Legal framework

The levy of corporate tax is governed by the Corporate Income Tax Act.

Corporate tax is leviable on:

- the profits accruing to resident legal persons;

- the profits accruing to resident legal persons which are not traders, including the organisations of the religious denominations, from any transactions under the Commerce Act (Targovski zakon), and from letting movable and immovable property;

- the profits accruing to non-resident legal persons from a permanent establishment in the Republic of Bulgaria.

Unincorporated associations and social insurance schemes are treated as equivalent to legal persons.

Taxable persons

- Resident legal persons which are commercial companies;

- Resident legal persons which are not traders, in respect of their profits accruing from any transactions under Article 1 of the Commerce Act and from letting movable and immovable property;

- Resident unincorporated associations and social insurance schemes established pursuant to Article 8 of the Social Insurance Code (Kodeks za sotsiyalno osiguryavane);

- Non-resident legal persons which carry out economic activity in Bulgaria through a permanent establishment;

- Non-resident unincorporated associations which carry out economic activity in Bulgaria through a permanent establishment.

Persons who are only subject to levy of alternative taxes on the respective activity do not pay corporate tax:

- providers of passenger transport by taxi;

- public-financed enterprises;

- organisers of games of chance, and

- persons engaged in the operation of vessels.

Organisers of games of chance and persons engaged in the operation of vessels are liable for corporate tax in respect of all activities other than those subject to levy of alternative tax. Therefore, such persons are liable for corporate tax in respect of their activities other than those subject to levy of alternative tax.

How to determine the tax financial result

The tax financial result is the accounting financial result adjusted under the procedure of the Corporate Income Tax Act. The positive tax financial result is a tax profit. The negative tax financial result is a tax loss.

Tax base

The tax base for assessment of corporate tax is the tax profit.

Amount of the tax

The corporate tax rate is 10 %.

Declaring

The corporate tax is declared by an Annual Tax Return under the Corporate Income Tax Act on the tax financial result and the annual corporate tax due. The annual activity report, containing statistical summaries and accounting documents, must be submitted together with the annual tax return.

Taxable persons which did not carry out activity within the meaning of the Accountancy Act (Zakon za schetovodstvoto) during the tax period do not submit an annual tax return and annual activity report. An annual tax return is submitted where a liability for corporate tax or a liability for tax on expenses arises for a tax period during which activity was not carried out within the meaning of the Accountancy Act, as well as where a taxable person wishes to declare other data and circumstances provided for in the standard form of the return.

Declaring a tax return

The tax return is submitted by electronic means (online, signed using an electronic signature).

Deadlines for declaring and payment

- An annual tax return must be submitted by 31 March of the following calendar year;

- The corporate tax, after deducting the tax prepayments made, must be remitted by 31 March of the following calendar year.

Corporate tax prepayments

Tax prepayments are not made by:

1. Any taxable persons whose net revenues from sales for the previous year do not exceed BGN 300 000;

2. Any newly formed taxable persons, for the year of their formation, with the exception of any such persons newly formed as a result of a transformation under the Commerce Act.

The corporate tax prepayments are monthly and quarterly. They are determined on the basis of the taxable person’s projected tax profit for the current year.

Monthly tax prepayments: must be made by any taxable persons whose net revenues from sales for the previous year exceed BGN 3 000 000.

Quarterly tax prepayments: must be made by any taxable persons which are not obliged to make monthly tax prepayments. More specifically, these are the persons whose net revenues from sales for the previous year range from BGN 300 000.01 to BGN 3 000 000 inclusive.

Quarterly tax prepayments may also be made by persons which are exempt from tax prepayments, and in this case they are supposed to apply the relevant determining, remittance and declaring procedure, but do not incur penalty interest when the annual corporate tax exceeds the tax prepayments as determined.

Deadlines for remittance

- The monthly tax prepayments for January, February and March must be remitted by 15 April, and the monthly tax prepayments for April to December must be remitted by the 15th day of the current month;

- The quarterly tax prepayments for the first and second quarter must be remitted by the 15th day of the month following the end of the quarter, and the quarterly tax prepayments for the third quarter must be remitted by 15 December. No tax prepayment is made for the fourth quarter.

Declaring

Tax prepayments are declared by the annual tax return for the previous year.

A declaration must be submitted in case of a change (increase or decrease) made in the amount of the tax prepayments declared by the annual tax return for the previous year. This is the declaration on changes of tax prepayments and the initial declaration of quarterly tax prepayments. There is no explicitly set deadline for submitting the declaration on changes of tax prepayments, but the changes of the prepayments may not be enjoyed until such declaration has been submitted. When quarterly tax prepayments are initially declared, the declaration must be submitted by the deadline for making the first tax prepayment.

Any such declaration must be submitted by electronic means, signed using an electronic signature.

Legal framework

The levy of tax on expenses is governed by the Corporate Income Tax Act.

A final tax on expenses is levied on the following expenses supported by documents:

1. Any business entertainment expenses.

2. Any expenses on fringe benefits provided in kind to factory and office workers and to persons hired under a management and control contract. The expenses on fringe benefits provided in kind furthermore include:

- the expenses on contributions (premiums) for supplementary voluntary social insurance, for voluntary health insurance and for life insurance;

- the expenses on food vouchers.

Any expenses on fringe benefits, which are not provided in kind and which constitute income of a natural person, are taxed under the conditions and the procedure of the Income Taxes on Natural Persons Act.

3. The expenses in kind associated with own assets, leased assets and/or assets provided for use, provided for personal use and/or associated with use of staff, by factory workers, office workers and persons hired under management and control contracts (hired persons), as well as by persons performing work in person.  Employers have the option to choose taxation under the procedure of the Corporate Income Tax Act for the income in kind constituting expenses in kind. Normally, this option is exercised via the annual tax return under the Corporate Income Tax Act for the previous year.

The option exercised furthermore applies to all natural persons who use corporate assets for private purposes.

The income in kind which is taxed under the procedure of the Corporate Income Tax Act is not included in the natural persons’ taxable income.

Taxable persons

1. The tax on entertainment expenses is paid by the persons who are subject to levy of corporate tax.

2. The tax on expenses on fringe benefits provided in kind is paid by all employers or commissioning parties under management and control contracts.

3. The tax on expenses in kind is paid by all employers or commissioning parties under management and control contracts or under legal relations for performing work in person, if these persons have exercised their option under the procedure of the Corporate Income Tax Act for the taxation of the income in kind constituting expense in kind.

Exemption from taxation

1. No tax is levied on any expenses on fringe benefits incurred on contributions (premiums) for supplementary voluntary social insurance, for voluntary health insurance and for life insurance in an amount not exceeding the amount of BGN 60 per month per hired person, where the taxable person does not incur any coercively enforceable public obligations by the end of the month during which the expenses are charged.

2. No tax is levied on any expenses on fringe benefits incurred on food vouchers where the amount of such expenses does not exceed BGN 60 per month per hired person, where the following conditions are simultaneously fulfilled:

- the agreed basic monthly remuneration of the person in the month of the provision of the vouchers is not less than the average monthly agreed basic remuneration of that person for the previous three months;

- the taxable person does not incur any coercively enforceable public obligations by the time of the provision of the vouchers;

- the vouchers are provided to the taxable person by a person which has obtained authorisation to carry on operator business from the Minister of Finance on the basis of a competitive procedure.

3. No tax is levied on any expenses on fringe benefits incurred on transportation of factory and office workers and of persons hired under a management and control contract from the place of residence to the place of work and back. The exemption does not apply to expenses on transportation carried out by passenger car or by extra bus services, except in the cases where such transportation is carried out by passenger car to inaccessible and remote areas and the taxable person cannot ensure the implementation of its activity without incurring this expense.

Amount of the tax

The rate of the tax on expenses is 10 %.

Declaring of the tax

There is no separate standard form of a return for the tax on expenses. The tax on expenses is declared by the annual tax return submitted by the taxable person.

Deadlines for payment of the tax

The tax on expenses must be paid by 31 March of the following calendar year.

The levy of an alternative tax on the operation of vessels is governed by the Corporate Income Tax Act.

Taxable persons have the option to choose taxation of their the operation of vessels by a tax on the operation of vessels. The taxable persons which have opted for taxation under this procedure are taxed for a period of not less than 5 years.

The taxable persons are subject to levy of corporate tax in respect of all activities other than those on which the alternative tax is leviable.

Taxable persons 

Persons which carry out maritime merchant shipping, where they simultaneously fulfil the following conditions:

1. they are companies registered under the Commerce Act, or permanent establishments of a company which is resident for tax purposes in another Member State of the Economic Union or a Member State of the European Economic Area, in accordance with the relevant tax legislation and by virtue of a convention for the avoidance of double taxation with a third country is not considered to be resident for tax purposes in another State outside the European Union or the European Economic Area;

2. they operate their own vessels or chartered vessels, and they charter vessels;

3. they do not refuse to train apprentices on board the vessels, with the exception of the cases where the number of apprentices exceeds one per 15 officer members of the ship’s complement;

4. they man their vessels with Bulgarian citizens or with nationals of other Member States of the European Union or of the European Economic Area;

5. vessels flying the Bulgarian flag or a flag of another Member State of the European Union or of the European Economic Area account for at least 60 % of the net tonnage of the vessels operated;

6. they carry out their activity in conformity with the requirements of the international conventions and European Union law regarding the safety and security of navigation, protection of the environment from pollution by vessels and the living and working conditions on board the vessel.

Persons carrying out maritime merchant shipping where managing vessels on the basis of management agreements and simultaneously meeting the following requirements:

1. they are companies registered under the Commerce Act, or permanent establishments of a company which is resident for tax purposes in another Member State of the Economic Union or a Member State of the European Economic Area, in accordance with the relevant tax legislation and by virtue of a convention for the avoidance of double taxation with a third country is not considered to be resident for tax purposes in another State outside the European Union or the European Economic Area;

2. vessels flying the Bulgarian flag or a flag of another Member State of the European Union or of the European Economic Area account for at least 60 % of the net tonnage of the vessels operated;

3. they carry out their activity in conformity with the requirements of the international conventions and European Union law regarding the safety and security of navigation, protection of the environment from pollution by vessels and the living and working conditions on board the vessel;

4. more than half of the office on-shore personnel or of the crew is composed of Bulgarian citizens or of nationals of other Member States of the European Union or of the European Economic Area;

5. at least two-thirds of the tonnage of the vessels managed is managed by companies which are resident for tax purposes in a Member State of the European Union or in another State that is party to the Agreement on the European Economic Area.

Restrictions on the scope of the tax

The taxable persons do not have the right to apply the procedure for taxation of the operation of vessels in respect of:

- any seagoing vessels of a net tonnage under 100 tons;

- any fishing vessels;

- any pleasure vessels, with the exception of passenger vessels;

- any vessels which the taxable persons have provided for management or under a bareboat charter, except where any such vessels have been provided to the State;

- any rigs for the extraction of subsurface resources, any oil production platforms, and any vessels engaged in dredging operations and in tugging and towage operations.

Amount of the tax

The rate of the tax on the operation of vessels is 10 %.

Declarations

- The option for levy of a tax on the operation of vessels is exercised by the submission of a declaration under the Corporate Income Tax Act. 

- The tax is declared by an annual tax return on the tax on the operation of vessels due. An annual activity report, containing statistical summaries and accounting documents, must be submitted together with this return.

Deadlines for declaring and payment

- A declaration on exercise of the option must be submitted by 31 December of the previous calendar year.

- An annual tax return must be submitted and the tax due for the previous calendar year must be remitted by 31 March of the following calendar year.

The declaration is submitted by electronic means, signed using an electronic signature.

Legal frameworks

The levy of a tax for organisers of games of chance is governed by the Corporate Income Tax Act.

Tax on gambling activity of games where the bet consists in the charge for a telephone or another electronic communications service.

Taxable persons 

Organisers of games of chance where the bet consists in the charge for a telephone or another electronic communications service.

Tax base

The increase in the charge for the telephone or another electronic communications service.

Amount of the tax

The rate of the tax for organisers of games of chance is 15 %.

Declaring of the bets made and of the tax

- The organiser of the game of chance must declare the bets made and the tax at the territorial directorate of the National Revenue Agency in the area of the place of his registration by the 10th day of the month following the month of conduct of the games, by means of a return in a standard form.

The declaration is submitted by electronic means, signed using an electronic signature.

- The operator of the telephone or another electronic communications service must declare the bets made and the tax at the territorial directorate of the National Revenue Agency in the area of the place of his registration by the 10th day of the month following the month of conduct of the games, by means of a return in a standard form.

The declaration is submitted by electronic means, signed using an electronic signature.

The tax is declared by a return under the Corporate Income Tax Act on the tax on gambling activity of remotely organised games where the bet consists in the charge for a telephone or another electronic communications service.

Deadlines for remittance of the tax

The tax is withheld and remitted by the operator of the telephone or another electronic communications service by the 10th day of the month following the month of conduct of the games.

The operator of the telephone or another electronic communications service must satisfy itself that the organiser of the game of chance has obtained a licence from the Executive Director of the National Revenue Agency and to present to the territorial directorate of the National Revenue Agency the contract under which the operator takes the bets, incorporating a clause on the increase in the charge for the telephone or another communications service.

Ancillary and auxiliary activities within the meaning of the Gambling Act:

- the income accruing from such activities is subject to levy of an alternative tax at the rate of 12 %;

- the tax must be remitted by 31 March of the following year;

- the tax is declared by a tax return under the Corporate Income Tax Act on the tax due on income accruing from ancillary and auxiliary activities within the meaning of the Gambling Act, which must be submitted by 31 March of the following year at the territorial directorate of the National Revenue Agency in the area of the place of registration of the taxable person.

- the declaration is submitted by electronic means, signed using an electronic signature.

Legal frameworks

The levy of a on the gambling activity of games on gambling machines and games at a gambling casino is governed by the Corporate Income Tax Act.

Taxable persons 

The organisers of games on gambling machines and games at a gambling casino.

Tax assessment and tax amounts

The tax is assessed in respect of the following devices that are entered in the certificate of licence as granted and that are operated:

1. gambling machines at a gambling hall, respectively, each player’s place at such machines;

2. gambling tables and gambling machines at a gambling casino, respectively, each player’s place at such machines.

Amount of the tax:

1. in respect of a gambling machine at a gambling hall and a gambling casino, respectively, each player’s place at such a machine: BGN 500 per quarter;

2. in respect of roulette at a casino per gambling table: BGN 22 000 per quarter for each gambling table;

3. in respect of any other gambling equipment at a casino: BGN 5 000 per quarter for each gambling equipment.

No tax is due for the quarters prior to the grant and after the withdrawal of the licence to organise games of chance played on the relevant gambling equipment. The full amount of the tax is due for the quarter in which the licence to organise games of chance played on the relevant gambling equipment is granted or withdrawn. In the cases where the activity is suspended, the full amount of the tax is due for the quarter during which the activity was suspended or resumed.

Declaring of the tax

The tax is declared by a return under the Corporate Income Tax Act on the tax on the gambling activity of games on gambling machines and games at a gambling casino, including such games that are organised remotely, which is submitted by the 15th day of the month following the end of the quarter. The return is submitted by electronic means (online, signed using an electronic signature).

Remittance of the tax

The tax must be remitted by the deadlines for declaring it.

Legal framework

The tax is governed by the Corporate Income Tax Act.

Taxable persons

A tax withheld at source is levied on:

any dividends and shares in a liquidation surplus, as distributed by resident legal persons for the benefit of:

1. any non-resident legal persons, except where the dividends accrue to a non-resident legal person through a permanent establishment in the country;

2. any resident legal persons which are not traders.

A tax withheld at source is also levied on the following income of non-resident legal persons where not accruing through a permanent establishment in the country:

- Any income from financial assets and from transactions in financial assets issued by resident legal persons, the State and the municipalities;

- Any interest payments, including interest within payments under a finance lease contract;

- Any income from rent or other provision for use of movable property;

- Any copyright and licence royalties;

- Any technical assistance fees;

- Any payments received under franchising agreements and factoring contracts;

- Any compensations for management or control of a Bulgarian legal person;

- Any income from rent or other provision for use of immovable property located in the country;

- Any income from the sale of immovable property located in the country;

- Any remunerations of any non-resident legal persons established in preferential tax treatment jurisdictions for services or rights, except where such services or rights are actually provided;

- Penalties and indemnities of any kind charged to the benefit of any non-resident legal persons established in preferential tax treatment jurisdictions, excluding benefits under insurance policies.

Exemption from taxation

No withholding tax is levied on any dividends and shares in a liquidation surplus where distributed to the benefit of:

- any resident legal person which participates in the capital of the company as a representative of the State;

- any common fund;

- any non-resident legal person which is resident for tax purposes in a Member State of the European Union or in another State that is party to the Agreement on the European Economic Area.

No withholding tax is levied, either, on:

- any income from interest payments;

- any income from the sale of financial instruments.

Tax base of withholding tax

- The tax base for assessment of the tax withheld at source on any income accruing from dividends is the gross amount of the dividends distributed.

- The tax base for assessment of the tax withheld at source on any income accruing from shares in a liquidation surplus is the difference between the market price of the claim by the shareholder or member concerned and the documented cost of acquisition of the shares or interests held by that shareholder or member.

- The tax base for assessment of the tax withheld at source on any income from interest payments under finance lease contracts, where the contract does not stipulate the rate of that interest, is the market rate of interest.

- The tax base for assessment of the tax withheld at source on any income accruing to any non-resident legal persons from acts of sale of financial assets is the positive difference between the selling price of those assets and the documented cost of their acquisition.

- The tax base for assessment of the tax withheld at source on any income accruing to any non-resident legal persons from the sale of immovable property is the positive difference between the selling price and the documented cost of acquisition of that property.

- The tax base for assessment of the tax withheld at source on the income accruing to non-resident persons in all other cases is the gross amount of the income.

Tax rates

1. The rate of the tax on income from dividends and shares in a liquidation surplus is 5 %.

2. The rate of the tax on the rest of the incomes is 10 %.

Declaring of the tax

The tax is declared by means of a declaration in a standard form on taxes due.

The persons who or which are required to withhold and remit the tax at source must declare the tax due for the quarter by a declaration in a standard form before the end of the month following that quarter. This declaration must be submitted to the territorial directorate of the National Revenue Agency in the area where the payer or the income is registered or subject to registration.

Where the payer of the income is not subject to registration, the tax declaration must be submitted to the Sofia Territorial Directorate of the National Revenue Agency.

In cases where the payer of the income is a person who or which is not obliged to withhold and remit a tax, the declaration must be submitted by the recipient of the income.

The declaration by electronic means, signed using an electronic signature.

A certificate on the tax remitted according to the procedure established by this Act on income accruing to non-resident legal persons is issued in a standard form at the request of the interested party. Any such certificate shall be issued by the territorial directorate of the National Revenue Agency where the declaration is submitted or is subject to submission.

Deadlines for remittance of the tax

Any payers of income withholding the tax at source must remit the taxes due no later than at the end of the month following the end of the quarter during which the decision on distribution of dividends or of shares in a liquidation surplus was made.

Any payers of income withholding the tax at source are required to remit the taxes due not later than at the end of the month following the end of the quarter of charging of the income.

The tax due must be remitted to the relevant territorial directorate of the National Revenue Agency in the area of the place of registration of the payer of the income or where that payer is subject to registration. Where the payer of the income is not subject to registration, the tax must be remitted to the Sofia Territorial Directorate of the National Revenue Agency.

Possibility to recalculate withholding tax

Any non-resident legal person, which is resident for tax purposes in a Member State of the European Union or in another State that is party to the Agreement on the European Economic Area, has the right to opt for a recalculation of the tax withheld at source if:

- The income from financial assets issued by resident legal persons, the State and the municipalities has its source inside the country;

- The income from transactions in financial assets issued by resident legal persons, the State and the municipalities has its source inside the country;

- The following income, charged by resident legal persons, resident sole traders or non-resident legal persons and sole traders through a permanent establishment or a fixed base in the country or paid by resident natural persons or by non-resident natural persons who have a fixed base in the country to the benefit of non-resident legal persons, has its source inside the country:

• any interest payments, including interest within payments under a finance lease contract;

• any income from rent or other provision for use of movable property;

• any copyright and licence royalties;

• any technical assistance fees;

• any payments received under franchising agreements and factoring contracts;

• any compensations for management or control of a Bulgarian legal person.

The following income has its source inside the country:

- any income from rent or other provision for use of immovable property, including an undivided interest in immovable property, located in the country;

- any income from the sale of immovable property, including an undivided interest in or a limited right in rem to immovable property, located in the country.

Where the non-resident person opts for a recalculation of the tax withheld at source, such recalculation is made in respect of all incomes realised by that person as listed above.

Where the non-resident person opts for a recalculation of the tax withheld at source on the incomes realised by that person, the tax as recalculated will be equal to the corporate tax which would have been due on such incomes if they were realised by a resident legal person. Where the non-resident person has effected any expenses associated with the incomes referred to in the first sentence, on which a tax on expenses would have been due if these expenses have been effected by a resident legal person, that tax will be added to the amount of the tax as recalculated.

A tax is refunded under the procedure of the Tax and Social-Insurance Procedure Code (Danachno-osiguritelen protsesualen kodeks) by the Sofia Territorial Directorate of the National Revenue Agency.

The procedure for recalculation of the withholding tax does not apply where the non-resident person is resident for tax purposes in any State that is party to the Agreement on the European Economic Area which is not a Member State of the European Union, with which the Republic of Bulgaria:

1. does not have a convention for the avoidance of double taxation that has entered into force, or

2. has a convention for the avoidance of double taxation which has entered into force, which does not provide for:

- exchange of information, or

- cooperation in tax collection.

Legal framework

The rules on insurance premium taxation are laid down in the Insurance Premium Tax Act.

Scope of taxation

An insurance premium tax is levied on insurance premiums under taxable insurance policies on which the risks are assumed by insurers.

Insurance premiums exempt from tax

The following insurance premiums are exempt from tax: insurance premiums under reinsurance and retrocession policies, life and annuity insurance, marriage and birth insurance, life insurance linked to an investment fund, permanent health insurance, capital redemption, supplementary insurance, insurance of goods in international transit, aircraft and ships insurance, third party liability insurance covering the possession and use of aircraft and ships, insurance of goods in international transit.

Taxable persons

The following persons are taxable:

- Insurers registered as a joint-stock company, cooperative, or a third country insurer through a subsidiary registered under the Commerce Act and licensed under the conditions and the procedure of the Insurance Code.

- Insurers from another Member State under the conditions of the right of establishment or the freedom to provide services.

- Tax representatives designated by the insurers operating under the conditions of the freedom to provide services to represent them in connection with the fulfilment of the obligations under the law.

Tax event

A tax event is the receipt of an insurance premium by an insurer under a taxable insurance contract as concluded and, with staggered payment of the insurance premium, each receipt of a part of the insurance premium is treated as a separate tax event. A tax event occurs on the date on which the insurer receives the insurance premium.

The tax becomes payable on the date on which the tax event occurs.

Tax base

The insurance premium tax base is the insurance premium received by the insurer under a taxable insurance contract. With staggered payment of the insurance premium, the tax base is the part of the insurance premium received by the insurer.

The tax base is credited with the bonuses and rebates reimbursed to the insurer under a taxable insurance contract. The bonuses and rebates from the insurance premium as granted are not included in the tax base where they have been granted to the insured person upon the payment of the insurance premium.

Rate of tax

The rate of the insurance premium tax is 2 %.

Assessment of the tax

The amount of the tax is determined by multiplying the tax base by the rate of tax.

Tax period

The tax period for assessing the insurance premium tax payable is the calendar month.

Tax payable for the tax period

The tax payable for the tax period is the difference between the total amount of tax chargeable from the insurer for the tax period and the total amount of the tax on the insurance premiums refunded during the same tax period. The total amount of the tax on the insurance premiums refunded during the same tax period is determined by multiplying by 2 % the amount of the already taxed insurance premiums which have been refunded during that tax period.

Declaring of the tax

Insurers must submit a tax return in a standard form for the previous calendar quarter by the end of the month following that quarter to the territorial directorate of the National Revenue Agency in the area where they are registered.

Tax representatives and insurers from another Member State under the conditions of the right of establishment or of the freedom to provide services must submit a tax return in a standard form on a single occasion for the first tax period for which tax is payable by the end of the following month.

Remittance of the tax

The tax payable for the tax period must be remitted by insurers each month by the end of the following month in revenue to the executive budget by crediting an account of the territorial directorate of the National Revenue Agency in the place where they are registered.

Interest in accordance with the Interest on Taxes, Fees and Other Similar State Receivables Act is recoverable on the tax payable which is not remitted when due.

Any taxable person, who or which fails to submit a return, fails to submit a return when due, fails to state or states untrue data or circumstances resulting in underassessment of the tax payable, is liable to a fine if a natural person or to a pecuniary penalty if a legal person.

Legal framework

The rules on the taxation of the income accruing to public-financed enterprises are laid down in the Corporate Income Tax Act.

Scope of taxation

A public-financed enterprises’ income tax is levied on any income accruing to public-financed enterprise from any transactions under Article 1 of the Commerce Act and from letting movable and immovable property.

Taxable persons

The taxable persons are the public-financed enterprises.

Public-financed enterprises are all persons applying budgets, accounts for financial resources from the European Union and accounts for external funds pursuant to the Public Finance Act, including the National Social Security Institute, the National Health Insurance Fund, the public higher schools, the Bulgarian Academy of Sciences, the Agricultural Academy, the Bulgarian National Television, the Bulgarian National Radio, the Bulgarian News Agency, as well as all other persons that are budgetary organisations whose budgets are included in the State budget, in the municipalities’ budgets, in the budgets of the social security funds, as well as all other legal persons whose financial resources, receipts and payments are included in the consolidated fiscal programme by virtue of a statutory instrument.

Tax base

The public-financed enterprises’ income tax is assessed on an annual tax base which includes the public-financed enterprise’s income accruing from transactions under Article 1 of the Commerce Act and from letting movable and immovable property.

Tax rates

The rate of the municipalities’ income tax is 2 %.

The rate of the income tax for all other public-financed enterprises is 3 %.

Declaring of the tax

Any public-financed enterprises subject to levy of an income tax for the relevant year must submit an annual tax return in a standard form by 31 March of the following year at the territorial directorate of the National Revenue Agency in the area where they are registered.

An annual activity report, containing statistical summaries and accounting documents, must be submitted together with the annual tax return.

Remittance of the tax

The income tax, assessed on the annual tax base, must be submitted by the public-financed enterprises by 31 March of the following year.
Interest in accordance with the Interest on Taxes, Fees and Other Similar State Receivables Act is recoverable on the tax payable which is not remitted when due.

Any taxable person, which fails to submit a return, fails to submit a return when due, fails to state or states untrue data or circumstances resulting in underassessment of the tax payable, in an unjustified tax reduction, retention or exemption, is liable to a pecuniary penalty.

Types of local taxes

The Municipal Council of the municipality concerned determines by ordinance the amount of the taxes under the conditions and the procedure and within the range established by the Local Taxes and Fees Act.

The following local taxes accrue to the municipal budget:

IMMOVABLE PROPERTY TAX

Immovable property tax is levied on the buildings and self-contained works in buildings located within the territory of the country, as well as on the lots which are located within the development limits of nucleated settlements and dispersed settlements, and the lots outside such development limits which are assigned residential, public-services, manufacturing, storage, resort, country-house, sporting or recreational functions by a detailed plan and after the assigned use of the land is altered, where so required by the procedure of a special law.

No tax is levied on any lots occupied by streets, roads of the national and municipal road networks and the railway network, up to the delimiting building lines. No tax is levied, either, on any lots occupied by water bodies constituting State and municipal ownership.

No tax is levied on agricultural land tracts and forests, with the exception of built-up land tracts in respect of the actually built-up surface area and the adjoining ground.

No tax is levied on any immovable properties whose assessed value does not exceed BGN 1 680.

Taxable persons

The following persons are taxable:

- the owners of taxable immovable properties;

- the owners of buildings constructed on State-owned or municipal-owned lots;

- the users, if a right in rem to use has been established;

- the concessionaires, if a concession contract has been awarded.

Declaring

Cases in which a tax return under the Local Taxes and Fees Act must be submitted:

- upon the acquisition of an immovable property;

- upon the establishment of a limited right in rem to an immovable property:

• a building right;

• a right to heighten and extend an existing building;

• a right to use;

• servitudes;

- upon a change of a declared circumstance which is relevant to the assessment of the tax.

The following properties are exempt from payment of immovable property tax, but a tax return on them must nevertheless be submitted:

1. properties constituting public municipal ownership;

2. properties constituting public State ownership, unless allocated for use to another person and that person is not exempt from tax;

3. the community centres (chitalishte);

4. the buildings owned by foreign States which house diplomatic missions and consular posts, on a basis of reciprocity;

5. the buildings appertaining to the Bulgarian Red Cross and to the Red Cross organisations registered in another Member State of the European Union or in another State that is party to the Agreement on the European Economic Area;

6. the buildings of the higher schools and the academies, used for teaching and scientific research;

7. the places of worship and the monasteries intended for religious practice, together with the lots on which they are constructed, where owned by the lawfully registered religious denominations in Bulgaria, as well as the prayer houses together with the lots on which they are constructed, where owned by the lawfully registered religious denominations in Bulgaria;

8. the parks, the sports grounds, the playgrounds and other such properties for public use;

9. the buildings designated as cultural assets, where not used for a for-profit purpose;

10. the museums, the galleries, and the libraries;

11. the properties which are directly used for the operation of public transport;

12. the temporary buildings servicing the construction of a new building or facility, until that new building or facility has been completed and commissioned;

13. the immovable properties the ownership in which has been restituted by law and which are unusable, for a period of five years. The tax on the above-mentioned immovable properties which are used by the State, the municipalities, the public organisations or by commercial companies in which they hold a participating interest, including privatised commercial ones, is payable by the users;

14. the buildings which have been commissioned before 1 January 2005 and which have received a Category B energy consumption class certificate and the buildings which have been commissioned before 1 January 1990 and which have received a Category C energy consumption class certificate, issued under the procedure of the Energy Efficiency Act (Zakon za energiynata efektivnost), as follows:

- for a period of 7 years reckoned from the year following the year of issue of the certificate;

- for a period of 10 years reckoned from the year following the year of issue of the certificate, if they also apply measures to utilise renewable sources for the production of energy to satisfy the needs of the building;

15. the buildings which have been commissioned after 1 January 1990 and which have received a Category C energy consumption class certificate before 1 January 2005 and the buildings which have been commissioned before 1 January 1990 and which have received a Category D energy consumption class certificate, issued under the procedure of the Energy Efficiency Act, as follows:

- for a period of 3 years reckoned from the year following the year of issue of the certificate;

- for a period of 5 years reckoned from the year following the year of issue of the certificate, if they also apply measures to utilise renewable sources for the production of energy to satisfy the needs of the building.

The exemption from tax is subject to the condition that the properties are not used for a for-profit purpose unrelated to their core activity.

Properties on which a tax return is not submitted:

- Any lots occupied by streets, roads of the national and municipal road networks and the railway network, up to the delimiting building lines;

- Any lots occupied by water bodies constituting State and municipal ownership;

- Any agricultural land tracts and forests, unless built-up.

Deadlines for submission of the declaration

2 months after the date of acquisition of the property or of the commissioning of the buildings or 6 months after the opening of the succession (if the property is acquired by inheritance). Penalties are imposed for late submission or for declaring untrue data concerning the levy of immovable property tax.

Deadlines for payment of immovable property tax

Until 30 June and until 31 October, in two equal instalments, in the year for which the tax is due. When the entire tax due for the year is paid by 30 April, a rebate of 5 % on the amount due is granted.

When an immovable property is transferred or where rights in rem to an immovable property are established, the tax due until the transfer or establishment of the rights, including for the month of the transfer or establishment, must be paid by the transferor or the person establishing the rights before the transfer or the establishment of the rights.

Tax reliefs

A rebate of 50 % applies to the tax due on any property which is used as a main residence. A rebate of 75 % applies to the tax due on any property which is used as a main residence by persons who have lost between 50 and 100 % of their working capacity.

INHERITANCE TAX

Inheritance tax is levied on the estates devolved by legal or testamentary succession in Bulgaria or abroad to Bulgarian citizens, and on the estates of foreign nationals which are located in Bulgaria. The estates of stateless persons are taxed as estates of Bulgarian citizens if those stateless persons are permanently resident in the territory of Bulgaria.

A deceased person’s estate incorporates the movable and immovable property owned by the ancestor and the rights to any such property, and the ancestor’s other property rights, receivables and liabilities at the time of the opening of the succession, unless otherwise provided by a law. Inheritance tax is furthermore levied on any property devolving directly on a third party in contemplation of the ancestor’s impending death pursuant to a contract concluded by the ancestor.

The following is exempt from inheritance tax:

- the estate of those who have fallen for the Republic of Bulgaria or in the line of duty, or who have perished in industrial accidents and natural disasters;

- the estate settled on the State and the municipalities;

- the estate settled on the Bulgarian Red Cross, the lawfully registered religious denominations in Bulgaria, the community centres (chitalishte) and other legal persons which are not traders, with the exception of the non-profit organisations designated for the pursuit of private-benefit activities; . any ordinary household furnishings;

- any small farm implements;

- any libraries and musical instruments;

- any works of art whose author is the ancestor, any of the heirs or any lineal relative of theirs up to any degree of consanguinity, or any collateral relative of theirs up to the fourth degree of consanguinity;

- the ancestor’s unclaimed pensions;

- the estates of Bulgarian citizens located abroad, in respect of which inheritance tax has been paid in the respective State.

If any two persons, of whom one is heir to the other, have died simultaneously or in immediate succession, no tax is due on the portion acquired by the deceased heir.

Declaring and remittance of the tax

An inheritance tax return must be submitted :

- within 6 months of the opening of the succession (applicable to heirs who are the ancestor’s spouses, parents or siblings);

- within 6 months of becoming aware of the opening of the succession (applicable to other legal or testamentary heirs);

- 6 months of delivery of possession (applicable to heirs of persons declared absent by the court at the time when the person was last heard from);

- from the birthday of an heir who was conceived at the time of opening of the succession.

Applicable to heirs who missed the deadlines owing to unawareness of the opened succession: 1 month of becoming aware.

A penalty is imposed for late submission or for declaring untrue data.

Deadlines for payment of inheritance tax

The tax must be paid within 2 months of the service of the notice of the amounts due on the legal heir/testamentary heir or within 1 month, where the tax must be withheld by a bank, an insurance company or another keeper of money deposited by the ancestor. When the inherited estate comprises a sole trader’s enterprise, a participating interest in a general partnership, shares and interests representing more than 50 % of the capital of commercial companies, the tax due may be paid within 1 year of the opening of the succession together with statutory interest, which begins to accrue after the expiry of the two-month time limit.

GIFT TAX AND TAX ON ONEROUS ACQUISITION OF PROPERTY

Object of taxation

Any properties acquired by donation and any onerously acquired immovable properties, limited rights in rem to such properties and motor vehicles are subject to levy of tax.

Any properties acquired gratuitously in any manner other than by donation, and any liabilities extinguished by remission, are also subject to levy of a tax in the same amount as gift tax.

A tax upon gratuitous acquisition of properties is also due when immovable properties and limited rights in rem to such properties are acquired by prescription.

No tax is levied on any motor vehicles which have been acquired before being first registered for operation within Bulgaria, and where the transfer fulfils an obligation imposed by a law or in pursuance of an act of the Council of Ministers on the gratuitous allocation of properties to investors under priority investment projects.

No tax is levied on any properties acquired by donation between lineal relatives and between spouses.

Taxable persons

The tax must be paid by the transferee of the property and, in the case of exchange, by the person acquiring the more valuable property, unless otherwise agreed. In case it has been agreed that the tax is due by both parties, they are liable jointly. If the parties have agreed that the tax is due by the transferor, the other party stands surety.

Where the transferee of the property is abroad, the transferor is liable for the tax.

The base for assessment of the tax is the assessed value of the property in lev terms at the time of the transfer, and upon acquisition by prescription, the base is the assessed value of the property in lev terms at the time of issue of the recordable instrument attesting to the right of ownership.

Tax base

The basis for determining the tax is the valuation of the property in BGN at the time of the transfer. The property is valued as follows:

- the real estates and the limited real rights over them are valued at the agreed price or at a price determined by a state or municipal body, and if it is lower than the tax assessment - at the latter, according to an appendix to the law;

- vehicles - by insurance value.

Tax rates

In case of remunerative acquisition of property, the tax is determined by the municipal council in the amount of 0.1 to 3 percent on the assessment of the transferred property.

Deadlines for the payment of tax levied on the free-of-charge acquisition of property

This tax is paid to the municipality on whose territory the relevant piece of immovable property is located. Failing that, it is paid to the municipality in which the taxable person has their permanent address [if they are a natural person] or its seat [if it is a legal person]. Persons who do not have a permanent address pay their tax [to the municipality] where they have their current address. The tax is paid either when ownership of the property is transferred or when the relevant property deed is issued (in accordance with the statutory time period) and entered in the relevant register. In all other cases, property acquired free of charge must be declared and the tax due for its acquisition must be paid within two months of the transfer of ownership.

The following are exempt from the tax above

Property acquired by or by means of:

- the central government and the municipal administrations;

- educational, cultural and academic organisations receiving public financing, institutions specialising in the provision of social services and medical and residential care facilities for children;

- the Bulgarian Red Cross;

- the national organisations of and for people with disabilities;

- funds providing relief to victims of natural disasters and financing the conservation and restoration of historical and cultural landmarks;

- medical treatment facilities regulated under the Medical Treatment Facility Act;

- donations for the medical treatment of EU nationals or nationals of other States that are parties to the Agreement on the European Economic Area (EEA Agreement) and for technical aids meant for persons with disabilities;

- charitable donations for persons whose working capacity has been reduced by 50 % or more and for low-income [Bulgarian] nationals;

- donations for non-profit organisations receiving subsidies from the budget of the central government and non-profit organisations entered in the central register of non-profit organisations, where these donations are meant to fund their work in the interest of the public (both donations received and made);

- regular gifts;

- property transferred free of charge in the fulfilment of a statutory obligation; donations made to community centres (chitalishte);

- pieces of property acquired according to the procedure set out in the Privatisation and Post-privatisation Control Act; in-kind contributions to the capital of a trading company, a cooperative or a non-profit organisation;

- other countries, where the acquisition of immovable property is concerned and reciprocal arrangements apply;

- assistance provided free of charge under the terms and according to the procedure set out in the Art Sponsorship Act.

CIRCULATION TAX

Circulation tax is levied on all vehicles with a registration enabling them to use the road network in the Republic of Bulgaria. This tax is paid by vehicle owners. Vehicle owners may claim their right to tax exemption or tax relief by lodging a dedicated tax return. Where a vehicle is deregistered, the taxable person holding ownership of it submits a document attesting to the deregistration to the competent authority.

Tax base

Municipal councils are responsible for fixing the amount of circulation tax payable for each type of vehicle:

- passenger and commercial vehicles with a technically permissible maximum mass of 3.5 tonnes: the tax amount is calculated based on a formula which comprises a property component and an environmental component. The property component is calculated by adjusting the vehicle’s engine power using a factor reflecting the vehicle’s year of manufacture. The value of the environmental component depends on the emission standard met by the passenger or commercial vehicle with a technically permissible maximum mass of 3.5 tonnes;

- trailers intended for use with passenger vehicles: per trailer;

- mopeds (per moped) and motorcycles (per motorcycle, depending on its engine capacity);

- tricycles referred to in Article 4 of Regulation (EU) No 168/2013: per tricycle, depending on its total mass;

- buses and coaches: per bus or coach, depending on its total number of seats;

- commercial vehicles [with a technically permissible maximum mass] exceeding 3.5 tonnes but not 12 tonnes: per 750 kg unit of load capacity or fraction of one;

- tractor units for semi-trailers and road tractors: per tractor unit for semi-trailers or road tractor, depending on the [technically] permissible maximum mass of the combination, the number of axles and the tractor unit or tractor’s type of suspension;

- specialised construction machinery, mobile cranes and other special-purpose vehicles (except trolleybuses): per vehicle;

- mobile cranes with a deadweight exceeding 40 tonnes: per mobile crane;

- tractors: per tractor, depending on its engine power;

- other mobile machinery: per piece of machinery;

- snowmobiles and quadricycles referred to in Article 4 of Regulation (EU) No 168/2013: per vehicle;

- commercial vehicles with a [technically] permissible maximum mass exceeding 12 tonnes: per vehicle, depending on the [technically] permissible maximum mass of the combination, the number of axles and the type of suspension;

- ships: per tonne or fraction of one, in accordance with [the figures in] the register where the ship is entered;

- water jets: per water jet;

- sailboats and motorboats: per tonne or fraction of one;

- water scooters: per kW;

- tugs and pushers: per kW;

- hauled inland waterway vessels: per tonne of maximum permissible loadings;

- planes: per tonne of maximum take-off weight or fraction of one;

- paraplanes: per paraplane;

- hang gliders: per hang glider;

- powered hang gliders: per powered hang glider;

- free balloons: per free balloon;

- sailplanes: per sailplane.

Tax exemption

The following are exempt from circulation tax:

- vehicles owned by State agencies, municipal authorities or organisations receiving public financing that enjoy special traffic privileges, ambulances and fire trucks owned by other entities, as well as [vehicles owned] by the State Agency for Technical Operations used for the discharge of the latter’s statutory obligations;#

- vehicles owned by diplomatic missions and consulates, where reciprocal arrangements apply;

- vehicles owned by the Bulgarian Red Cross and used for its purposes;

- electric cars, motorcycles and mopeds, as well as all electric propelled vehicles falling into categories L5е, L6е and L7е, as defined in Article 4 of Regulation (EU) No 168/2013;

- passenger vehicles owned by persons whose work capacity has been reduced by 50 % or more, where the engine capacity and power of these vehicles do not exceed 2 000 cm3 and 117.64 kW, respectively;

- deregistered vehicles (tax is no longer payable as from the month following the month in which the relevant vehicle was deregistered);

- end-of-life motor vehicles which must be sent for dismantling in accordance with a statutory instrument (tax is no longer payable once these are deregistered and a certificate attesting to their having been sent for dismantling is produced).

Tax relief

Provision has been made for the following types of tax relief:

- For mopeds and motorcycles with an engine power of up to 74 kW (inclusive) and such vehicles meeting the Euro 4 emission standard, the tax payable stands at 20 % less than the standard amount.

- For mopeds and motorcycles with an engine power of up to 74 kW (inclusive) and such vehicles meeting emission standards higher than Euro 4, the tax payable stands at 60 % less than the standard amount.

- For buses, coaches, commercial vehicles, road tractors and tractor units for semi-trailers with engines that meet the Euro 4 emission standard, the tax payable stands at 20 % less than the standard amount.

- For buses, coaches, commercial vehicles, road tractors and tractor units for semi-trailers with engines that meet the Euro 5, Euro 6 and EEV emission standards, the tax payable stands at 50 % less than the standard amount.

- For buses and coaches offering scheduled transport services subsidised by municipalities along lines in urban settlements and sparsely populated mountainous and border regions, the tax payable stands at 10 % less than the standard amount, provided that the vehicles are not used for other purposes.

Where the entry of a motor vehicle in the road vehicle register kept by the Ministry of Interior does not include information on the emission standard it may meet, the vehicle is assumed not to meet any emission standard.#

Declaration obligation

Within two months of any changes to the conditions under which their vehicle(s) are taxed, the owner(s) of said vehicle(s) must declare these to the municipality (a declaration of ownership of a car or truck with a technically permissible maximum mass not exceeding 3.5 tonnes and a declaration of ownership of a road vehicle, excluding cars and lorries with a technically permissible maximum mass not exceeding 3.5 tonnes) in which they have their permanent address or, respectively, their seat. Such changes are in place where:

1. a road vehicle is inherited;

2. a road vehicle is jointly owned;

3. the owner/owners of a road vehicle does/do not have their permanent address or, respectively, their seat in the territory of Bulgaria;

4. grounds to claim entitlement to tax exemption are in place;

5. grounds to claim tax relief are in place, except tax relief in respect of mopeds and motorcycles with an engine power of up to 74 kW (inclusive) and such vehicles meeting the Euro 4 emission standard, buses, coaches and commercial vehicles with a technically permissible maximum mass exceeding 3.5 tonnes, road tractors and tractor units for semi-trailers with engines that meet the Euro 4, Euro 5, Euro 6 and EEV emission standards, where [the entry on the relevant vehicle] in the road vehicle register does not include information on the emission standards that it may meet.

Where vehicles without a registration enabling them to use the road network in the Republic of Bulgaria are concerned, the two months above begin to run as from the date on which they are registered.

Deadlines for submitting the declaration

two months after the acquisition of a motor vehicle (the date of the purchase agreement is used) or after its registration with the Traffic Police (KAT) (the date on the control card is used; for imported motor vehicles).

Where a taxable person fails to observe the deadlines above, this person is imposed a penalty.

Tax payment deadlines

Circulation tax is paid in two equal instalments within the following deadlines:

- by 30 June and

- by 31 October of the year for which it is due.

Where a person pays the full amount of the tax due in advance (by 30 April), 5 % of the amount is deducted.

Circulation tax must be paid in order for a vehicle to be admitted to its annual roadworthiness test. The payment of circulation tax is verified by:

1. running a cross-check using an automated information exchange feature linking the information system of the Ministry of Transport, Information Technology and Communications for electronic registration of the regular roadworthiness tests performed on road vehicles and:

- the information exchange system of the Ministry of Finance, or

- the local taxes and charges administration system of the relevant municipality, or

2. a duly submitted document issued or certified by the relevant municipality.

Circulation tax is paid to the coffers of the municipality in which the owner has their permanent address or its seat. Where the owner does not have their permanent address or its seat in the territory of Bulgaria, circulation tax is paid to the coffers of the municipality in which the vehicle is registered.

PRESUMPTIVE FLATE-RATE TAX

An annual presumptive flat-rate tax is levied on the income of any natural person, including a sole trader, accruing from activities subject to presumptive taxation, where:

- the turnover of said person for the previous year does not exceed BGN 50 000, and

- the person is not registered under the Value Added Tax Act, except where they are registered for the purposes of intra-Community acquisitions.
All types of activities on which presumptive flat-rate tax is levied and the lower and upper limits between which the annual tax amount may vary, as determined by the municipal council, [can be found below]:

General provisions

Persons engaged in activities subject to presumptive taxation are not generally taxed according to the procedure set out in the Law on the Income Taxation of Natural Persons. Instead, the provisions on the various subtypes of withholding tax and the provisions on the taxation of costs set out in the Corporate Income Tax Act apply.

Where, within a single uninterrupted twelve-month period, you opt to terminate you activities subject to presumptive taxation and/or establish a new enterprise engaged in activities subject to presumptive taxation, presumptive flat-rate tax is not levied on the new enterprise, if the sum total of the turnovers of the two enterprises stands at over BGN 50 000 during the period cited. Instead, the new enterprise is taxed for the relevant fiscal year according to the standard procedure set out in the Law on the Income Taxation of Natural Persons.

Where your turnover for the relevant fiscal year exceeds BGN 50 000 or you opt to register under the Value Added Tax Act, you will be taxed according to the standard procedure set out in the Value Added Tax Act.

Presumptive flat-rate tax is levied on each of the activities in the table above individually but also on a group of such activities undertaken by the same person. Where a person engages in the activities cited above at more than one establishment, each establishment is taxed individually.

Declaration obligation

Tax returns in respect of presumptive flat-rate tax are submitted using a standard form and the circumstances relevant to determining the tax amount are stated by 31 January of the relevant year. Where a person starts their business after 31 January, the tax return must be submitted immediately after they have done so.

Where a person has submitted a tax return in respect of presumptive flat-rate tax by 31 January and paid the full amount of tax due determined in accordance with the stated circumstances by said date, 5 % of this amount is deducted.

Within seven days of any changes in the circumstances relevant to determining the tax amount, the person concerned must submit a tax return in respect of presumptive flat-rate tax, detailing these changes. Within seven days of the date on which an enterprise is transferred to a sole trader, both the vendor and the acquirer must submit tax returns.

A tax return is submitted by the end of the month following that in which the circumstances [in the Declaration obligation section] arose.

Declaring a flat-rate tax 

A tax return in respect of presumptive flat-rate tax is submitted to the municipality on whose territory the establishment in which an activity subject to presumptive taxation is conducted is situated. Where the relevant activity is not conducted at a dedicated establishment or the establishment changes, the tax return is submitted to the municipality where the natural person, including the sole trader, has their permanent address.

Where the tax return of a natural person who is not a Bulgarian national is submitted by an authorised representative having their permanent address in Bulgaria, this is done at the municipality where the authorised representative has their permanent address.

In all other cases, the tax return is submitted with Sofia Metropolitan Municipality.

The establishment where an activity is conducted is deemed to change where the change in the location of said establishment during a [fiscal] year results in changes in the relevant tax amount.

Payment of presumptive flat-rate tax

Presumptive flat-rate tax is paid in four equal instalments within the deadlines below:

1. for Q1: by 31 January;

2. for Q2: by 30 April;

3. for Q3: by 31 July;

4. for Q4: by 31 October.

When the presumptive flat-rate tax for [a quarter of] a given fiscal year becomes payable, its amount must be paid not later than seven days after the submission of the relevant tax return. Where the taxable person has failed to submit a tax return, the amount must be paid not later than seven days after the end of the submission deadline for the tax return.

Presumptive flat-rate tax is paid to the coffers of the municipality on whose territory the establishment in which an activity subject to presumptive taxation is conducted is situated. Where the relevant activity is not conducted at a dedicated establishment or the establishment changes, the tax is paid to the coffers of the municipality where the natural person, including the sole trader, has their permanent address.

Tax relief

The following groups of taxable persons on whose activities presumptive flat-rate tax is levied may be granted tax relief, with the groups listed first being considered first:

1. Where they conduct their activity on their own and do not hire workers to assist in or conduct said activity for the duration of the entire fiscal year, natural persons, including sole traders, whose reduction of working capacity stands at 50 % or more, as certified by an effective decision of a competent authority, enjoy a 50 % reduction in their presumptive flat-rate tax.

2. Natural persons, including sole traders, conducting two or three activities subject to presumptive taxation listed in points 1 to 36 of the table above on their own pay only the tax due for the activity to which the highest tax amount corresponds. Where they are engaged in more than three activities, natural persons are not entitled to this tax relief.

3. Where they conduct an activity listed in points 5, 6, 8 to 15, 18 to 20, 25, 27 to 29 and 31 of the table above on their own and do not hire workers to assist in or conduct said activity for the duration of the entire fiscal year, natural persons, including sole traders, who have retired pay 50 % of the presumptive flat-rate tax due for the activity.

4. Persons who use their workplace to train apprentices within the meaning of the Skilled Crafts Act and are engaged in an activity subject to presumptive taxation specified in point 10 of the table above pay 50 % of the presumptive flat-rate tax due for their workplace.

A person is entitled to the tax relief [referred to in point 1 above] for the entire fiscal year during which they suffered their loss of working capacity or during which the validity of the decision is set to expire.

Tax deduction

Where, within a single uninterrupted twelve-month period, you opt to terminate your activities subject to presumptive taxation and/or establish a new enterprise engaged in activities subject to presumptive taxation, tax is not levied on the new enterprise, if the sum total of the turnovers of the two enterprises stands at over BGN 50 000 during the period cited. Where your turnover for the relevant fiscal year exceeds BGN 50 000 or you opt to register under the Value Added Tax Act, the tax amount already paid is deducted from the tax amount payable for the relevant fiscal year according to the Law on the Income Taxation of Natural Persons.

In such cases, the presumptive flat-rate tax for that year is payable by the end of the quarter preceding that in which the circumstances above arose.

CITY TAX

Taxable persons

In this case, the taxable persons are persons that offer overnight stays.

Tax rates

Tax rates may range between BGN 0.20 and BGN 3.00 per night and are set out in dedicated municipal council regulations for the various settlements in a municipality. They further depend on the category of each accommodation establishment and whether it is registered under the Tourism Act.

The amount of tax due

The amount of tax due for a given calendar month is calculated by a municipal administration official on the basis of information obtained from the Single Tourism Information System kept by the Ministry of Tourism. The calculation entails multiplying the number of nights [spent by tourists at accommodation establishments] for this month by the tax rate set by the relevant municipal council.

Tax return submission

By 30 January each year, taxable persons must submit a tax return in respect of the tax amount due for the previous calendar year using a standard form.

Tax payment

Taxable persons must pay the city tax due for a given calendar month by the fifteenth day of the month following that in which the relevant stays took place.

City tax is paid to the coffers of the municipality in which an accommodation establishment within the meaning of the Tourism Act is situated.

Administration of city tax

Municipal administration officials are in charge of assessing and collecting city tax and putting in place precautionary measures to ensure its collection according to the procedure set out in the Tax and Social Security Procedure Code.

TAX ON TAXI SERVICES 

Activities subject to taxation

A tax is levied on taxable persons in respect of taxi services rendered by them or on their behalf.

Taxable persons

The taxable persons referred to in this section are all carriers holding a registration certificate issued by the Executive Director of the Road Transport Administration Executive Agency and a permit to offer taxi services issued by the mayor of the relevant municipality according to the procedure set out in the Road Transport Act.

A tax is levied on the taxable persons in respect of taxi services rendered by them or on their behalf.

Taxable persons must pay a tax on taxi services for each vehicle for which a permit to offer taxi services has been issued.

Tax rates

The tax rate for each year is set out in a dedicated regulation of the relevant municipal council and may range between BGN 300 and BGN 1 000. Taxable persons must pay the amount set by the relevant municipal council for each vehicle in respect of which a permit to offer taxi services has been issued.

Tax return submission and tax payment

Before receiving the permit issued pursuant to the Road Transport Act, taxable persons must submit a standard tax return on the tax amount due to the municipality for whose territory the permit to offer taxi services has been issued. The tax return must state the circumstances relevant to determining the tax amount.

Within seven days of any changes in the circumstances relevant to determining the tax amount, the taxable person must submit the tax return, detailing these changes. Within seven days of the date on which the transfer of an enterprise to a sole trader is entered in the commercial register of a municipality, both the vendor and the acquirer must submit tax returns.

The tax amount due is paid before a taxable person receives their permit to offer taxi services issued pursuant to the Road Transport Act. Any excess tax amounts paid are reimbursed after the taxable person submits a written request in accordance with the procedure set out in the Tax and Social Security Procedure Code.

Municipalities collect local charges in respect of the following:

- household waste;

- the use of retail and wholesale markets, fairs, sidewalks, squares and streets;

- the use of [services offered by] crèches, baby-food kitchens, kindergartens, camps, dormitories and the use of social services financed from municipal budgets;

- the provision of meals to children in compulsory pre-school education (to complement schemes financed from the State budget);

- technical services;

- administrative services;

- purchase of burial plots;

- general support activities within the meaning of the Pre-school and School Education Act, where these are not financed from the State budget and are implemented by personal development support centres;

- dog ownership;

- other statutory local charges.

Municipal councils are responsible for setting rates for all services and entitlements provided by municipalities. The use of public sidewalks, squares and streets or parts of these as paid or free parking areas within the meaning of the Road Traffic Act is governed by dedicated regulations adopted by municipal councils.

The rates of local charges are calculated based on the necessary logistics and administrative costs incurred in the provision of the relevant services.

Local charges may be simple or pro rata. They may be paid via a cashless payment, in cash or by means of municipal revenue stamps within the periods and according to the procedure set out in the Local Taxes and Charges Act.