax base for the income of mariners is 10 percent of the amount of the annual tax base calculated in Par. 1.

 

 

Section II

Income from Activity in Sole-Trader Capacity

 

Taxable Income

Art. 26. (Last Amendment – SG No. 95/2009, in force as of 01.01.2010) (1) The taxable income accruing from activity in a sole-trader capacity shall be the taxable profit formed according to the procedure established by the Corporate Income Tax Act, including the financial result from the transfer of the sole trader’s enterprise without deletion of the sole trader in the Commercial Register.

(2) The taxable income referred to in Par. (1) shall exclude the accounting financial result formed by activities:

  1. on which alternative taxes are levied under the Corporate Income Tax Act;
  2. (Last Amendment – SG No. 106/2008, in force as of 01.01.2009) taxable by a patent tax in accordance with the provisions of the Local Taxes and Fees Act;
  3. (Repeal – SG No. 95/2009, in force as of 01.01.2010).

(3) Upon formation of the tax profit, sole traders shall apply the provisions on carry-forward of a tax loss under the Corporate Income Tax Act.

(4) For the purposes of determining the taxable income referred to in Par. (2), the portion of undistributable expenses corresponding to the activities referred to in Par. (2) shall be arrived at by multiplying the total amount of unidstributable income/expenses by the proportion of the net income accruing from the activities referred to in Par. (2) and all net income from sales.

(5) Any sole traders, who carry out activities which are subject to levy of alternative tax within the meaning given by the Corporate Income Tax Act, shall be taxed under the terms and according to the procedure established by the said Act.

(6) (New – SG No. 106/2008 in force as of 01.01.2009) The taxable income under Par. (1) shall also include the excess of the double amount indicated in a legal act, of the daily traveling expenses of the sole proprietor.

(7) (Last Amendment – SG No. 106/2008, in force as of 01.01.2009) Taxability according to Pars (1) to (5) shall furthermore apply to any income from economic activity accruing to a natural person who is a merchant within the meaning given by the Commerce Act but is not registered as a sole trader.

 

Use of Natural Person’s Personal Property for Activity in Sole-rader Capacity

Art. 27. (1) Any natural person, who owns the sole trader’s enterprise, may incorporate into the property of the sole trader any items of movable and immovable property acquired by the said person which:

  1. are not in a co-ownership regime, or
  2. are not part of community property.

(2) The items of property referred to in Par. (1) shall be entered into the accounts of the sole trader at the documented cost of acquisition thereof.

(3) In the cases under Par. (1), the natural person who owns the sole trader shall draw up a memorandum, stating therein the type of the item of property and the cost referred to in Par. (2).

(4) In the cases referred to in Item 2 of Par. (1), the other spouse shall declare, by a notarized declaration, the consent thereof to incorporation of the item of property into the property of the sole trader.

(5) If any item of property referred to in Par. (1) be subsequently excluded from the property of the sole trader and passes to the natural-person owner, for tax purposes the natural person who owns the sole trader shall be deemed to effect a sale of the said item of property at a market price, notwithstanding the circumstances covered under Art. 13 herein. The taxable income shall be determined as a difference between:

  1. the market price and the tax value: in respect of any tax depreciable assets under the Corporate Income Tax Act;
  2. the market price and the documented cost of acquisition: in respect of any other items of property.

(6) The tax temporary differences, within the meaning given by the Corporate Income Tax Act, which are related to any item of property referred to in Par. (1), shall not be recognized for tax purposes at the time of the sale referred to in Par. (5) and in the subsequent years.

(7) The market price referred to in Par. (5) shall be presumed as a cost of acquisition upon a subsequent sale or exchange of the item of property by the natural-person owner, as well as upon a subsequent application of Par. (2).

 

Annual Taxable Amount

Art. 28. (Last Amendment – SG No. 31/2011, in force as of 01.01.2011) (1) The annual tax base for income gained from an economic activity as a sole proprietor shall be determined by reducing the taxable income under Art. 26 for the fiscal year by the contributions which the self-insured person has effected at his account for the fiscal year, in accordance with the provisions of the Social Security Code and the Medical Insurance Act, as well as by the mandatory social security contributions transferred from abroad, which are at the account of the natural person.

(2) The annual tax base under Par. 1 shall be reduced by:

  1. the personal contributions for additional voluntary social insurance, effected throughout the year, totally up to 10 percent of the annual tax base under Par. 1, as well as by the personal contributions for voluntary medical insurance and premiums/contributions under life insurance contracts totally up to 10 percent of the annual tax base under Par. 1;
  2. the difference between 7920 BGN and the amount of the used relief under Art. 18, Par. 1, including for the year of occurrence of the incapacity for work and for the year of expiration of the term of validity of the decision – for persons with 50 and over 50 per cent of reduced incapacity for work, determined by an effective decision of a competent authority;
  3. (Last Amendment – SG No. 31/2011, in force as of 01.01.2011) the difference between the social security contributions effected throughout the year under Art. 9a of the Social Security Code and the amount of the used relief under Art. 20.

 

Section III

Income from Other Economic Activity

 

Taxable Income

Art. 29. (Last Amendment – SG No. 31/2011, in force as of 01.01.2011) (1) (Former text of Art. 29 – SG No. 31/2011, in force as of 01.01.2011) The taxable income from economic activity of natural persons other than traders under the meaning of the Commercial Law shall be determined by reducing the income by activity-related expenses as follows :

  1. (New – SG, No. 95 of 2009, in force as of 01.01.2010) with 60 percent for the income of persons, registered as tobacco producers and agricultural producers, for production of unprocessed agricultural products with the exception of the income of production of decorative plants;
  2. (Former item 1 – SG No. 95/2009, in force as of 01.01.2010) by 40 percent for:
  3. a) (Last Amendment – SG No. 95/2009, in force as of 01.01.2010) income of persons carrying out business activities of production of processed or unprocessed agricultural products(including income from produced decorative plants sale),income of a forest enterprise(including income from gathering wild herbs, mushrooms and fruits),income of a game enterprise and a fish enterprise.
  4. b) copyright and license remunerations, including for income from sale of inventions, scientific, cultural and artistic products by their authors, as well as for remuneration of artists – performers;
  5. c) income from craftsmanship, which is not patent taxable under the Local Taxes and Fees Act;
  6. (Former item 2, SG No. 95/2009, in force as of 01.01.2010) 25 percent for income from carrying out business on a freelance basis or remuneration under non-employment relationships.

(2) (New – SG No. 31/2011, in force as of 01.01.2011) Incomes that have been used upon calculation of a taxable income under the procedure of Article 26 with reference for previous fiscal years, are not included in the taxable income under paragraph 1.

 

Taxation of income from economic activities of natural persons that are registered as tobacco producers and agricultural producers

Article 29a. (New – SG No. 31/2011, in force as of 01.01.2011) (1) The taxable income from economic activities of natural persons that are registered under the Value Added Tax Act as tobacco producers and agricultural producers is calculated under the procedure of Article 26 and is subject to taxation on total annual tax base under Article 28.

(2) In the cases in which the natural person registers or deregisters himself/ herself under the Value Added Tax Act within the current fiscal year, the income from economic activity is subject to taxation under the procedure of paragraph 1 with reference to the whole fiscal year. A tax prepayment which is withheld and/ or is remitted with reference to income acquired until the registration date is deducted upon calculation of three months’ prepayments under the procedure of Corporate Income Tax Act as well as deducted from the tax which is levied under Article 48 (2).

(3) Natural persons registered as tobacco producers and agricultural producers that are not registered under the Value Added Tax Act have the right to choose their income from economic activity to be taxed under the procedure of paragraph 1.

(4) The persons under paragraph 3 exercise their right to choose to be taxed under the procedure of paragraph 1 through submission of declaration form by 31 December of the preceding year.

(5) The persons under paragraph 3 that have chosen to be taxed under the procedure of paragraph 1, apply this taxation procedure for a term of at least five consecutive fiscal years.

(6) The persons under paragraph 1 and (3) who calculate their taxable income under the procedure of Article 26 apply the Accountancy Act, in such case they are regarded as sole traders.

(7) In the taxable income under Article 26 (1) is not included the fiscal result with reference to income which according to Article 11 is acquired during fiscal years which precede the fiscal year from which the income taxation under Article 14 (2) begins and with reference to which the income arises and is to be charged in the period of taxation with the same tax.

(8) In the taxable income under Article 26 (1) is included the financial result with reference to income which according to Article 11 is acquired during the period of taxation under Article 14 (2) and which have not been used upon calculation of the accounting financial result for the year of acquisition or for following years.

 

Annual Taxable Amount

Art. 30. (Last Amendment – SG No. 113/2007, in force as of 01.01.2008) The annual tax base shall be determined by reducing the taxable income under Art. 29, gained throughout the fiscal year, by the contributions which the self-insured person is obliged to make for the fiscal year at his account, and in case the person is not self-insured – by the deducted mandatory social security contributions which are at his account under the Social Security Code and the Medical Insurance Act, as well as by the mandatory social security contributions transferred from abroad which are at the account of the natural person.

 

Section IV

Income from Rent or from Other Onerous Provision for Use of Rights or Property

 

Taxable Income

Art. 31. (Last Amendment– SG No. 1 13 /200 7 , in force as of 01.01. 2008) (1) (Last Amendment – SG No. 113/2007, in force as of 01.01.2008) The taxable income accruing from rent or from other onerous provision for use of rights or immovable property shall be determined by debiting the income acquired with 10 per cent expenses.

(2) The payments acquired under a lease contract, which does not expressly provide for transfer of the right of ownership to the property, shall be treated as income from rent referred to in Par. (1).

(3) The taxable income accruing from any payments under franchising agreements and factoring contracts, as well as under other contracts for provision for use of rights, shall be determined according to the procedure established by Par. (1).

 

Annual Taxable Amount

Art. 32. (Last Amendment – SG No. 99/2011, in force as of 01.01.2012) The annual taxable amount for the income accruing to resident natural persons from rent or other onerous provision for use of rights and property shall be determined by debiting the taxable income referred to in Art. 31 herein with the contributions which the person is obligated to make for the tax year for his or her own account according to the procedure established by Art. 40 (5) of the Health Insurance Act.

 

Section V

Income from Transfer of Rights or Property

 

Taxable Income

Art. 33. (Last Amendment – SG No. 94/2012, in force as of 01.01.2013) (1) The taxable income accruing from the sale or exchange of immovable property, including of limited rights in rem to any such property, shall be determined by debiting the positive difference between the selling price and the cost of acquisition of any such property with 10 per cent expenses.

(2) The taxable income shall be the positive difference between the selling price and the cost of acquisition upon sale or exchange of:

  1. means of transport by road, air and water;
  2. works of art, collectors’ items and antiques.

(3) The taxable income accruing from the sale or exchange of shares, interests, compensation instruments, investment vouchers and other financial assets, as well as from trade in foreign exchange, shall be the sum total of the profits realized during the year, determined for each particular transaction, debited with the sum total of the losses realized during the year, determined for each particular transaction.

(4) The realized profit/loss referred to in Par. (3) shall be determined by debiting the selling price with the cost of acquisition of the financial asset. Where any financial assets of one and the same type, issued by one and the same person, have different costs of acquisition and part of the said assets is subsequently sold and it cannot be proven which part is sold, the cost of acquisition of each such asset shall be the weighted average price determined on the basis of the cost of acquisition of the financial assets of the same type and issuer held at the date of the sale.

(5) The selling price shall include everything acquired by the person in connection with the sale/exchange, including any consideration other than money when the contribution relates to property, the incomes from its sale or exchange are not subject to taxation pursuant to Art. 13 (1) as of the date of the filing of such contribution in the Commercial Registry.

(6) The cost of acquisition referred to in Pars. (1), (2) and (4) shall be:

  1. the documented cost of acquisition of the property;
  2. the documented cost of acquisition of the property, credited with the documented payment due by the natural person: in the cases of exchange with additional payment;
  3. (Last Amendment – SG No. 113/2007, in force as of 01.01.2008) zero – in case of lack of a documentary proven price of acquisition, including for property acquired as donation, or for shares and interests obtained after allocation of profit or another source of own capital. The price of acquisition under Par. 1 shall also be zero in case of a subsequent sale or exchange of the landed estate under Subpar. 8, including of restricted real rights thereupon;
  4. the documented additional payment due by the natural person: in the cases of exchange with additional payment, where there is no documented cost of acquisition of the property;
  5. (Last Amendment – SG No. 95/2009, in force as of 01.01.2010) the portion of the non-cash contribution entered in the Memorandum of Incorporation, in the Memorandum of Association or in the Art.s of Association of a commercial corporation, corresponding to the shares and interests sold or exchanged: in the cases of non-cash contributions made to a commercial corporation,  in cases where the contribution is property, income from sale or exchange, which are not subject to taxation under Art. 13 (1) on the date the contribution is registered in the Trade Register;
  6. the market price referred to in Art. 10 (4) herein of the property acquired upon exchange: in the cases of sale/exchange of property acquired upon exchange;
  7. the documented cost of acquisition of the property, adjusted until 1997 inclusive for the overall consumer price index as announced by the National Statistical Institute: in the cases of sale or exchange of property acquired prior to the 1st day of January 1998.
  8. (New – SG No. 113, in force as of 01.01.2008) documentary proven price of acquisition of the landed estate, corresponding to the part for which a right of construction is established – in the cases of establishment of a right of construction
  9. (New – SG No. 95/2009, in force as of 01.01.2010) documentary proved property acquisition price-an object of in kind contribution in commercial company-in the cases of sale or barter of shares and stakes obtained as a result of in contributions in a commercial company made, with the exception of the cases under Section 5.
  10. (New – SG No. 94/2012 in force as of 01.01.2013) the taxable value of the property at the deregistration of the sole proprietor from the Commercial Register – in case of deregistration of sole trader, when the property of the undertaking has been transferred to the physical person – owner.

(7) Where the selling price referred to in Par. (1) is paid by installments in different tax years, the taxable income shall be determined according to the following formula for each of the said tax years:

 

TITY =[(SP–CA)-0,.10 ´ ( SP– CA )]´( PPR/SP),

 

where:

TITY shall be the taxable income for the tax year;

SP shall be the selling price;

CA shall be the cost of acquisition;

PPR shall be the part payment received during the tax year.

(8) Where the selling price referred to in Par. (2) is paid by installments in different tax years, the taxable income shall be determined according to the following formula for each of the said tax years:

 

TITY =( SP–CA )´ ( PPR/SP),

 

where:

TITY shall be the taxable income for the tax year;

SP shall be the selling price;

CA shall be the cost of acquisition;

PPR shall be the part payment received during the tax year.

(9) The income received in connection with the provision of property under a lease contract which expressly provides for transfer of the right of ownership to the property shall be subject to taxation notwithstanding the circumstances covered under Art. 13 herein. The taxable income shall be determined according to the following formula:

 

TITY = [( CP – CA ) – 0,10 ´ ( CP – CA)] ) ´ (PR/CP)

 

 

where:

TITY shall be the taxable income for the tax year;

CP shall be the price of the property as set under the contract;

CA shall be the cost of acquisition;

PR shall be the payments received during the tax year net of interest paid.

(10) (New – SG No. 113/2007, in force as of 01.01.2008) In case of termination of a lease contract in which transfer of the title prior to the expiration of the contract is explicitly stated and without transferring of the title upon the movable or immovable property – subject of the contract, the lease installments which are not subject to reimbursement, shall be deemed as income from use of property, gained at the time of termination. The taxable income determined under Art. 31, shall be reduced by the taxable income determined under the formula under Par. 9, and in this case “SR” shall be the sum of the installments under the lease contract which are not subject to reimbursement and were obtained in preceding fiscal years.

(11) (Last Amendment – SG No. 113 /2007, in force as of 01.01.2008) The taxable income upon transfer of a sole trader’s enterprise with expungement of the sole trader shall be the positive difference between the selling price as set by the contract and the owners’ equity of the enterprise.

 

Annual Taxable Amount

Art. 34. The annual taxable amount for the income from transfer of rights or property shall be the taxable income referred to in Art. 33 herein, as acquired during the tax year.

 

Section VI

Income from Other Sources

   

Taxable Income

Art. 35. (Last amendment – SG No. 94/2012 in force as of 01.01.2013) The taxable income shall be the gross sum total of the taxable incomes acquired during the tax year from:

  1. any compensations for lost profit and damages of such nature;
  2. any cash prizes and merchandise awards awarded at competitions and contests which are not provided by an employer or a commissioning entity;
  3. (Last amendment – SG No. 94/2012 in force as of 01.01.2013) any interest, including such within payments under a lease contract with the exception of interests under Art. 38, Par. 13;
  4. any producer dividends distributed by cooperatives;
  5. exercise of intellectual property rights by succession;
  6. all other sources which are not expressly specified in this Act and whereon final taxes are not levied according to the procedure established by this Act or whereon final taxes are not levied according to the procedure established by the Corporate Income Tax Act.

 

Annual Taxable Amount

Art. 36. (Last Amendment – SG No. 99/2011, in force as of 01.01.2012) The annual taxable amount for the income from other sources shall be determined by debiting the taxable income referred to in Art. 35 herein, as acquired during the tax year, with the contributions which the person is obligated to make for the tax year for his or her own account according to the procedure established by Art. 40 (5) of the Health Insurance Act.

 

PART THREE

FINAL TAXES

 

Chapter Six

 

FINAL TAX ON INCOME FROM SOURCE INSIDE AND OUTSIDE BULGARIA

 

Taxation of Non-resident Persons’ Income

Art. 37. (Last Amendment – SG No. 94/2010, in force as of 01.01.2011) (1) (Last Amendment – SG No. 94/2010, in force as of 01.01.2011) A final tax, notwithstanding the circumstances covered under Art. 13 herein, shall be levied on the incomes under Art. 18 (11) and the following income from a source inside Bulgaria, charged/paid in favour of any non-resident natural person:

  1. any compensations for lost profit and damages of such nature;
  2. any scholarships for study in Bulgaria and abroad;
  3. any interest payments, including interest within payments under a lease contract;
  4. any income from rent or from other onerous provision for use of movable or immovable property, including any payments under a lease contract which does not expressly provide for transfer of the right of ownership to the property;
  5. any payments received under franchising agreements and factoring contracts;
  6. any copyright and licence royalties;
  7. any technical assistance fees;
  8. (Last Amendment – SG No. 113/2007, in force as of 01.01.2008) awards and remuneration for activity performed on the territory of the country by foreign natural persons – public figures, scientists, cultural and sporting figures, including when the income is paid/accrued through a third party such as an impresario agency, producing company and other intermediaries;
  9. any income from management and control, from participation in management and supervisory bodies of enterprises;
  10. any income from sale, exchange or other onerous transfer of immovable property;
  11. (Last Amendment – SG No. 113/2007, in force as of 01.01.2008) installments under a lease contract which explicitly provides for transfer of the title upon immovable property;
  12. any income from sale, exchange or other onerous transfer of shares, interests, compensation instruments, investment vouchers and other financial assets, with the exception of the income from exchange covered under Art. 38 (5) herein.

(2) (Last Amendment – SG No. 94/2010, in force as of 01.01.2011) The final income tax under Par. 1, Subpar. 1-9 and under Art. 8 (11) shall be determined on the basis of the gross sum of the accrued/paid income.

(3) (New – SG No. 113/2007, in force as of 01.01. 2008) The final income tax under Par. 1, Subpar. 10 and 11 shall be determined on the basis of the positive difference between the sale price and the documentary proven price of acquisition of the property, reduced by 10 per cent expenses.

(4) (New – SG No. 113/2007, in force as of 01.01.2008) The final income tax under Par . 1, Subpar. 12 shall be determined on the basis of the positive difference between the sale price and the documentary proven price of acquisition of the property.

(5) (New – SG No. 113/2007, in force as of 01.01. 2008 ) Where a part of the sale price is paid, for the purpose of determining the final income tax, the received part of the sale price and the proportional part of the documentary proven price of acquisition shall be deemed as the sale price and the documentary proven price of acquisition of the property under Par . 3 and 4.

(6) (New – SG No. 113/2007, in force as of 01.01.2008) In the event of termination of a lease contract where transfer of title prior to the expiration of the contract is explicitly stated, even without transfer of the title upon the movable or immovable property – subject of the contract, the lease installments which are not subject to reimbursement shall be deemed as income from use of property, acquired by the foreign natural person as of the time of termination. The deposited final tax under Par. 1, Subpar. 3 and 11 as of the time of termination shall be deducted from the final tax due under Par. 1, Subpar. 4 .

(7 ) (Last Amendment – SG No. 1 06 /2008 , in force as of 01.01. 200 9 )No final tax shall be levied on any income under Par. 1, exempted from taxation underArt. 13 herein and charged/paid in favour of non-resident natural persons established for taxpurposes in a Member State of the European Union, or another Member State of the EuropeanEconomic Area.

(8) ( Last Amendment – SG No. 106/2008, in force as of 01.01.2009) The circumstances referred to in Subpar. (7) shall be certified to the payer of the income by a document issued by the tax administration of the State in which the person is established for tax purposes, and by a declaration by the person who has acquired the income, to the effect that the circumstances covered under Art. 13 exist.

 

Recalculation of the final tax under art.37

Art.  37a. (Last Amendment – SG No. 95/2009, in force as of 01.01.2010)

(1) A foreign individual that is a tax resident of a member state of the European Union or a tax resident of a state party to the European Economic Area agreement may choose to recalculate the final tax of the income under Art. 37. In case the foreign individual chooses to recalculate the final tax, the whole annual income obtained by the individual is that are subject to taxation with final tax under Art. 37 are recalculated.

(2) In case the foreign individual chooses to recalculate the final income tax under Art. 37, the recalculated tax is equal to the tax on the total annual tax base or to the tax on the annual tax base under Art. 28,which would be due on condition they have been obtained by a tax-resident individual. In case the tax non-resident have made expenses related to sentence one, which would be a subject of taxation under the procedure of Corporate Income Tax Act on condition they have been made by a tax resident individual, this tax increases the amount of the recalculated tax.

(3) In case the amount of the contributed final tax under Art. 37 exceeds the amount of the recalculated tax on the same income under Par. 2 the positive difference between the final tax on income under Art. 37 and the tax on the total annual tax base calculated for the same income is refunded ,in case that the tax non-resident may not deduct from the tax due in the state where he/she is a tax resident.

(4) The option of recalculation of the final tax under Art. 37 is exercised by submitting of the annual tax declaration under Art. 50. All taxable income that are subject to declaration are included in the tax declaration of the tax non-resident individual.

(5) The remission of tax under Par. 3 is made in accordance with the procedure specified in the Tax Insurance Procedure Code.

(6) Pars. 1-5 are not applicable on the occasions when the foreign individual is a local individual for tax purposes of a state, party to the European Economic Area agreement but not a member state of the European Union with which the Republic of Bulgaria:

  1. has no valid agreement for avoidance of double taxation, or
  2. has valid agreement for avoidance of double taxation which does not provide:
  3. a) information exchange, or
  4. b) cooperation upon collection of taxes

 

Income of Resident and Non-resident Natural Persons

Art. 38. (Last Amendment – SG No. 94/2012, in force as of 01.01.2013) (1) (Last Amendment – SG No. 99/2011, in force as of 01.01.2012) A final tax shall be levied on the taxable income from:

  1. dividend for sole proprietor;
  2. dividends and shares in liquidation in favour of:
  3. a) any resident or non-resident natural person, where accruing from a source inside Bulgaria;
  4. b) any resident natural person, where accruing from a source outside Bulgaria.

(2) The final tax on any income from dividends shall be assessed on the gross amount as determined by the decision on the distribution of dividend.

(3) (Last Amendment – SG No. 99/2011, in force as of 01.01.2012) The final tax on any income from dividends in the form of a hidden profit distribution shall be assessed on the gross amount of the sums as charged.

(4) The final tax on share in any liquidation surplus shall be assessed on the positive difference between the value of the said share and the documented cost of acquisition of the participating interest in the company/cooperative.

(5) (Last Amendment – SG No. 113/2007, in force as of 01.01.2008) Taxable income gained from exchange of shares and interests in connection with transformation of companies under Chapter Nineteenth, section II of the Corporate Income Tax Act, shall be subject to final taxation:

  1. by resident natural persons upon the exchange of shares and interests in domestic commercial corporations for shares and interests in domestic commercial corporations or in commercial corporations abroad;
  2. by resident natural persons upon the exchange of shares and interests in commercial corporations abroad for shares and interests in commercial corporations abroad or in domestic commercial corporations;
  3. by non-resident natural persons upon the exchange of shares and interests in domestic commercial corporations for shares and interests in domestic commercial corporations or in commercialcorporations abroad.

(6) The taxable income referred to in Par. (5) shall be determined at the time of the exchange and shall be the positive difference between the market price of the shares/interests acquired upon the exchange and the cost of acquisition under Art. 33 (6) herein of the shares or interests in the transforming corporation.

(7) The market price referred to in Par. (6) shall be presumed to be a cost of acquisition under Art. 33 (6) upon a subsequent sale or exchange of the shares and interests in the acquiring/newly established corporation, as well as upon a subsequent application of Par. (6).

(8) A final tax shall be levied on the gross sum total of the taxable income from supplementary voluntary social insurance, from voluntary health insurance and life assurances, acquired at the date of:

  1. recovery of the amounts remitted for life assurances;
  2. recovery of the amounts remitted for voluntary health insurance, with the exception of the cases of refund of expenses on health services and provision of health services and goods to the insured person upon occurrence of the events provided for in the contracts of health insurance;
  3. receipt of the amounts remitted for supplementary voluntary social insurance prior to attainment of entitlement to supplementary pension;
  4. transfer of amounts from an individual account to the account of a third party;
  5. modification of the contract of insurance, in respect of which a relief under Art. 19 herein has been enjoyed, into a contract for which the said relief may not be enjoyed;
  6. drawing on the amounts under a contract for assurance for repayment of a loan, where a life assurance is used to secure an obligation of the natural person.

(9) No final tax shall be levied on any income referred to in Par. (8), corresponding to the portion of the payments/premiums for which a tax relief has not been enjoyed according to the procedure established by Art. 19 herein.

(10) A final tax shall be levied on the gross amount of the income acquired by the person upon the sale or exchange of movable property under Item 2 (d) of Art. 13 (1) herein.

(11) (New – SG No. 19/2011, in force as of 08.03.2011) A final tax shall be levied on the taxable incomes acquired by a member of cooperation from interest on credits to the cooperation.

(12) (New – SG No. 99/2011, in force as of 01.01.2012) A final tax shall be levied on the income from rent or other profitable grants of residential flat property managed by general meeting of owners, calculated/paid by enterprises or self-insuring persons.

(13) (New – SG No. 94/2012 in force as of 01.01.2013) By final tax shall be levied the gross sum of local physical persons’ incomes from interests on deposits in commercial banks.

 

 

Chapter Seven

TRANSFER FROM LEVY OF FINAL ANNUAL (LICENCE) TAX TO TAXATION UNDER GENERAL RULES

(Last Amendment – SG No. 113/2007, in force as of 01.01.2008)

 

Common Rules for Levy of Final Annual (Licence) Tax

Art. 39. (Last Amendment – SG No. 113/2007, in force as of 01.01.2008) (1) Where within the current fiscal year the grounds for patent taxation are revoked under the Local Taxes and Fees Act, the income of the natural persons, including sole proprietors, for the current fiscal year shall be subject to taxation under the general provisions of this act.

(2) In the cases under Par. 1, natural persons, including sole proprietors, shall not effect advance payments for the current year under the meaning of this act.

(3) Where within the current fiscal year a person cancels his registration under the Value Added Tax Act, he shall be subject to taxation in accordance with the general provisions of this act for the whole fiscal year .

Deduction of Annual (Licence) Tax

Art. 40. (Last Amendment – SG No. 94/2012 in force as of 01.01.2013) (1) In the cases referred to in Art. 39, Par. 1 from the tax on the total annual taxation basis or from the tax on the annual taxation basis for incomes from business activities as a sole proprietor shall be deducted the patent tax due and paid in pursuant to the Local Taxes and Fees Act as of the date of submitting declaration that the grounds for taxation have dropped out.

(2) The amount of the patent tax under Par. 1 shall be certified by a document, issued by the competent municipality.

 

Tax Reliefs upon Levy of Final Annual (Licence) Tax

Art. 41. (Repeal – SG No. 113/2007, in force as of 01.01.2008)

 

PART FOUR

RATES OF TAXES. TAX ASSESSMENT, WITHHOLDING AND REMITTANCE. DECLARING

 

Chapter Eight

WITHHOLDING OF TAX PREPAYMENTS

 

Withholding of Tax Prepayments on Income from Employment Relationships

Art. 42. (Last amendment – SG No. 94/2012 in force as of 01.01.2013) (1) The advance tax for income from employment relationships shall be determined by the employer every month on the basis of the monthly tax base.

(2) The monthly tax base is calculated on the basis of the taxable income under Par. 24 for the respective month which is diminished with the amount of the mandatory insurance contributions, deducted by the employer, which are at the physical individual expense under the procedure of the Social Security Code and the Health Insurance Act or for mandatory insurance abroad. The monthly tax base of the income of employment relationships under Par. 1, section 26, letter ’’i’’ and the income of additional provisions of a self-insuring entity is calculated when the taxable income under Art. 24 for the respective month is deducted with the amount of the insurance contributions, paid in advance through the company, which the self-insuring entity is obliged to pay under the provisions of the Social Security Code and the Health Insurance Act.

(3)The monthly tax base shall be reduced by :

  1. the tax relief for reduced capacity for work under Art. 18, Par. 2;

2.the tax relief under Art. 19, Par. 2, when the sums are deducted by the employer at the time of payment of the income from employment.

(4) The amount of the tax payable shall be determined by multiplying the monthly tax base under Par. 3 by a tax rate at the amount of 10 per cent  and for the incomes earned as seafarer – at a tax rate of 1 per cent.

(5) The tax under Par. 4 shall be deducted by the employer at the time of final payment of the taxable income, accrued for the relevant month.

(6) Where only partial payments for the relevant month or for another month are effected, the employer shall pay the tax under Par. 4, determined on the basis of the gross amount of the partial payments.

(7) The tax under Par. 6, paid by the employer shall not be deducted from the partial payment; it shall be deducted from the tax under Par . 5.

(8) (Last amendment – SG No. 94/2012 in force as of 01.01.2013)  Par. 6 shall not apply for partial payments for the relevant month, when the total amount of the income from employment relationship for the relevant month is paid by the 25th day of the following month.

(9)The tax under Par. 1-8 shall be paid within the time limits and in accordance with the provisions of Art. 65 and 66.

 

Tax Prepayment on Income from Economic Activity

Art. 43. (Last Amendment – SG No. 40/2012) (1) A person who has gained income from economic activity under Art . 29 shall be subject to advance taxation upon the difference between the taxable income and the contributions which the self-insured person is obliged to effect at his account for the months of the quarter during which the taxable income has been gained; if the person is not self-insured – between the taxable income and the deducted mandatory social security contributions.

(2) A person with 50 and over 50 percent reduced capacity for work shall be subject to advance taxation from economic activity under Art. 29, after the taxable income of the person from all sources of income, gained from the beginning of the year and subject to taxation on the basis of the total annual taxbase, reduced by the deducted or paid at the account of the person mandatory social security contribution, exceeds 7920 BGN.

(3) The amount of the tax due shall be calculated by multiplying the difference under Par. 1 by a tax rate of 10 per cent.

(4) Where a payer of the income from economic activity is an enterprise or a self-insured person, the tax amount shall be determined and the tax shall be deducted by the payer of the income at the time of its payment .

(5) Par. 4 shall not apply when the person acquiring income is a self- insured person under the meaning of the Social Security Code and declares this circumstance in a written declaration before the payer of the income.

(6) Where the payer of the income from economic activity is other than enterprise or a self-insured person, or where the person acquiring the income is self-insured and has declared this circumstance before the income payer, the tax amount shall be determined and the tax shall be paid by the person who has acquired the.

(7) The tax under Par. 3 shall be payable within the time limits and under the provisions specified in Art. 65-68.

(8) (Last Amendment – SG No. 31/2011, in force as of 01.05.2011) Persons exercising economic activity as sole proprietors under the meaning of the Commercial Law, inclusive of sole proprietors as well as natural persons in cases under Art. 29a, shall effect advance payments at tax rate of 15 percent in accordance with the provisions of the Corporate Income Tax Act.

(9) (Last Amendment – SG No. 40/2012) In the cases under Par. 2, the person acquiring the income, shall certify the degree of reduced capacity for work by means of a valid as of the date/s/ of payment of the income, expert decision of the Territorial Expert Medical Committee (TEMC) or the National Expert Medical Committee /NEMC/, a copy of which must be submitted a single time to the payer of the income, when he is obliged to deduct and pay the tax .

 

Tax Prepayment on Income from Rent or from Other Onerous Provision for Use of Rights or Property

Art. 44. (Last Amendment – SG No. 40/2012) (1) (Last Amendment – SG No. 113/2007, in force as of 01.01.2008) Any person, who has acquired income from rent or from other onerous provision for use of rights or property, shall be liable to tax prepayment when the taxable income accruing to the said person from all sources of income, debited with the compulsory social insurance contributions remitted during the year, exceeds the amount of the annual tax threshold.

(2) (Last Amendment – SG No. 106/2008, in force as of 01.01.2009) A person with 50 and over 50 percent of reduced capacity for work shall be subject to advance taxation for income from rent or other types of granting of rights or property for use against payment, after the taxable income of the person from all sources of income, gained from the beginning of the fiscal year and subject to taxation on the basis of the total annual tax base, reduced by the deducted or deposited at the account of the person mandatory social security contributions, exceeds 7920 BGN.

(3) (Last Amendment – SG No. 106/2008, in force as of 01.01.2009) The amount of the tax payable shall be determined by multiplying the difference under Par. 1 by the tax rate of 10 per cent.

(4) (New – SG No. 94/2010, in force as of 01.01.2011) In case the payer of the income from rent or from other onerous provision for use of rights or property is an enterprise or a self-employed person, the amount of the tax is calculated and the tax is deducted from the payer of the income upon its payment. In such cases the amount of the due advance tax is calculated when the taxable income under art.31 is multiplied by a 10 percent tax stake.

(5) (Last Amendment – SG No. 40/2012) In the cases under paragraph 2, the person acquiring the income, verifies the degree of reduced working capacity with an expert decision issued by Expert Labour Medical Commission (ELMC)/Expert National Medical Commission (ENMC) which is valid at the date/ dates of the income payment. A copy of the expert decision issued by ELMC/ENMC is given to the payer of the income just once when he/ she is obliged to withhold and pay in the tax.

(6) (Former Par. 4, Last Amendment – SG No. 94/2010, in force as of 01.01.2011) The tax under paragraph 3 and 4 is paid in within the terms and procedure under article 65-68.

 

Certification of paid up taxable income and withheld tax

(Last Amendment – SG No. 94/2010, in force as of 01.01.2011)

Art. 45. (Last Amendment – SG No. 94/2012, in force as of 01.01.2013)  (1) (Last Amendment – SG No. 99/2011, in force as of 01.01.2012)  Upon request by the person, the employer under Art. 49 (1) shall issue, not later than the 31st day of January of the next succeeding year, a certificate in a standard form showing the taxable income acquired during the year and the tax withheld during the year. The certificate shall also include the tax withheld or refunded to the employee  upon determination of the annual amount of the tax.

(2) (Last Amendment – SG No. 99/2011, in force as of 01.01.2012) The employer issues to the employee a standard certificate for the taxable income accrued for the proceeding year and the tax withheld where:

  1. the employment relationship has been terminated during the year;
  2. the income is accrued as a result of relationships under § 1(26)(i) of the Additional Provisions;
  3. the employer is not  an employer under basic employment contract as of 31 December of the tax year – that fact is established by written declaration submitted by the employee;
  4. the tax has not been withheld/refunded under Art. 49 (5) and (6) as of 31 January of the following year.

(3) (Last Amendment – SG No. 99/2011, in force as of 01.01.2012) If the circumstances referred to in Art. 5 (10) of the Social Insurance Code apply, the certificate referred to in Par. (2) shall be issued by the competent local division of the National Social Security Institute whereto the payrolls and the attachments thereto have been delivered.

(4) (Last Amendment – SG No. 94/2010, in force as of 01.01.2011) The enterprise or the self-insured person, which or who is a payer of income under Art. 29 and 31, shall furthermore issue a certificate in standard forms, showing the income paid and the tax withheld according to the procedure established by Art. 43 and 44 herein, and shall provide the said certificate to the person who has acquired the income.

(5) (New – SG No. 113/2007 in force as of 01.01.2008) If the certificate under Par . 1 is not requested by the worker/employee until 31 st January of the following year, such a certificate shall be issued upon request and after the period of time specified in Par. 1.

(6) (Last Amendment – SG No. 99/2011, in force as of 01.01.2012) The certificate under Par. (2) is issued and submitted to the employee within the following time limits:

  1. not later than a month after the last payment under the relationship envisaged in Par. 2, pt. 1 but not later than 31 December of the tax year;
  2. not later than 10 January of the following year for the cases under Par. 2, pts. 2 and 3;
  3. not later than 5 February for the cases under Par. 2, pt. 4.

(7) (New – SG No. 94/2010, in force as of 01.01.2011) The enterprise or the self-employed person- payer of incomes from other sources under art.35 is obliged to issue a certificate for the paid incomes in compliance with a given pattern form, which he/ she places at the disposal of the person that has acquired the income.

(8) (New – SG No. 94/2012 in force as of 01.01.2013) The official notices referred to in Pars. 4 and 7 shall be issued at the request of the person who has earned the income, and in case such person has not requested issuance thereof – until 15 April of the following year.

(9) (Former Par. (8) – SG No. 94/2012, in force as of 01.01.2013) The standard certificates under Pars 1, 2, 4 and 7 are submitted to the person having accrued the income or duly authorized agent.

 

 

Chapter Nine

TAX RATES OF FINAL TAX UNDER CHAPTER SIX

 (Title Last Amendment – SG No. 113/2007, in force as of 01.01. 2008)

 

Rate of Final Tax under Chapter Six

Art. 46. (Last Amendment – SG No. 94/2012, in force as of 01.01.2013) (1) (Last Amendment – SG No. 94/2012, in force as of 01.01.2013)  The tax rate shall be 10 per cent for income under Art. 37 and Art. 38, Par. 5, 8, 10, 11, 12 and 13.

(2) The tax rate shall be 7 percent for income under Art. 38, Par. 8 in the cases of receipt of sums after the expiration of the term of the life insurance, which is 15 or more years.

(3)The tax rate shall be 5 per cent for income under Art. 38, Par. 1.

(4)The final tax under Chapter Six shall be deducted and paid within the time limits and in accordance with the provisions of Art. 65-68.

 

Final Taxes Applicable

(Title Last Amendment – SG No. 31/2011, in force as of 01.01.2011)

Art. 47. (Last Amendment – SG No. 31/2011, in force as of 01.01.2011) Any persons who carry out economic activity in a merchant capacity within the meaning given by the Commerce Act, including any sole traders as well as natural persons in cases under Art. 29a, shall apply the provisions of the Corporate Income Tax Act on taxation of expenses and on withholding taxes.

 

Chapter Ten

ANNUAL TAXATION

 

Annual Tax Table

Art. 48. (Last Amendment – SG No. 94/2012, in force as of 01.01.2013) (1) The tax amount on the basis of the annual tax base shall be determined by multiplying the total annual base under Art. 17 by a tax rate of 10 per cent.

(2) (Last Amendment – SG No. 31/2011, in force as of 01.01.2011) The tax amount on the basis of the annual tax base for income from economic activity as a sole proprietor and for incomes from economic activity under Art. 29a shall be determined by multiplying the annual tax base under Art. 28, Par. 2 by a tax rate of 15 percent.

(3) The tax paid in advance and/or paid throughout the fiscal year shall be deducted from the taxes determined under Par. 1 and 2.

(4) The final income tax deducted or paid in throughout the fiscal year under Art. 37 for a natural person, who for the fiscal year is considered a local natural person, shall be also deducted from the tax determined under Par . 1.

(5) (Repeal – SG No. 94/2012, in force as of 01.01.2013)

(6) (New – SG No. 95/2009, in force as of 01.01.2010) The tax on the agriculture activities income annual tax base is subject to remission at an amount of up to 60 percent for sole traders, registered as agricultural producers with respect to the annual tax base of income from production of unprocessed vegetable and animal products under the conditions for remission of corporate tax under Art. 189b of the Corporate Income Tax Act.

(7) (New – SG No. 95/2009, in force as of 01.01.2010) Tax remission under Par. 6 as a state aid for agricultural producers is not permitted for legal entity that is a strained partnership.

(8) (New – SG No. 99/2011, in force as of 01.01.2012) After the deductions under Pars. 3 – 5, the tax under Pars. 1 and 2 shall be calculated as per complete BGN.

 

Annual Tax on Income from Employment Relationships

Art. 49. (Last Amendment – SG No. 95/2009, in force as of 01.01.2010) (1) (Last Amendment – SG No. 95/2009, in force as of 01.01.2010) Not later than the 31st day of January of the next succeeding tax year, the employer shall calculate the annual taxable amount, debited according to the procedure established by Par. (3), and shall determine the annual amount of the tax referred to in Art. 25(1) and (3) where the said employer is an employer under a principal employment relationship of the factory or office worker.

(2) Where the factory or office worker has or has had an employment contract for additional work with another employer or has had a principal employment relationship with another employer during the tax year, the employer referred to in Par. (1) shall include the income acquired at the other employer upon calculation of the annual taxable amount and shall determine the annual amount of the tax if the factory or office worker submits thereto a certificate referred to in Art. 45 herein from the other employer.

(3) (Last Amendment – SG No. 95/2009, in force as of 01.01.2010) The annual taxable amount referred to in Art. 25 (1) and (3) herein shall be debited with the annual amount of:

  1. the tax reliefs referred to in Art.s 19 and 22 herein, where the amounts have been withheld by the employer upon payment of the income from an employment relationship;
  2. (Last Amendment – SG No. 113/2007, in force as of 01.01.2008)tax relieves under Art. 18 and 20.

(4) Par. (3) shall apply where the factory or office worker provides to the employer, within a period commencing on the 30th day of November and ending on the 31st day of December of the tax year, the following documents:

  1. a copy of a valid decision of the Territorial Medical Expert Board/National Medical Expert Board: in respect of the tax relief referred to in Art. 18 herein;
  2. copies of the contracts with the commercial insurance/social insurance company: in respect of the tax relief referred to in Art. 19 herein;
  3. copies of the documents certifying the contributions made: in respect of the tax relief referred to in Art. 20 herein;
  4. 4. (Repeal – SG No. 113/2007, in force as of 01.01.2008)
  5. copies of documents certifying that the donee is among the persons listed in Art. 22 herein and that the gift has been received: in respect of the tax relief covered under Art. 22 herein.

(5) Where the annual amount of the tax as determined is above the amount of the tax withheld from the factory or office worker during the year, the balance shall be withheld from the person not later than the 31st day of January of the next succeeding year.

(6) Where the annual amount of the tax as determined is below the amount of the tax prepayments withheld, the employer shall refund the balance to the person not later than the 31st day of January of the next succeeding year.

(7) The amount refunded under Par. (6) shall be set off from the employer successively against the succeeding payments to the executive budget in respect of taxes on income from employment relationships of the person or of other persons.

(8) (New – SG, No. 95/2009, in force as of 01.01.2010) Upon calculation of the annual tax base and the annual tax under the procedure of the previous Pars. the income from labour relationships under Par.1, section 26 letter ’’i’’ from the additional provisions is not included.

 

 

Chapter Eleven

DECLARING

 

Section I

Annual Tax Return

 

Obligation to Submit Annual Tax Return

Art. 50. (Last Amendment – SG No. 94/2012, in force as of 01.01.2013) (1) (Last Amendment – SG No. 113/2007, in force as of 01.01.2008) The local natural persons shall submit annual tax declarations according to a pattern as regards to:

1.The income gained throughout the year and subject to taxation upon the annual tax base and with a tax upon the annual tax base under Art. 28;

  1. (Last Amendment – SG No. 99/2009 in force as of 01.01.2010) the income liable to patent tax under the procedure of the Local Taxes and Fees Act;
  2. (Last Amendment – SG No. 94/2012, in force as of 01.01.2013) the income acquired from foreign sources during the year from:

а) dividends;

б) liquidation shares;

в) income under Art. 38, Par. 5, item 2, Par. 8 and Par. 13;

  1. the shares and interests in companies, place of economic activity, determined base and immovable property abroad.
  2. (New – SG No. 99/2009, in force as of 01.01.2010) the given/received monetary loans as follows:
  3. a) the outstanding part of monetary loans given during the tax year, if their total amount is over 10 000 BGN.
  4. b) the residues outstanding of monetary loans given during the same year or the previous five tax years at the end of the tax year, if the amount of these residues is over 40 000BGN.
  5. c) the outstanding part of monetary loans received during the tax year, if their total amount is over 10 000 BGN, with the exception of the received credits, given by credit institutions within the meaning of the Credit Institutions Act.
  6. d) the residues outstanding of monetary loans received during the same year or the previous five tax years at the end of the tax year, with the exception of the received credits, given by credit institutions within the meaning of Credit Institutions Act, if the total amount of these residues is over 40 000 BGN.

(2) (Last Amendment – SG No. 99/2009, in force as of 01.01.2010) The foreign natural persons shall submit an annual tax declaration under Par. 1 for income gained under Par. 1, Subpar. 1 and 2 and in the cases referred to in Art. 37a as well.

(3) (Last Amendment – SG No. 99/2009, in force as of 01.01.2010)  Any resident and non-resident natural persons, who have acquired income from employment relationships referred to in Item 26 (f) and (g) of § 1 of the Supplementary Provision herein, shall submit an annual tax return referred to in Par. (1) in respect of the said income.

(4) (Last Amendment – SG No. 113/2007, in force as of 01.01.2008) Certificates of tax withheld under Art. 45 are to be attached to the annual declaration under Subpar. (1).

(5) (Last Amendment – SG No. 113/2007, in force as of 01.01.2008) Local natural persons s hall enclose to the annual tax declaration under Par. 1 certificates about the tax amount paid abroad and the mandatory social security contributions, issued by the foreign competent authorities.

(6) (New – SG No. 113/2007, in force as of 01.01. 2008) Local natural p persons shall not be obliged to submit a certificate of the amount of the tax paid under Par. 5 for income from a source abroad, for the taxation of which an effective tax agreement is applied regarding avoidance of double taxation and “exemption with a progression”.

(7) (Last Amendment – SG No. 31/2011, in force as of 01.01.2011) Persons carrying out economic activity as traders under the meaning of the Commercial Law, inclusive of sole proprietors as well as natural persons in cases under Art. 29a, shall declare in the annual tax declaration under Par. 1 the payable and deposited taxes upon the expenditure in accordance with the Corporate Income Tax Act.

(8) (New – SG No. 113/2007, in force as of 01.01.2008)  The annual tax declaration under Par. 1 for income of minor persons and those under judicial disability shall be submitted by the parents, or guardians and trustees respectively.

 

Attachments to Annual Tax Return for Sole Traders

Art. 51. (Last Amendment – SG No. 31/2011, in force as of 01.01.2011) (1) (Last Amendment – SG No. 31/2011, in force as of 01.01.2011) The entities carrying out agricultural activity as traders within the meaning of the Commerce Act, including the sole traders as well as natural persons in cases under Art. 29a, submit the annual tax declaration together with the annual activity report.

(2) Annual activity report is not submitted by the entities under Par. 1 that comply with the following conditions:

  1. have not carried out activity for the respective tax year;
  2. have not accounted income or losses under the accounting legislation for the respective tax year.

 

Excuse from Obligation to Submit Annual Tax Return

Art. 52. (Last Amendment – SG No. 99/2011, in force as of 01.01.2012) (1) (Former text of Art. 52 – SG No. 95/2009, in force as of 01.01.2010) The obligation to submit an annual tax return shall not apply to any persons who have received solely:

  1. (Last Amendment – SG No. 99/2011, in force as of 01.01.2012) income from employment relationships, when as of December 31 of the tax year the person has employer under basic employment relationship, and the employer has determined the annual amount of the tax for all incomes from employment relationships acquired during the tax year and the full amount of the tax for the tax year has been withheld until the 31st day of January of the next succeeding year, and/or
  2. (New – SG No. 99/2011, in force as of 01.01.2012) income from employment relationships, where as of December 31 of the tax year the person has no employer under basic employment relationship, or the person has an employer  and the employer has not determined the annual amount of the tax for all incomes from employment relationships acquired during the tax year, provided the following conditions are met:
  3. a) the tax upon the annual tax base is equal to the tax withheld in advance under Art. 42 and
  4. b) the person does not enjoy tax reliefs under Art. 23 , and/or
  5. (Former item 2 – SG No. 99/2011, in force as of 01.01.2012) non taxable incomes with the exception.
  6. (Former item 3 – SG No. 99/2011, in force as of 01.01.2012) incomes subject to final (licence) tax under Art. 38, with exception of the incomes under Art. 50 (1), point 3, and/or
  7. (Former item 4 – SG No. 99/2011, in force as of 01.01.2012) income accruing to non-resident persons, on which a final tax has been levied, except for the cases referred to in Art. 37a.

(2) (Last Amendment – SG No. 99/2011, in force as of 01.01.2012)  – SG No. 99/2011, in force as of 01.01.2012) Notwithstanding the provisions under Par.1, the tax resident physical entities are obliged to submit annual tax declaration in the cases under Art. 50, Par.1, sections 4-5 and Par. 3.

 

Time Limit for Submission of Annual Tax Return

Art. 53. (Last Amendment – SG No. 99/2011, in force as of 01.01.2012) (1) The annual tax return shall be submitted on or before the 30th day of April of the year next succeeding the year of acquisition of the income.

(2) Any person, who submits an annual tax return on or before the 10th day of February of the next succeeding year, shall enjoy a rate rebate of 5 per cent of the balance of tax due under the annual tax return where remitted on or before the same date.

(3) Any person, who submits an annual tax return on or before the date referred to in Par. (1) by electronic means, shall enjoy a rate rebate of 5 per cent of the balance of tax due under the annual tax return where remitted on or before the same date, provided that the said person has not applied Par. (2).

(4) (New – SG No. 99/2011, in force as of 01.01.2012) The rebate under Pars. 2 and 3 shall be available to persons having obligation to pay advance tax, upon the condition that such persons have paid the tax due within the time limits under Art. 67.

 

Place of Submission of Annual Tax Return

Art. 54. (Last Amendment – SG No. 95/2009, in force as of 01.01.2010)  (1) The annual tax return shall be submitted to the National Revenue Agency territorial directorate exercising competence over the permanent address of the taxable person, including the sole trader, who is liable for the tax.

(2) (New – SG No. 113/2007, in force as of 01.01. 2008) In the cases under Art. 50, Par. 8, the annual tax declaration shall be submitted to the territorial directorate of the National Revenue Agency according to the permanent address of the minor person or of the person under judicial disability.

(3) (Last Amendment – SG No. 113/2007, in force as of 01.01.2008) Where the annual tax return of a non-resident natural person is submitted through an attorney-in-fact who has a permanent address in the country, the said submission shall be effected at the National Revenue Agency territorial directorate exercising competence over the permanent address of the said attorney-in-fact.

(4) (Last Amendment – SG No. 113/2007, in force as of 01.01.2008) Outside the cases referred to in Sub aragraphs (1) to (3), the annual tax return shall be submitted to the Sofia Territorial Directorate of the National Revenue Agency.

 

Section II

Tax Return

(Title Last Amendment – SG No. 94 /2012, in force as of 01.01.2013)

 

 

Obligation to Submit a Tax Return

Art. 55. (Last amendment – SG No. 94/2012 in force as of 01.01.2013) (1) The undertakings and self-insured persons that are payers of income and are obligated to  withhold and pay in taxes pursuant to this Act, shall submit a tax return in standard form for taxes due.

(2) Where the income payer is not an undertaking or self-insured person, the tax return under Par. 1 shall be submitted by the person that has earned the income.

(3) The tax withheld for employment relations incomes, for which information pursuant to Art. 73, Par. 6 shall be submitted, shall not be indicated in the tax return under Par. 1.

 

Time Limit for Submission of Tax Return

Art. 56. (Last amendment – SG No. 94/2012 in force as of 01.01.2013) The tax return referred to in Art. 55, Par. 1 shall be submitted within the time limits for payment of taxes due.

   

Venue of Submission of Tax Return

Art. 57. (Last amendment – SG No. 94/2012 in force as of 01.01.2013) The tax return referred to in Art. 55, Par. 1 shall be submitted to the territorial directorate of the National Revenue Agency at which due taxes shall be paid in.

 

Certificate on Tax Paid by Non-resident Natural Person

Art. 58. (Last Amendment – SG No. 95/2009, in force as of 01.01. 2010) (1) (Former text of art. 58, Last Amendment, SG No. 95/2009, in force as of 01.01.2010) A certificate on tax paid according to the procedure established by this Act by a non-resident natural person shall be issued in a standard form at the request of any such person. Any such request shall be submitted to the National Revenue Agency territorial directorate whereto the tax declaration referred to in Art. 50 or Art. 55 has been submitted.

(2) (New – SG No. 95/2009 , in force as of 01.01.2010) Upon request of the tax non-resident, the certification for paid annual tax base and/or annual tax base under Par. 28 is issued separately for the separate income types under Par. 8, except for the cases in which the income is obtained through definite base.

 

 

Section II

Tax Return on Levy of Final Annual (Licence) Tax

(Repeal – SG No. 106 /2008, in force as of 01.01.2009)

 

Obligation to Submit Tax Return on Levy of Final Annual (Licence) Tax

Art. 59. (Repeal – SG No. 106 /2008, in force as of 01.01.2009).

 

Time Limit for Submission of Tax Return on Levy of Final Annual (Licence) Tax

Art. 60. (Repeal – SG No. 106/2008, in force as of 01.01.2009).

 

Place of Submission of Tax Return on Levy of Final Annual (Licence) Tax

Art. 61. (Repeal – SG No. 106/2008, in force as of 01.01.2009).

 

 

Section IV

Time Limits and Place of Submission of Tax Returns on Alternative Taxes Payable by Sole Trader

 

Obligation and Time Limits for Submission of Tax Returns on Alternative Taxes Payable by Sole Traders

Art. 62. In respect of the activities taxed under Art. 26 (5) herein, the sole traders shall apply the provisions of the Corporate Income Tax Act on declaring of the tax.

 

Place of Submission of Tax Returns on Alternative Taxes Payable by Sole Traders

Art. 63. The tax returns referred to in Art. 62 herein shall be submitted to the National Revenue Agency territorial directorate exercising competence over the permanent address of the natural person.

 

 

Section V

Endorsement of Standard Forms

 

Endorsement of Standard Forms

Art. 64. (Last Amendment – SG No. 31/2011, in force as of 01.01.2011) (1) (Last Amendment – SG No. 31/2011, in force as of 01.01.2011) The standard forms of the tax returns and declaration under Art. 29a (4) of this Act shall be endorsed by an order of the Minister of Finance.

(2) (Repeal – SG No. 106/2008 , in force as of 01.01.2009)

(3) The standard forms of a Statement of Amounts Paid and of a certificate under this Act, as well as of the certificate referred to in Art. 58 herein and of the statement referred to in Art. 73 (1) herein, shall be endorsed by an order of the Minister of Finance.

(4) (Last Amendment – SG No. 106/2008, in force as of 01.01. 2009) The orders and the model forms under Subpars. (1) to (3) are published in the State Gazette.

 

 

Chapter Twelve

TAX REMITTANCE

 

Section I

Time Limits and Place of Remittance of Taxes Withheld by Payer of Income

 

Time Limits for Remittance of Taxes Withheld by Payer of Income

Art. 65. (Last Amendment – SG No. 94/2012, in force as of 01.01.2013) (1) (Last Amendment – SG No. 94/2012, in force as of 01.01.2013)  The tax under Art. 46 for income under Art. 37, Par. 1, Subpar. 1-9 and Art. 38, Pars. 10 and 12, shall be deducted and paid by the enterprise or by the self-insured person – taxpayer until the end of the month following the trimester of accrual of the income from the enterprise or the receipt of the income, by the self-insured person.

(2) (Last Amendment – SG No. 94/2012, in force as of 01.01.2013) The tax referred to in Art. 46 herein on the income referred to in Art. 38 (2) herein shall be withheld and remitted by the enterprise which is a payer of the income not later than at the end of the month next succeeding the trimester during which the decision on the distribution of dividend was made.

(3) (Last Amendment – SG No. 94/2012, in force as of 01.01.2013) The tax referred to in Art. 46 herein on the income referred to in Art. 38 (3) herein shall be withheld and remitted by the enterprise which is a payer of the income not later than at the end of the month next succeeding the trimester during which the sums were charged.

(4) (Last Amendment – SG No. 94/2012, in force as of 01.01.2013) The tax referred to in Art. 46 herein on the income referred to in Art. 38 (4) herein shall be withheld and remitted by the enterprise which is a payer of the income not later than at the end of the month next succeeding the trimester during which the share in any liquidation surplus was charged.

(5) Par. (4) shall not apply to any income from shares in any liquidation surpluses in the cases of transfer of property upon transformation according to the procedure established by Art. 265 of the Commerce Act, in which cases the tax shall be remitted according to the procedure established by Art. 67 herein by the sole trader who has acquired the income.

(6) The tax referred to in Art. 46 herein on the income referred to in Items 10 to 12 of Art. 37 (1) and Art. 38 (5) herein shall be remitted according to the procedure established by Art. 67 herein by the person who has acquired the income.

(7) (Last Amendment – SG No. 94/2012, in force as of 01.01.2013) The tax under Art. 46 on the income under Art. 38 (8) and (11) shall be withheld and paid by the insurance/social insurance company (provided it is local entity), respectively by the cooperative, not later than at the end of the month next succeeding the trimester during which the income was acquired by the natural person.

(8) The commercial insurance/social insurance company referred to in Par. (7) shall ascertain the portion of the non-taxable income referred to in Art. 38 (9) herein on the basis of a written declaration provided by the natural person who is liable for the tax.

(9) (Last amendment – SG No. 94/2012 in force as of 01.01.2013) The tax under Art. 46 for the incomes under Art. 38, Par. 13 shall be withheld and paid in by the commercial banks and branches of foreign banks in the country within the end of the month following the month of income earning.

(10) (Last amendment – SG No. 94/2012 in force as of 01.01.2013) The tax under art.46 regarding the incomes under art.8, (11) is withheld and paid in by the payer of the income by the end of the month, next succeeding the trimester of accounting of the income by the local legal entity, the sole trader, the commercial location or by the fixed base inside the country.

(11) (Last amendment – SG No. 94/2012 in force as of 01.01.2013) The tax which the employer is obligated to withhold pursuant to Art. 42 shall be paid in not later than the 25th day of the month subsequent to the month during which the tax was withheld or during which the partial payments in the cases under Art. 42, Par. 6 were made. The employer under the basic employment relationship shall pay in the tax under Art. 49, Par. 5 until 25 February of the following year.

 

(12) (Last amendment – SG No. 94/2012 in force as of 01.01.2013) The tax which undertakings and self-insured persons – income payers, are obligated to withhold under Arts. 43, Par. 4 and Art. 44, Par. 4 shall be contributed not later than the end of the month subsequent to the trimester during which the income was earned, and in case of incomes earned during the fourth trimester of the tax year – no advance tax shall be withheld and paid in.

 

Place of Remittance of Taxes Withheld by Payer of Income

Art. 66. (Last Amendment – SG No. 95/2009, in force as of 01.01.2010) (1) (Former text Art. 66 – SG No. 95/2009, in force as of 01.01.2010) The tax referred to in Art. 65 herein shall be remitted to the executive budget by crediting an account of the National Revenue Agency territorial agency exercising competence over the place of registration of the payer of the income.

(2) (New, SG No. 95/2009, in force as of 01.01.2010) Overdeposited tax or undue paid sums for taxes under Art. 37, Para. 1, section 1-9 and Art. 38 on the income obtained by tax non-residents are subject to remission from the Revenue Agency Territorial Directorate where the income tax of the tax non-resident is subject to payment.

 

 

Section II

Time Limits and Place of Remittance of Taxes by Person Who Has Acquired Income

 

Time Limits for Remittance of Taxes by Person Who Has Acquired Income

Art. 67. (Last amendment – SG No. 94/2012 in force as of 01.01.2013) (1) (Last amendment – SG No. 94/2012 in force as of 01.01.2013)  Where the payer of the income is not obligated to withhold and remit the tax, the tax referred to in Art. 43, 44 and 46 herein shall be remitted by the person who has acquired the income, on or by the end of the month next succeeding the quarter of acquisition of the income.

(2) (Last amendment – SG No. 94/2012 in force as of 01.01.2013) Tax prepayment under Art. 43 (6) and Art. 44 (3) shall not be remitted in respect of any income acquired during the fourth quarter of the tax year.

(3) (Last amendment – SG No. 94/2012 in force as of 01.01.2013) The tax referred to in Art. 46 herein, as determined at the time of the exchange referred to in Art. 38 (5) herein, shall be remitted by the person who has acquired the income on or by the end of the month next succeeding the quarter during which a subsequent sale or exchange was effected of the shares and interests in the acquiring/newly established corporation, including upon a subsequent exchange of the shares or interests in connection with transformation of commercial corporations.

(4) The tax due under Art. 48 herein shall be remitted on or before the 30th day of April of the year next succeeding the year of acquisition of the income.

 

Place of Remittance of Taxes by Person Who Has Acquired Income

Art. 68. (Last Amendment – SG No. 95/2009, in force as of 01.01.2010) (1) The tax referred to in Arts. 43, 44, 46 and 48 herein shall be remitted to the executive budget by crediting an account of the National Revenue Agency territorial agency exercising competence over the permanent address of the resident natural person, including the sole trader.

(2) The tax referred to in Par. (1) of any non-resident person who has received income through an attorney-in-fact who has a permanent address in the country shall be remitted to the executive budget by crediting an account of the National Revenue Agency territorial agency exercising competence over the permanent address of the said attorney-in-fact.

(3) Where the place of submission of the tax cannot be ascertained according to the procedure established by Pars. (1) and (2), the tax shall be remitted to the executive budget by crediting an account of the Sofia City Territorial Directorate of the National Revenue Agency.

(4) (New – SG No. 95/2009, in force as of 01.01.2010) Overdeposited tax or undue paid sums for taxes under Art. 37, Par. 1, section 10-12 and Art.38 on the income obtained by tax non-residents are subject to remission from the Revenue Agency Territorial Directorate where the income tax of the tax non-resident is subject to payment.

 

 

Section III

Time Limits and Place of Remittance of Final Annual (Licence) Tax

(Repeal – SG No. 106 /2008, in force as of 01.01.2009)

 

Time Limits for Remittance of Final Annual (Licence) Tax

Art. 69. (Repeal – SG No. 106/2008, in force as of 01.01.2009)

 

Place of Remittance of Final Annual (Licence) Tax

Art. 70. (Repeal – SG No. 106 /2008, in force as of 01.01.2009)

 

 

Section IV

Time Limits and Place of Submission of Alternative Taxes by Sole Traders

 

Time Limits for Submission of Alternative Taxes by Sole Traders

Art. 71. In respect of the activities taxed under Art. 26 (5) herein, the sole traders shall apply the provisions of the Corporate Income Tax Act regarding the time limits for remittance of the tax.

 

Place of Submission of Alternative Taxes by Sole Traders

Art. 72. The taxes referred to in Art. 71 herein shall be remitted to the executive budget by crediting an account of the National Revenue Agency territorial agency exercising competence over the permanent address of the natural person.

 

 

PART FIVE

DISCLOSURE OF INFORMATION, APPLICABLE PROVISIONS OF OTHER ACTS AND REFUND OF TAX WITHHELD IN ANOTHER MEMBER STATE OF EUROPEAN UNION

(Title Last Amendment – SG No. 106 /2008, in force as of 01.01.2009)

 

 

Chapter Thirteen

DISCLOSURE OF INFORMATION

 

Income Payers’ Obligations to Disclose Information

Art. 73. (Last Amendment – SG No. 94/2012 in force as of 01.01.2013) (1) (Last amendment – SG No. 94/2012 in force as of 01.01.2013) The undertakings and self-insured persons that are payers of income within the meaning of the Social Insurance Code shall draw up a record of a standard layout regarding the paid in the course of the year incomes:

  1. under Art. 10, Par. 1, items 3, 4 and 6, subject to levying by a tax on the total annual tax basis;
  2. under Chapter Six, subject to levying by a final tax, save for the incomes subject to declaring pursuant to Art. 42, Par. 5 of the Tax Insurance Procedure Code;
  3. from transfer of rights and property save for the incomes under Art. 13, Par. 1, item 3;
  4. under Art. 13, Par. 1, items 3, 7, 8, 9, 20, 21 and 24, in case the annual amount of the relevant income paid to a physical person exceeds BGN 5000.

(2) (Last Amendment – SG No. 94/2012 in force as of 01.01.2013) In case of transformation or transfer of an undertaking, the record under Par. 1 shall be drawn up by the assignee.

(3) (Last Amendment – SG No. 94/2012 in force as of 01.01.2013) The  income under Art. 38, (1), item 2 shall be included in the reference under Subpar. (1) for the fiscal year in which the decision for allocation of dividends, for the fiscal year of accrual of the sums – in cases of hidden allocation of the profit-  or for the fiscal year of accrual of the liquidation share. In case of sale, exchange or other transfer of rights or property made for valuable consideration pursuant to Art. 33, Par. 3, the incomes shall be included in the record under Par. 1 for the tax year of transfer.

(4) (Last Amendment – SG No. 95/2009, in force as of 01.01.2010) The inquiry under Par. 1 is submitted to the Revenue Agency Territorial Directorate where the tax payer is registered by 30 April. Upon cessation of activities in connection with a liquidation procedure or with declaration of bankrupt of a partnership, the inquiry under Par. 1 is submitted within the terms and procedure for submission of tax declaration specified in Art. 162 of Corporate Income Tax Act.

(5) (Last Amendment – SG No. 94/2012 in force as of 01.01.2013) Where the persons referred to in Par. (1) have paid income to more than five natural persons during the tax year, the statement referred to in Par. (1) shall be presented solely on an electronic data medium in a format and according to a procedure approved by an order of the Executive Director of the National Revenue Agency.

(6) (Last Amendment – SG No. 106/2008, in force as of 01.01.2009) Employers shall periodically disclose information on the income paid under employment relationships and on the tax withheld on the said income. The Ministry of Finance shall issue an ordinance on the content, manner and procedure for presentation and storage of the data.

 

State Bodies’ Obligation to Disclose Information

Art. 74. (1) When so requested by the revenue authorities, the Ministry of the Interior shall provide the information necessary to ascertain whether a person is resident or non-resident according to Chapter One herein.

(2) Annually, on or before the 15th day of December, the Ministry of Regional Development and Public Works shall provide the National Revenue Agency with up-to-date information on the population by current address, consolidated by nucleated settlement.

 

 

Chapter Fourteen

APPLICABLE PROVISIONS OF OTHER LAWS

 

Priority Application of Tax Convention or Another International Treaty

Art. 75. (1) In the event of a conflict between the provisions of any tax convention or another international treaty, which has been ratified by the Republic of Bulgaria, has been promulgated and has entered into force, and any provisions of this Act, the provisions of the relevant tax convention or treaty shall prevail.

 

Foreign Tax Credit

Art. 76. (1) Outside the cases referred to in Art. 75 herein, upon assessment of the income tax any resident natural person shall be allowed foreign tax credit in respect of identical or similar foreign taxes levied abroad by the respective competent authorities.

(2) Any person referred to in Par. (1) shall be allowed foreign tax credit in respect of all taxes on dividends, interest, copyright and licence royalties, technical assistance fees and rents as paid from sources abroad.

(3) The foreign tax credit referred to in Par. (2) shall be determined for each State and for each type of income separately and shall be limited to the amount of the Bulgarian income tax which would have been due on such foreign-source income if applied to a domestic-source income.

(4) Where necessary, the Minister of Finance may:

  1. determine which taxes are identical or similar to the income tax on natural persons;
  2. specify the origin and the particular amount of the domestic-source or foreign-source income accruing from the respective source;
  3. disallow foreign tax credit in respect of such foreign taxes whereby the credit has been wrongfully increased.

 

Prevention of Tax Evasion

Art. 77. Upon determination of the liabilities of persons under this Act in the cases of transactions between related parties, of transactions concluded under terms and conditions whereof the fulfilment leads to an evasion of taxation and application of market prices, transfers related to a fixed base, as well as interest arising from a financial lease, the provisions of the Corporate Income Tax Act on prevention of fiscal evasion with respect to tax shall apply, mutatis mutandis.

 

 

Chapter Fifteen

DEDUCTION AND REFUND OF TAX PAID IN ANOTHER MEMBER STATE OF EUROPEAN UNION

(Last Amendment – SG No. 106/2008, in force as of 01.01.2009)

 

Deduction of Tax Withheld in Another Member State of European Union

Art. 78. (1) The tax withheld in the Kingdom of Belgium, the Republic of Austria or in the Grand Duchy of Luxembourg on any savings income, paid by a paying agent to resident natural persons, with the exception of sole traders, shall be deducted from the tax due on the aggregate annual taxable amount of the person as determined in the annual tax return referred to in Art. 50 herein as submitted.

(2) Should there be any balance after the deduction referred to in Par. (1), the said balance shall be refunded on the basis of a request within the time limits and according to the procedure established by Chapter Sixteen of the Tax and Social-Insurance Procedure Code.

(3) A document certifying the amount of the income and the tax withheld in the State under Par. (1), issued by the competent tax authorities of the said State, shall be attached to the annual tax return referred to in Par. (1) or to the request referred to in Par. (2), as the case may be.

 

Refund of Tax Withheld in Another Member State of European Union

(Title Last Amendment – SG No. 106/2008, in force as of 01.01.2009)

Art. 79. (1) Any natural person, with the exception of sole traders, who was not obligated to submit a return under Art. 50 herein, shall have the right to a refund of the tax withheld in the Kingdom of Belgium, the Republic of Austria or in the Grand Duchy of Luxembourg on any savings income, paid by a paying agent.

(2) The refund referred to in Par. (1) shall be effected on the basis of a request within the time limits and according to the procedure established by Chapter Sixteen of the Tax and Social-Insurance Procedure Code.

(3) A document certifying the amount of the income and the tax withheld in the State under Par. (1), issued by the competent tax authorities of the said State, shall be attached to the request referred to in Par. (2).

 

 

PART SIX

ADMINISTRATIVE PENALTY PROVISIONS

 

Art. 80. (1) Any person, who submits any tax return under this Act past the due date, shall be liable to a fine or a pecuniary penalty not exceeding BGN 500, unless subject to a severer sanction.

(2) Any person, who fails to state or who misstates any particulars or circumstances in a tax return leading to underassessment of the tax or to exemption from tax, shall be liable to a fine or a pecuniary penalty not exceeding BGN 1,000, unless subject to a severer sanction.

(3) Upon a repeated violation, the fine or pecuniary penalty referred to in Par. (1) shall be to an amount not exceeding BGN 1,000, and the fine or pecuniary penalty referred to in Par. (2) shall be to an amount not exceeding BGN 2,000, unless the person is subject to a severer sanction

Art. 80a. (New – SG No. 99/2009, in force as of 01.01.2010)  (1) A physical individual who, being liable to taxation, does not declare or declare incorrect information under Art. 50, Par. 1, section 5, is imposed a fine amounting to 10percent of the sums not declared.

(2) In case of repeated violation, the fine under Par. 1 amounts to 15 percent of the undeclared sums, provided the individual is not liable to more severe penalty.

Art. 80b. (New – SG No. 94/2010, in force as of 01.01.2011) (1) A natural person who, being obliged, fails to issue a document under Art. 9, para.2 for the incomes acquired by him/ her is imposed a fine amounting from BGN 100 to BGN 500.

(2) With reference to the violations under para.1, the fine is imposed separately for each unissued document.

(3) Upon repeated violation under para.1, the amount of the fine is from BGN 200 to BGN 1000.

Art. 81. (Last Amendment – SG No. 99/2011, in force as of 01.01.2012) (1) (Former text of Art. 81 – SG No. 99/2011, in force as of 01.01.2012) Any person, who or which is payer of income and, despite being under an obligation to do so, fails to withhold a tax or to remit a tax when due, shall be liable to a fine or a pecuniary penalty not exceeding BGN 1,000, unless subject to a severer sanction.

(2) (New – SG No. 99/2011, in force as of 01.01.2012) Upon repeated violation under Par.1, the amount of the  fine or the pecuniary penalty is up to  BGN 2000.

Art. 81a. (New – SG No. 99/2011, in force as of 01.01.2012) (1) A person – payer of income who has the obligation to and does not provide to the person who have acquired the income the standard certificates under Art. 45 (1), (2), (4) and (7), shall be  liable to a fine or a pecuniary penalty to the amount of BGN 250, save in cases where the person is subject to heavier penalty. For violations committed by more than one natural person, the fine or the pecuniary penalty shall be imposed on each person separately.

(2) Upon repeated violation under Par.1, the amount of the  fine or the pecuniary penalty is up to  BGN 500.

 

 

Art. 82. (1) Any person blameworthy for a failure to submit or for late submission of the information referred to in Art. 73 herein, as well as for stating untrue or incomplete data, shall be liable to a fine or a pecuniary penalty not exceeding BGN 250, unless the person is subject to a severer sanction.

(2) For any violations referred to in Par. (1), committed in respect of more than one natural person, the fine or pecuniary penalty shall be imposed separately in respect of each natural person.

(3) Upon a repeated violation under Par. (1), the fine or pecuniary penalty referred to in Par. (1) shall be to an amount not exceeding BGN 500.

 

Art. 83. (Last Amendment – SG No. 95/2009, in force as of 01.01. 2010)  (1) Individual who fails to perform his/her obligation for submission of annual activity report under Art. 51, Par. 1 or fails to submit it in time is subjected to a fine or property sanction at the amount of up to 500 BGN, if he/she is not liable to more severe penalty.

(2) Upon subsequent violation under Par. 1 the fine or property sanction is at the amount of up to BGN 1000.

 

Art. 84. (1) Any employer under a principal employment relationship, who fails to fulfil the obligation thereof to determine the annual amount of the tax on income from employment relationships, shall be liable to a fine or a pecuniary penalty not exceeding BGN 500.

(2) Upon a repeated violation under Par. (1), the fine or pecuniary penalty shall be to an amount not exceeding BGN 1,000.

 

Art. 85. (1) The violations under this Act shall be ascertained by a written statement drawn up by a revenue authority.

(2) The penalty decrees shall be issued by the Executive Director of the National Revenue Agency or by an official thereby authorized.

(3) The written statements ascertaining violations and the penalty decrees shall be drawn up, issued and appealed against according to the procedure established by the Administrative Violations and Sanctions Act.

 

Art. 86. The provisions of the Administrative Violations and Sanctions Act shall apply to the imposition of administrative sanctions.

 

SUPPLEMENTARY PROVISIONS

 

  • 1. (Last Amendment – SG No. 94/2012 in force as of 01.01.2013) Within the meaning given by this Act:
  1. “Bulgaria” or “the country” shall be the Republic of Bulgaria and, when used in a geographical sense, shall include the territory over which the Republic of Bulgaria exercises the State sovereignty thereof, as well as the continental shelf and the exclusive economic zone wherewithin the Republic of Bulgaria exercises sovereign rights in conformity with international law.
  2. (Last Amendment, SG No. 82/2009) “Permanent address” shall be the address within the meaning given by Item 3 of § 1 of the Supplementary Provision of the Bulgarian Personal Documents Act.
  3. “Permanent establishment” shall be a permanent establishment within the meaning given by Item 5 of § 1 of the Supplementary Provisions of the Tax and Social-Insurance Procedure Code.
  4. “Fixed base” shall be a fixed base within the meaning given by Item 7 of § 1 of the Supplementary Provisions of the Tax and Social-Insurance Procedure Code.
  5. “Dividend” shall be:

(a) income from shares;

(b) income from participating interests, even in unincorporated associations, and from other corporate rights, where treated as income from shares;

€ hidden profit distribution.

  1. “Share in any liquidation surplus” shall be:

(a) a share in any liquidation surplus within the meaning given by the Commerce Act, including the share in the property charged to a partner upon dissolution of a general or limited partnership;

(b) the cash equivalent of the share in the property charged to a partner upon cessation of membership in a corporation;

€ the equity stake contribution appertaining upon termination of membership in a cooperative or upon termination of a cooperative;

(d) the property transferred upon transformation through transfer of property to the sole owner according to procedure established by Art. 265 of the Commerce Act;

€ any income of the nature of a share referred to in Litterae (a) to (d) upon dissolution of a commercial corporation/cooperative or upon cessation of membership in a commercial corporation/cooperative abroad.

  1. “Interest payment” shall be income from debt claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor’s profits, including interest paid on deposits with banks and income (premiums) from debentures and bonds.
  2. (Last Amendment – SG No. 106/2008, in force as of 01.01.2009) “Franchising agreement”, “factoring”, “hidden distribution of profit” “copyright and licence royalties” and “technical assistance fees” shall be the respective notions within the meaning given by the Corporate Income Tax Act.
  3. “Market price” shall be the market price within the meaning given by Item 8 of § 1 of the Supplementary Provisions of the Tax and Social-Insurance Procedure Code.
  4. “Works of art, collectors’ items and antiques” shall be the respective notions within the meaning given by the Value Added Tax Act.
  5. (Last Amendment – SG No. 106/2008, in force as of 01.01.2009) „ Disposal of financial instruments „ for the purposes of Art. 13, Par. 1, Subpar. 3, shall be the following transactions :
  6. a) Transactions with shares of collective investment schemes, shares and rights, effected on a regulated market under the meaning of Art. 7 3 of the Markets and Financial Instruments Act; rights for the purposes of sentence one shall be securities providing opportunity for subscription for a certain number of shares in connection with an adopted resolution for increase in the capital ;
  7. b) Transactions concluded pursuant to the provisions for buyback by collective investment schemes, admitted for public sale in the country or in another member – state of the European Union, or in a country – party to the EEA Agreement;
  8. c) Transactions concluded pursuant to the provisions for tender offers under Chapter Eleven, section II of the Public Offering Securities Act, or analogical transactions in another member – state of the European Union, or in a country – party to the EEA Agreement.
  9. (Last Amendment – SG No. 106/2008, in force as of 01.01.2009) „ Additional voluntary social security „ shall be social security contributions under Part Two, Chapters Three and Four of the Social Security Code, as well as the voluntary social security, pursuant to the legislation of a member – state of the European Union or of another country – party to the EEA Agreement, by an institution carrying out activities directly related to pension insurance or to the social security for professional qualification and unemployment.
  10. (Last Amendment – SG No. 106/2008, in force as of 01.01.2009) „ Voluntary medical insurance” shall be insurance under Chapter Three of the Medical Insurance Act, as well as the activity related to voluntary medical insurance carried out in accordance with the legislation of a member – state of the European Union, or of another country – party to the EEA Agreement, by an institution, carrying out activities related to voluntary (additional) medical insurance .
  11. (Last Amendment – SG No. 106/2008, in force as of 01.01.2009) „ Life Insurance „ are the types of insurance under Chapter I, Subpar . 1 and 3 of Annex № 1 to the Insurance Code, concluded by insurance agents, licensed in accordance with the Insurance Code, or by insurance agents with seat in a member – state of the European Union, or in another country – party to the EEA Agreement, carrying out activity pursuant to the right of establishment or freedom of service rendering.
  12. “Income accruing from investment of technical provisions” shall be the portion of the net financial income from investment of the resources in the mathematical (premium) provisions as distributed by an insurer to the individual accounts of the insureds.
  13. “Insurance benefit” shall be insurance benefit within the meaning given by the Insurance Code.
  14. “Ground rent” shall be income accruing to the owner of agricultural land for the use of the said land from a cooperative registered under the Cooperatives Act.
  15. “Rent charge” shall be income accruing to a lessor by virtue of a contract of tenancy.
  16. “Producer dividends” shall be the dividends distributed to the members of a cooperative for output thereby produced and sold to the said cooperative.
  17. “Consumer dividends” shall be the dividends distributed for consumer goods which the members of a cooperative purchase from the said cooperative.
  18. “Unprocessed agricultural product” shall be any primary product obtained from plants and animals which is used in its natural form, without being subject to technological processing and treatment as a result of which any physico-chemical changes have occurred in the composition.
  19. (Repeal – SG No. 106/2008, in force as of 01.01.2009).
  20. (Repeal – SG No. 106/2008, in force as of 01.01.2009).
  21. (Last Amendment – SG No. 32/2009 in force as of 01.01.2010) Medical-treatment facilities” shall be the medical-treatment facilities under the Medical-Treatment Facilities Act.
  22. “Donation for culture” shall be the assistance provided gratuitously under the terms and according to the procedure established by the Financial Support for Culture Act.
  23. “Employment relationships” shall be:

(a) the legal relationships with factory and office workers under the Labour Code;

(b) the legal relationships with civil servants and the legal relationships between the Minister of Defence and the Minister of Interior or officials authorized thereby, of the one part, and the employees of the relevant ministries, of the other parts;

€ (Last Amendment – Last Amendment – SG No. 81/2012, in force as of 01.09.2012) the legal relationships with the members of the Supreme Judicial Council, the Inspector General and the inspectors of the Inspectorate at the Supreme Judicial Council, the judges, prosecutors, investigating magistrates, chief administrators and the deputies thereof in the judicial authorities, the public enforcement agents, the recording magistrates and the judicial officers under the Judicial System Act, including candidates for junior judges and junior prosecutors in relation with remuneration paid to them during their training,  as well as the legal relationships under the Constitutional Court Act;

(d) the legal relationships between the Bulgarian Orthodox Church or another registered denomination under the Religious Denominations Act, of the one hand, and the ministers of the said Church or denomination holding a spiritual title, of the other hand;

€ (Last Amendment – SG No. 99/2011, in force as of 01.01.2012) legal relationships with any persons deriving income from election offices;

(f) (Last Amendment – SG No. 106/2008 , in force as of 01.01. 2009) legal relationships, connected with employment of persons by a foreign person, when the labour is expended on the territory of the country, as well as the legal relations of employment of a local natural person by a foreign person when the labour is expended outside the territory of the country ;

  1. g) (New – SG No. 113/2007, in force as of 01.01.2009) legal relations between an employer under Subpar. 27 and a Bulgarian or foreign natural person, when these legal relations are based on a contract for providing personnel between the employer and a third party;
  2. h) (New – SG No. 113/2007, in force as of 01.01. 2009) legal relations regarding contracts for management and control, including with members of management and controlling bodies of enterprises.

(i) (New – SG No. 95/2009, in force as of 01.01.2010) the relationships, regardless of the grounds for their arise, with associates and associate members in possession of more than five percent of the joint-stock company, for their implementation of personal labour in the companies and the cooperatives in which they are associates, cooperative members or shareholders.

  1. j) (New – SG No. 99/2011, in force as of 01.01.2012) legal relationships with trainees receiving remuneration under training contract for acquisition of qualification included in the nomenclature of the specialties, determined under the terms and conditions of Art. 181 (1) of the Health Act.
  2. (Last Amendment – SG No. 106 /2008, in force as of 01.01.2009) „ Employer „ shall be any local person, foreign person, carrying out activity through a place of economic activity or a certain base on the territory of the country, as well as commercial representation under the Investments Support Act, who employs natural persons or is a party to a contract for providing personnel by a foreign person.
  3. “Practice of a skilled craft” shall be the manufacture of arts or the provision of services carried out by a natural person entered in the register of craftsmen, who is not registered as a sole trader.
  4. “Persons practising a liberal profession” shall comprehend: professional accountants; consultants; auditors; lawyers; notaries; private enforcement agents; jurors; experts with the court and the prosecuting magistracy; licensed appraisers; industrial property agents; medical specialists; translators and interpreters; architects; engineers; site managers; intellectuals, educators, artists and scientists; insurance agents; other natural persons in respect of whom the following conditions simultaneously exist:

(a) they carry out a professional activity for their own account;

(b) they are not registered as sole traders;

€ they are self-insured persons within the meaning given by the Social Insurance Code.

  1. “Non-employment relationships” shall be the legal relationships other than such referred to in Items 26, 28 and 29, by virtue of which a natural person, who is not a sole trader, owes the achievement of a specific result.
  2. “Intellectual property” shall be the property of any scientific, artistic or literary work, including cinematograph films and television films and recordings for transmission by radio or television; the property of any patent, trade mark, industrial design or utility model, drawing, plan, secret formula or process, as well as of information concerning industrial, commercial or scientific experience (know-how).
  3. (Last Amendment – SG No. 106/2008, in force as of 01.01.2009) “Owners’ equity of an enterprise,” in connection with the application of Art. 33 (11), shall be the balance-sheet value of the assets net of the balance-sheet value of the liabilities of the enterprise.
  4. “Enterprise” shall be an enterprise within the meaning given by the Accountancy Act, as well as a representative office under the Investment Promotion Act and a contribution payment centre established in pursuance of Art. 8 of the Social Insurance Code.
  5. “Tax convention” shall refer to:

(a) any convention for the avoidance of double taxation with respect to taxes on income;

(b) any convention for the avoidance of double taxation with respect to taxes on income and capital gains;

€ any convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income;

(d) any convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital gains;

€ any convention or treaty for the avoidance of double taxation of income derived from international air transport, regardless of whether the said conventions or treaties are inter-state or inter-governmental.

  1. “Foreign tax credit” shall be the right, enjoyable under conditions as specified by this Act, to allow a tax on income or profit already paid abroad against the tax assessed on the profit accruing to the taxable person from sources inside the country and abroad.
  2. “Repeated violation” shall be any violation which is committed within one year after the entry into effect of a penalty decree whereby the offender was penalized for a violation of the same kind.
  3. (Repeal – SG No. 113 /200 7, in force as of 01.01.2008)
  4. (Repeal – SG No. 113/2007, in force as of 01.01.2008)
  5. (Repeal – SG No. 113 /2007, in force as of 01.01.2008)
  6. (Repeal – SG No. 113 /2007, in force as of 01.01.2008)
  7. (Repeal – SG No. 113 /2007, in force as of 01.01.2008)
  8. (Repeal – SG No. 113/2007, in force as of 01.01.2008)
  9. (Repeal – SG No. 113 /2007, in force as of 01.01.2008)
  10. (Repeal – SG No. 113 /2007, in force as of 01.01.200 8)
  11. 45. (Repeal – SG No. 113 /2007, in force as of 01.01.2008)
  12. (Repeal – SG No. 113 /2007, in force as of 01.01.2008)
  13. “Weighted average price” shall be the price which is determined according to the following

 

formula:

 

WAP=(CA1xNA1 + CA2xNA2 + … + CAnxNAn) : (NA1 + NA2 + … + NAn)

 

where:

WAP shall be the weighted average price;

CA1,2…n shall be the cost of acquisition of the relevant financial asset;

NA1,2…n shall be the number of financial assets acquired at a price of CA1,2…n.

  1. (Repeal – SG No. 113/2007, in force as of 01.01.2008)
  2. “Savings income” shall be:

(a) any income related to debt claims of every kind, whether or not secured by mortgage and whether or not carrying a right to participate in the debtor’s profits, including interest paid on deposits with banks, interest paid and discounts made on bonds or debentures (premiums and prizes); penalty charges for late payments shall not be regarded as savings income;

(b) any income deriving from interest accrued or capitalized at the sale, refund or redemption of the debt claims referred to in Littera (a);

(c) any income referred to in Litterae (a) and (b), paid either directly or through a paying agent and distributed by:

(aa) a collective investment scheme licensed in another Member State;

(bb) a paying agent certified in the Member State where the said agent is established, treated as a collective investment scheme;

(cc) a collective investment scheme established in a third country;

(d) income realized upon the sale, refund or redemption of shares or units in persons referred to in Litterae (aa), (bb) and (cc), if they invest directly or indirectly (via persons referred to in Litterae (aa), (bb) and (cc)) more than 40 per cent of their assets in debt claims referred to in Littera (a).

  1. “Paying agent” shall be any person carrying out economic activity within the territory of the Kingdom of Belgium, the Republic of Austria or in the Grand Duchy of Luxembourg, who or which pays savings income to resident natural persons under this Act, including where the said agent is an intermediary upon payment of the said income.
  2. (New – SG No. 113/2007, in force as of 01.01.2008) “Residential property” in connection with the application of Art. 13, Par. 1, Subpar. 1, shall be immovable property, which at the time of sale or exchange may serve as accommodation.
  3. (Last Amendment – SG No. 94/2010, in force as of 01.01.2011) ’’Main Working Relationship’’ is the working relationship under section 26 that have aroused first in time. Upon defining of the basic employment relationship, the employment relationships under pt. 26, letter ’’i’’ are not taken into consideration.
  4. (New – SG No. 95/2009, in force as of 01.01.2010) ’’Annual Activity Report’’ is the report under Art. 20, Par. 4 of the Statistics Act.
  5. (New – SG No. 95/2009, in force as of 01.01.2010) ’’A mariner’’ is a physical entity occupying labour relationships position as a member of the ship’s company of a vessel that is registered in the member state of the European Union Register of Shipping, nevertheless he is on dry land or on board the ship, who has qualification certificate and certificate of additional and/or specialized training, obtained in accordance with the procedure of the ordinance under Art. 87, Par. 1 of the Merchant Shipping Code.
  6. (New – SG No. 94/2010, in force as of 01.01.2011) ’’Jurisdictions with preferential tax regime’’ are those within the meaning of the Corporate Income Tax Act.
  7. (New – SG No. 31/2011, in force as of 01.01.2011) ’’Income acquired from economic activity of natural persons” for the purposes of Article 29a is the income accruing from the activity of production of processed or unprocessed agricultural products, excluding the income from growing of ornamental plants, of natural persons that are registered as tobacco producers and agricultural producers who are not considered as sole traders within the meaning of the Commerce Act.
  8. (New – SG No. 94/2012 in force as of 01.01.2013)  „Taxable value” for purposes of Art. 33, Par. 6, item 10 shall be the value within the meaning of Art. 53, Par. 4 of the Corporate Income Taxation Act.

 

  1. (New – SG No. 94/2012 in force as of 01.01.2013) „Deposit accounts” shall be bank accounts for deposit of money for a definite time against remuneration (interest).

 

  1. (New – SG No. 94/2012 in force as of 01.01.2013) „State financial award for special contribution to the Bulgarian state and nation” shall be the state financial award for persons for their extraordinary achievements and overall contribution in the field of culture, science, education, defense and national security, health aid, sports etc., for strengthening and development of civil society, democratic institutions and human rights and freedoms protection, for natural disasters and emergencies fight, for environmental protection and for acts of individual courage, granted pursuant to the Awarding of Persons with Special Contribution to the Bulgarian State and Nation Act.
  • 2. This Act transposes the provisions of Council Directive 90/434/EEC on the common system of taxation applicable to mergers, divisions, [partial divisions], transfers or assets and exchanges of shares concerning companies of different Member States [and to the transfer of the registered office, of an SE or SCE, between Member States] and Council Directive 2003/48/EC on taxation of savings income in the form of interest payments.

 

TRANSITIONAL AND FINAL PROVISIONS

 

  • 3. The Personal Income Tax Act (promulgated in the State Gazette No. 118 of 1997; [modified by] Constitutional Court Judgement No. 6 of 1998, [promulgated in] No. 35 of 1998; amended in Nos. 71 and 153 of 1998, Nos. 50, 103 and 111 of 1999, No. 105 of 2000, No. 110 of 2001, Nos. 40, 45, 61 and 118 of 2002, Nos. 42, 67, 95 and 112 of 2003, Nos. 36, 37, 53, 70 and 108 of 2004, Nos. 43, 102, 103 and 105 of 2005, Nos. 17 and 63 of 2006) is hereby superseded.

 

  • 4. (1). Any person, who or which is a principal employer within the meaning given by the Personal Income Tax Act as superseded at the 31st day of December 2006, shall recalculate finally the tax on the income from employment relationships and legal relationships equivalent to an employment relationship on an annual basis according to the procedure established by the said Act not later than the 31st day of January 2007.

(2) Art. 49 (5), (6) and (7) herein shall apply to the difference in the tax in connection with the recalculation referred to in Par. (1).

(3) The employers within the meaning given by the Personal Income Tax Act as superseded shall issue the certificate referred to in Art. 38 of the said Act on the income from employment relationships received during 2006.

 

  • 5. The amount of the tax prepayment upon the final payment of the income in respect a taxable income from employment relationships within the meaning of this Act, charged but unpaid prior to the entry of this Act into force, shall be determined according to Art. 42 (3) herein.

 

  • 6. (1) Any income received prior to the entry of this Act into force, other than income from employment relationships, and which is subject to taxation under the Personal Income Tax Act as superseded, in respect of which the date of acquisition of the income under this Act is after the 1st day of January 2007, shall be deducted upon determination of the taxable income under this Act.

(2) The portion of the taxable income which, in pursuance of Art. 22 (2) of the Personal Income Tax Act as superseded, was ignored upon determination of the tax base within the meaning given by the said Act, shall be declared as taxable income under this Act during the next succeeding tax years until depletion of the remainder of the years referred to in Art. 22 (2) of the Personal Income Tax Act as superseded.

 

  • 7. (1) Any income received in 2006 and subject to declaring according to the procedure established by the Personal Income Tax Act as superseded shall be declared not later than the 15th day of April 2005 by submission of the annual tax return referred to in Art. 41 of the said Act.

(2) Any enterprises, which paid any income other than income from employment relationships and pensions to natural persons in 2006, shall submit the statement referred to in Art. 57 of the Personal Income Tax Act as superseded not later than the 15th day of April 2007.

 

  • 8. (1) The tax due on any income received during 2006 shall be remitted within the time limits and according to the procedure established by the Personal Income Tax Act as superseded.

(2) A rebate in respect of the tax remitted under Par. (1) shall be enjoyed under the terms, according to the procedure and at the rate established by the Personal Income Tax Act as superseded.

 

  • 9. The standard forms of an annual tax return for 2006 and the statement for 2006 referred to in Art. 57 of the Personal Income Tax Act as superseded shall be endorsed not later than the 10th day of January 2007 by an order of the Minister of Finance, which shall be promulgated in the State Gazette.

 

  • 10. (In force as of 24.11.2006) The standard forms of the Statement of Amounts Paid and the certificate referred to in Art. 45 (4) herein, of the certificate referred to in Art. 58 herein and of the tax return referred to in Art. 59 (1) herein shall be endorsed not later than the 31st day of December 2006 by orders of the Minister of Finance. The said standard forms and orders shall be promulgated in the State Gazette.

 

  • 10a. (Last Amendment – SG No. 99/2011, in force as of 01.01.2012) (1) Persons with specified by a valid resolution of a competent authority type and degree of disability 50 and over 50 per cent benefit from tax relief for persons of reduced capacity for work under the provisions of this Act.

(2) Persons who has been assigned a degree of permanently reduced capacity for work for life by 31 December 2009 under the Health Act and persons who have a degree of permanently reduced capacity for work for life under Art. 3 of the transitional and final provisions of the Health Act are regarded as having type and degree of disability determined for life.

(3) (New – SG No. 99/2011, in force as of 01.01.2012) Persons with degree of reduced capacity for work of  50 and over 50 per cent, established after reaching the age for acquisition of the right to pension under Art. 68 of the Social Security Code, as well as persons who have reached the age for acquisition of the right to pension under Art. 68 of the Social Security Code within the time limits for decision of the Territorial Medical Expert Board (National Medical Expert Board), shall use tax relief for persons of reduced capacity for work under the provisions of this Act regardless of the time – limits set in the Territorial Medical Expert Board (National Medical Expert Board) decision.

 

  • 10b. (New – SG No. 49/2010, in force as of 01.07.2010) The  taxable income in the case of employment relationship shall not include the considerations paid pursuant to § 22о, Item 1 of the Transitional and Final Provisions of the Social Security Code.

 

  • 11. In the Social Insurance Code (promulgated in the State Gazette No. 110 of 1999; [modified by] Constitutional Court Judgment No. 5 of 2000, [promulgated in] No. 55 of 2000; amended in No. 64 of 2000, Nos. 1, 35, and 41 of 2001, Nos. 1, 10, 45, 74, 112, 119 and 120 of 2002, Nos. 8, 42, 67, 95, 112 and 114 of 2003, Nos. 12, 38, 52, 53, 69, 70, 112 and 115 of 2004, Nos. 38, 39, 76, 102, 103, 104 and 105 of 2005, Nos. 17, 30, 34, 56, 57, 68 and 82 of 2006), the words “the Personal Income Tax Act” shall be replaced passim by “the Income Taxes on Natural Persons Act”.

 

  • 12. In the Protection against the Harmful Impact of Chemical Substances and Preparations Act (promulgated in the State Gazette No. 10 of 2000; amended in No. 91 of 2002, Nos. 86 and 114 of 2003, Nos. 100 and 101 of 2005, Nos. 30 and 34 of 2006), in Item 17 of ? 1 of the Supplementary Provision, the words “the Personal Income Tax Act” shall be replaced by “the Income Taxes on Natural Persons Act”.

 

  • 13. In the Health Insurance Act (promulgated in the State Gazette No. 70 of 1998; amended in Nos. 93 and 153 of 1998, Nos. 62, 65, 67, 69, 110 and 113 of 1999, Nos. 1, 31 and 64 of 2000, No. 41 of 2001, Nos. 1, 54, 74, 107, 112, 119 and 120 of 2002, Nos. 8, 50, 107 and 114 of 2003, Nos. 28, 38, 49, 70, 85 and 111 of 2004, Nos. 39, 45, 76, 99, 102, 103 and 105 of 2005, Nos. 17, 18, 30, 33, 34 and 59 of 2006), in Art. 42 (1) and (3) and ? 19d (5) of the Transitional and Final Provisions, the words “the Personal Income Tax Act” shall be replaced by “the Income Taxes on Natural Persons Act”.

 

  • 14. In the Integration of Persons with Disabilities Act (promulgated in the State Gazette No. 81 of 2004; amended in Nos. 28, 88, 94, 103 and 105 of 2005, Nos. 18, 30, 33, 37 and 63 of 2006), in Art. 40 (3) and Art. 41, the words “the Personal Income Tax Act” shall be replaced by “the Income Taxes on Natural Persons Act”.

 

  • 15. In the Act Conferring Certain Rights on Persons Who Have Served as Presidents of the Republic of Bulgaria (promulgated in the State Gazette No. 59 of 2003), in Art. 2 (2), the words “the Personal Income Tax Act” shall be replaced by “the Income Taxes on Natural Persons Act”.

 

  • 16. In the Family Allowances Act (promulgated in the State Gazette No. 32 of 2002; amended in No. 120 of 2002, No. 112 of 2003, No. 69 of 2004, No. 105 of 2005, Nos. 21, 30, 33 and 68 of 2006), in Item 2 of ? 1 of the Supplementary Provisions, the words “the Personal Income Tax Act” shall be replaced by “the Income Taxes on Natural Persons Act”.

 

  • 17. In the Local Elections Act (promulgated in the State Gazette No. 66 of 1995; corrected in No. 68 of 1995; [modified by] Constitutional Court Judgment No. 15 of 1995, [promulgated in] No. 85 of 1995; amended in No. 33 of 1996; [modified by] Constitutional Court Judgment No. 4 of 1997, [promulgated in] No. 22 of 1997; amended in Nos. 11 and 59 of 1998, Nos. 69 and 85 of 1999, No. 29 of 2000, No. 24 of 2001, No. 45 of 2002, Nos. 69 and 93 of 2003, No. 28 of 2005, Nos. 17, 24, 30 and 69 of 2006), in Art. 33 (2), the words “the Personal Income Tax Act” shall be replaced by “the Income Taxes on Natural Persons Act”.

 

  • 18. In the Election of Members of Parliament Act (promulgated in the State Gazette No. 37 of 2001; [modified by] Constitutional Court Judgment No. 8 of 2001, [promulgated in] No. 44 of 2001; amended in No. 45 of 2002, Nos. 28, 32 and 38 of 2005, Nos. 24, 30 and 63 of 2006), in Art. 15a, the words “the Personal Income Tax Act” shall be replaced by “the Income Taxes on Natural Persons Act”.

 

  • 19. In the Tax and Social-Insurance Procedure Code (promulgated in the State Gazette No. 105 of 2005, amended in Nos. 30, 33, 34, 59, 63, 73, 82 and 86 of 2006), in Item 1 of Art. 178 (2), the words “the Personal Income Tax Act” shall be replaced by “the Income Taxes on Natural Persons Act”.

 

  • 20. In the Election of President and Vice President of the Republic Act (promulgated in the State Gazette No. 82 of 1991; amended in No. 98 of 1991, No. 44 of 1996, No. 59 of 1998, Nos. 24, 80 and 90 of 2001, No. 45 of 2002, No. 28 of 2005, Nos. 24 and 63 of 2006), in Art. 10k (3), the words “the Personal Income Tax Act” shall be replaced by “the Income Taxes on Natural Persons Act”.

 

  • 21. This Act shall enter into force on the 1st day of January 2007, with the exception of ? 10, which shall enter into force on the day of promulgation of the Act in the State Gazette.

 

This Act was passed by the 40th National Assembly on the 9th day of November 2006 and the Official Seal of the National Assembly has been affixed thereto.

 

 

Annex to Chapter Seven

(Repeal – SG No 113/2007, in force as of 01.01.2008)