Tax Optimization Is an Art
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Corporate Income Tax

March 11th, 2013

Corporate income tax is levied on the chargeable profits of companies resident in Bulgaria for tax purposes. Liable for corporate income tax are local legal entities, local entities that are not traders, local unincorporated companies and insurance funds established under the Social Security Code, foreign entities and unincorporated companies when conducting business in the country through a permanent establishment.

“Profit” is defined as the “positive financial result”. This indicates the possibility of a negative one, because before determining the taxable profit, the financial result must be converted towards reduction or increase. Moreover “permanent” and “temporary” differences, which are unrecognized for tax purposes expenses, should be taken into account, as well as the depreciable assets that are considered those whose value is equal to or greater than BGN 700 (350 EUR) or other lower value threshold chosen by the company.

It is also possible to be formed tax loss, if the company received a negative result, after conversion of the accounting result with all temporary and permanent tax differences. The company is entitled to deduct the tax loss within the next 5 years.

The rate of the corporate income tax in Bulgaria is 10% and the amount of tax is determined by multiplying the tax base by the rate. Every company shall submit an annual tax return and pay the amount of the corporate income tax by March 31st of the next year.

Please contact us to receive your free copy of Corporate Income Tax chapter from The Complete Tax Guide by BulgariCo.com.

Bulgarian Tax System

March 5th, 2013

Bulgaria has a standard tax system to the ones effective in the other members of the European Union. The main sources of tax in Bulgaria are the Corporate Tax, the Withholding Tax, the Alternative Taxes, the Personal Income Tax and the Value Added Tax.

Basic concept by which the Bulgarian tax system is guided in designing and implementing the taxation regime include adequacy (the tax rates are measured to generate only as much revenue as it is needed to for provision of essential public services), simplicity (easy to understand taxation process), effectiveness (minimized administrative burden of the tax collection), neutrality (tax regimes do not favor any group or sector over another), convenience of payment (to be paid at times convenient to the taxpayer), equity (the Bulgarian tax system equally burdens all individuals or entities in similar economic circumstances) and restricted (for specific purposes and for limited period).

As part of the economic policy, tax policy in its essential elements is aimed at supporting economic growth and budgetary stability through reducing the tax and social security, stimulating investments and simplifying the tax system and its effective administration.

Foreign legal entities are subject to Bulgarian corporate tax only if they perform business activity in Bulgaria through a permanent establishment. Foreign legal entities are also subject to withholding tax on certain income from sources in Bulgaria, as far as such income is not attributed to a permanent establishment.

The personal income tax is regulated by the Personal Income Tax Act that covers taxation of all wages, salaries, benefits, etc. resulting from employment. It also covers distributions of dividends and liquidation shares. The basic principle of PITA is that personal income is taxed only when actually received.

Bulgaria is an active member of the European Union since 2007 and as such applies the regulations set out by the European Union. Cooperation between the tax authorities of Member States remains a key element of European fiscal policy. Direct taxation is regulated almost entirely through bilateral agreements, while the EU Treaty contains some provisions and harmonization in indirect taxation.

Supervision and control over the import, export and transit of goods to, from and through Bulgaria, the collection of duties, implementation of administrative regulations and criminal investigations in cases terms and conditions provided in the Criminal Procedure Code are responsibilities of the Customs Agency, which is a centralized administrative structure under the supervision of the Minister of Finance.

Statements and tax returns, declarations of taxation at the corporate level and statements of income taxation of individuals must be submitted in the offices of the National Revenue Agency.

Please contact us to receive your free copy of Corporate Income Tax chapter from The Complete Tax Guide by BulgariCo.com.

The Greek Run

May 24th, 2012


We launch an offer aimed at helping our Greek neighbours to store their savings in their own limited company accounts in Bulgarian banks. It is not necessary to travel to Bulgaria.

The offer is at half our usual prices for company formation and related services.

For those requiring immediate help we provide trust service after our know-your-client procedure is met. Act now. Act safely. We stand ready to assist. Family foundations, and cooperatives are also available at request, but these take longer to register. The latter can be combined with our other services when time is of essence.

Give us a call at +359 89 2217417 or write us to hellenico@bulgarico.com.


Pursuant to Art. 254, Par. 1 of the Corporate Income Tax Act (CITA), the taxable persons mentioned in Chapter 34 can choose whether their activity from ships operation to be levied with the tax on the activity from ships operation. The tax rate is 10 per cent. The taxable persons, who have chosen to be levied under this procedure, are levied with this tax for a term not shorter than 5 years.

According to Art. 218, Par. 2, for all the remaining activities, except for those that must be levied with the alternative tax, the taxable persons must be levied with corporate tax.

Who is entitled to pay alternative tax on the activity from ships operation?

This tax is paid by the persons performing marine commercial navigation if they comply with all the following conditions:

1. They are companies registered under the Commercial Act or are permanent establishments of a company, which is established for taxation purposes in another European Union-member state or European Economic Area-member state in accordance with the respective tax legislation, and, based on a Tax Treaty concluded with a third state, is not considered as established for taxation purposes in another state outside the EU or the EEA;

2. They operate with owned or rented ships, and also rent out ships;

3. They do not refuse to train trainees on board of the ships, except for the cases when the number of the trainees for a period of one year exceeds the ratio 1 trainee per 15 officers navigating the ships;

4. They recruit their crews with Bulgarian citizens or citizens of another EU or EEA-member states;

5. At least 60 per cent of the net tonnage of the operated ships belong to ships that are being navigated under Bulgarian flag or the flag of another EU or EEA-member states.

6. They operate according to the requirements of international conventions and the EU legislation regarding ships navigation safety and security, the environmental protection from ships navigation, and the living and working conditions on board.

Tax on the activity from ships operation is also due by the persons performing marine commercial navigation when they are administering ships based on management contracts, and at the same time are complying with the following conditions:

– they meet the criteria mentioned above in Items 1, 5 and 6;
– more than half of the administrative staff ashore or the crew consists of Bulgarian citizens or citizens of other EU member states or EEA member states;
– at least two thirds of the tonnage of the ships managed are administered by companies that are residents for tax purposes of an EU member state or another EEA member state.

Restrictions to the scope of the tax

The taxable persons are not entitled to apply the procedure for levying the activity from ships operation for:

1. Sea ships with net tonnage below 100 tons;
2. Fishing ships;
3. Entertainment ships, except for passenger ships;
4. Ships which the taxable persons have consigned for management or under a bareboat charter contract, except for the cases when the ships are consigned to the state;
5. Installations for extraction of ores and minerals, oil platforms and ships performing dredging, towing and dragging activities.

Legislation

The activity from ships operation is levied with alternative tax pursuant to the Corporate Income Tax Act.

Terms for declaring and paying

§ By 31 December of the previous calendar year – filing a declaration for exercising the right to choose under Art. 259, Par. 1;
§ By the end of each month – paying the tax for the previous month;
§ By 31 March of the next calendar year – filing an annual tax return for the previous calendar year.

Declaring the tax on the net tonnage of ships for the operation days of the ship:

The annual tax return is submitted to the National Revenue Agency’s territorial directorate, where the taxpayer is registered.

Pursuant to Art. 259, Par. 3 of CITA, when submitting the tax return the taxpayer shall also submit an annual statement of operations. Pursuant to § 1, Item 56 of CITA’s Supplementary Provisions, the annual statement of operations shall be the one under Art. 20, Par. 4 of the Statistics Act.

Download forms:

Template of the declaration under Art.259, Par.1 of CITA.

Annual Tax Return under Art. 259, Par. 2 of CITA for the tax due on the activity from ships operation.

Returns are submitted to:

§ The National Revenue Agency office, where the taxpayer is registered, or
§ By mail with confirmation of receipt

Tax due is paid:

§ Via banks

To state budget accounts of NRA’s territorial directorate, where the taxpayer is registered.

Payment can be made from every bank by filling in a payment order (deposit slip) forpayment to the budget.

! Usually the banks deduct a fee for the transfers. The lowest fee is deducted by the bank where the account of the respective NRA territorial directorate (office) is opened.

§ Via Internet

Payment via Internet requires a debit card and registration on the websites of E-pay and NRA

§ With postal order for tax payment.

The postal order shall specify the address and name of the respective territorial directorate (office) of NRA, the postal code, as well as the amount due.

Sanctions

Pursuant to Art. 261, Par. 1 of CITA, a taxable person that fails to submit the tax return under this law, or fails to submit it in due time, or fails to state data or circumstances, or states false data or circumstances resulting in either a lower amount of the tax or ungrounded abatement, or assignment, or exemption from tax, shall be penalized with a property sanction to the amount of BGN 500 to BGN 3,000. In case of a repeated (§ 1, Item 44 of the Supplementary Provisions) violation under Par. 1 the property sanction shall be to the amount of BGN 1,000 to BGN 6,000 (Art. 261, Par. 2 of CITA).

Pursuant to Art. 277 of CITA the persons who have applied the procedure for levying the activity from ships operation and do not comply with the conditions that entitle them to choose shall be penalized with property sanction to the amount from BGN 20,000 to 30,000, and in case of a repeated violation – to the amount from BGN 40,000 to 60,000. These persons shall not be entitled to apply the procedure for levying the activity from ships operation for the period of 5 years (Art. 277, Par. 2 of CITA).

A taxable person who fails to perform his/her obligations under Art. 259, Par. 3 (to submit an annual statement of operations), shall be penalized with a property sanction to the amount of BGN 500 to BGN 2,000, and in case of a repeated violation – to the amount of BGN 1,500 to BGN 5,000 (Art. 276 of CITA).

The statements for establishing the administrative offences shall be drafted by the National Revenue Agency authorities, and the penal rulings shall be issued by the Executive Director of the National Revenues Agency or an official authorized by him/her (Art. 278, Par. 1 of CITA).

Pursuant to Art. 278, Par. 2 of CITA the establishing of offences, issuing, appealing and execution of penal rulings shall be done under the procedure of the Administrative Offences and Sanctions Act.

20 July 2011

BulgariCo today introduced several products that in combination represent a complete outsourcing solution for our Romanian customers. It becomes apparent that many Romanian businesses consider if not relocating to Bulgaria to have a parallel Bulgarian operation that helps them optimise their taxes within the boundaries allowed by the law.

BulgariCo professionals pay regular visits and conducts sessions with potential customers both in Rousse and Bucharest.

Should you request a face to face meeting regarding this or our other products please feel free to contacts us at office@bulgarico.com

New Hellenic Products

July 19th, 2011

19 July 2011

BulgariCo is launching three new products to address the needs of our Hellenic clients arising from:

– the ongoing financial crisis in the country and
– the reactions of the fiscal authorities there.

The products are specifically targeted at addressing recently introduced normative regulations some of which are breaching the EU law and are expected to be challenged at EU level. Notwithstanding this, interim conditions need to be handled appropriately.

As a result of the fiscal clamp Greek business are now not only relocating their headquarters to Sofia, but moving jobs North of the boarder to Bulgaria.

Our products are in the areas of:

– Cross-border asset relocation
– Cross-border business set-up and outsourcing
– Individual (personal) relocation to Bulgaria

With corporate tax level of 10% and personal tax rate of 10% Bulgaria is turning into second homeland to Hellenic people with whom historical, cultural and economic relations abound.

Give us a call at +359 89 2217417 or write us to hellenico@bulgarico.com.

NB: English is the main language of our office but we can arrange for interpreters as well.
NB: Seminars and working sessions are organized in Petrici. You can book a time slot in advance. Free half an hour advice is rendered.

14 February 2011

Here you can download the Convention for Avoidance of Double Taxation signed between USA and Bulgaria.

Our comments and discussion will follow shortly.

Bulgaria. The Right EU Location

February 9th, 2011

09 February 2011

InvestBulgaria Agency (IBA) – the government investment promotion agency under the Ministry of Economy, Energy and Tourism has released a brochure investment climate and business opportunities in Bulgaria.

You can download the brochure here.

Sofia. The History of Europe

January 25th, 2011

05 October 2010
Greek investments in Bulgaria hit 37.5 million euro in three months alone

It seems that Greece, which is currently coping with serious economic challenges, has seen an investment heaven in Bulgaria. Over the first three months of 2010, Greek companies have invested in Bulgaria a total of 37.5 million euro, against only half a million euro for the same period of last year.

According to a publication in the Greek newspaper Impersia, this investment boom means that the Greek businessmen are seeking a secure place for their money and Bulgaria appears more attractive to them than their home market. According to Greece’s statistical watchdog, the volume of the trade exchange between Bulgaria and Greece hit 414.1 million euro in the first trimester of 2010.