Tax Optimization Is an Art
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Withholding Taxes

Income subject to withholding tax at source
When accrued to a non-resident entity withholding tax at source is due on:

Dividends and liquidation quotas

Interest, royalties, franchising and factoring fees

Technical, consultancy and management services fees

Capital gains from transfer of real estate

Capital gains from disposal of financial assets issued by resident entities or the State and municipalities (exemption for capital gains from disposal of shares on a regulated Bulgarian, EU or EEA market)

Rents from letting of equipment, real estate and other properties

Withholding tax rates

5% on the gross amount of dividends and liquidation quotas but 0% for distributions to EU / EEA entities

10% on the gross amount for all other taxable incomeThe withholding tax rates may be reduced or waived under an applicable tax treaty.

Refund provisions
Entities resident in the EU may declare tax deductible expenses and claim a corresponding deduction or refund of the withholding tax paid on a gross basis. The claim is annual and should be filed by 31 December of the following year.

Payment
The resident payer of the income has to withhold the tax and remit it to the budget within:

Three months following the month of accrual of the income when the recipient is tax resident of a country which has a tax treaty with Bulgaria

One month following the month of accrual in all other cases.The recipient has to remit the withholding tax due within the terms indicated above in the case of capital gains.

Further Information

For more information on Bulgarian Taxes visit our Downloads page where you will find our Quick Reference Guide on Bulgarian Tax Framework.

The Bulgarian Comprehensive Tax Guide in English is now being compiled and authored and is coming soon. Pre-register now for a 25% discount.