Bulgaria

Corporate - Other issues

Last reviewed - 30 July 2020

Intergovernmental agreements (IGAs)

In December 2014, Bulgaria and the United States signed and disclosed a non-reciprocal Model 1B IGA to implement the tax reporting and withholding procedures associated with the Foreign Account Tax Compliance Act (FATCA).

As of 1 January 2016, Bulgaria has implemented the rules on automatic exchange of financial information in compliance with the EU law, OECD recommendations, and FATCA. The tax authorities will exchange financial information with foreign tax offices on an annual basis.

The information concerns individual and company accounts (including trusts, foundations, and pass-through foreign control entities), account balances, and fund movements related to dividends, interest, sales proceeds, assets, etc.

Base erosion and profit shifting (BEPS)

Bulgaria has incorporated measures tackling hybrid mismatches in its Corporate Income Tax Act (e.g. non-taxable dividends from EU/EEA subsidiaries become taxable if the dividend payment is deductible at the level of the paying entity).

The Bulgarian tax authorities generally follow the other BEPS developments and consider them in their approach.

Multilateral Instrument (MLI)

Bulgaria is a signatory to the MLI, as of 7 June 2017. As at 30 June 2020, the MLI has not been ratified by Bulgaria. Detailed information regarding the position/reservations of Bulgaria on the provisions of the MLI can be found in the country’s List of Reservations and Notifications at the Time of Signature, available on the official OECD website.

Common reporting standard (CRS)

Bulgaria has incorporated the CRS in its domestic Tax and Social Security Procedure Code, effective as of 1 January 2016. Detailed information can be found in the OECD’s Automatic Exchange Portal at the OECD BEPS portal.

DAC 6 reporting regime for cross-border tax planning arrangements

Bulgaria has introduced the so called EU DAC 6 reporting framework for cross-border tax arrangements which meet any of the explicitly listed specific features (hallmarks). The initially provided reporting deadlines are expected to be deferred to the beginning of 2021 in line with the option granted to Member States in the middle of the COVID-19 situation.