Bulgaria

15% global minimum tax adopted in Bulgaria as of 1 January 2024

While Bulgaria is keeping its standard 10% nominal corporate income tax (CIT) rate, starting 1 January 2024, Bulgarian entities in scope of the so-called ‘global minimum tax’ will be subject to a minimum effective tax rate of 15%.

The law implementing the European Union (EU) Global Minimum Tax Directive was finally voted by the Bulgarian Parliament on 12 December 2023.

New and complex rules are introduced in the Bulgarian CIT Act to determine the effective tax rate (calculated on an aggregate basis for all entities in a given jurisdiction) and top-up taxes due (where the effective tax rate for a jurisdiction is below 15%).

Ever since the publication of the draft bill in September 2023, the key debate was around some important reliefs allowed under the EU Directive that Bulgaria refused to introduce. After strong reactions from businesses, the Parliament granted at least a partial relief for capital investments in fixed assets in Bulgaria.

The complex Pillar Two legislation will impact many large businesses in Bulgaria. Companies should prioritise the analysis of the financial and administrative impact of the new rules on their business organisation.

Public country-by-country (CbC) reporting adopted in Bulgaria as of 1 January 2025

The EU Directive on Public CbC Reporting has been recently implemented into the local legislation. The Directive is applicable to both EU-headquartered multinational enterprises (MNEs) and non-EU-headquartered MNEs doing business in the European Union through a subsidiary or branch with a total consolidated revenue of more than 1.5 billion Bulgarian lev (BGN) (750 million euros [EUR]).

Based on the legislation, MNEs would be required to publicly disclose certain tax-related information broken down by EU member states, non-cooperative jurisdictions, and all other jurisdictions on an aggregated level. Such information should be disclosed for the financial years starting on or after 22 June 2024. Accordingly, the first financial year subject to disclosure will be 2025 for companies using the fiscal year-end of 31 December. 

Adjustment of input value-added tax (VAT) credit for scrapping or loss of goods

Taxpayers will no longer need to make adjustments of VAT credit in the case of (i) duly proved or confirmed destruction of goods, including as a result of scrapping due to objective obsolescence, and (ii) scrapping when the goods are sold as a taxable supply. Prior to the changes, the VAT Act required such adjustments unless other exceptions were applicable. Due to this, there may be opportunities to apply for refund of VAT paid in similar situations for past periods.

Changes in the threshold for VAT registration  

From 1 January 2025, the VAT registration threshold will be increased to BGN 166,000.

Changes to the reduced VAT rates

The reduced VAT rate of 9% for restaurant and catering services, the use of sports facilities, and general tourist service is extended until the end of 2024 (it was supposed to expire at the end of 2023).

The 0% VAT rate for bread and flour is extended until the end of June 2024 (it was supposed to expire at the end of June 2023).