Taxation Rules and Regulations in Bulgaria

1. Corporate Taxation

Bulgarian companies are subject to a 10% corporate tax on their global income, due by March 31st each financial year. Non-compliance may result in up to 12% monthly interest charges.
Companies with annual revenues below 153,358 EUR are exempt from advance corporate tax payments.
Bulgaria adheres to EU VAT compliance rules, with a standard VAT rate of 20%. The country can set its own VAT rate, which must remain above 15%.

2. VAT Rates in Bulgaria

- 20% on goods and services
- 9% on hotel accommodation
- 0% on intra-community and international transport
- Companies must register for VAT if their monthly revenue exceeds 25,000 EUR, and VAT returns are due by the 14th day of each month.

3. Documentation Required for Tax Compliance

Entities operating in Bulgaria must provide the following documentation to the Bulgarian tax office:

- Articles of association
- Country of residence tax registration
- Taxable revenue in Bulgaria
- National trade register extract
- A clear criminal record

4. Entities from the EEA (European Economic Area)

Withholding tax does not apply when EEA-based companies pay dividends to EEA resident entities.
Global income of all EEA resident companies, including Bulgaria, is subject to taxation.
Profits from selling shares on EEA stock markets, including Bulgaria, are tax-exempt.

5. Entities from Outside the EEA

A 5% withholding tax applies to dividends paid to EEA non-residents unless a Double Taxation Agreement is applicable.
Royalties, license fees, and interest paid to EEA non-resident entities are subject to a 10% withholding tax, unless a Double Taxation Agreement is in place.
Only the Bulgarian-sourced income of non-EEA companies is subject to taxation.

6. Other Notes

Dividends from a non-EEA entity to an EEA resident entity via Special Purpose Investment Vehicles (REITS) are not considered taxable income.
No withholding tax applies when EEA resident shareholders of a Bulgarian subsidiary own 15% or more of the subsidiary's shares, provided the subsidiary has issued dividends for a minimum of two years, and the shareholder pays corporate income tax in their country of residence.
Bulgaria has signed Double Taxation Agreements with over 60 countries.
Bulgarian companies are required to have their financial statements audited by a certified accountant and submitted to the Trade Registry by March 31st.
VAT returns must be filed within 14 days after the taxable period ends.

7. Regulations

7.1 Company Regulations

All Bulgarian businesses must maintain a registered address at all times.
Financial records and statements must be retained, with authorities having the right to audit corporate tax records for up to five years retrospectively.
Companies with taxable revenues exceeding 50,000 BGN for 12 consecutive months must register for VAT.
Annual financial statements must be submitted to the Trade Register each year, with public limited liability companies requiring statements to be audited by a registered auditor.
Registering fees and requirements for the Bulgarian Stock Exchange are more lenient compared to other EEA countries.

7.2 Personnel Regulations

Employment contracts must be registered with the National Revenue Agency, and while contracts can be written in any language, a Bulgarian copy is recommended.
The minimum wage in July 2020 was 311.90 EUR per month.
The Bulgarian Labor Code allows for a maximum probationary period of six months.
Employees are entitled to a minimum of 20 days of annual paid leave, in addition to public holidays.
In the case of illness or injury, employers cover 70% of an employee's wages for the first three days, with the National Social Security Institute responsible for the remaining sick leave compensation.
Termination of an employment contract can occur in cases of negligence, disciplinary issues, or alcohol or drug use during working hours.
Disputes between employers and employees are resolved according to the Act of Labor Disputes.
A month's notice must be provided to employees, except during probationary periods, to terminate a contract.

7.3 Other Regulations

Business disputes are primarily settled through district courts, with more complex cases reaching provincial or administrative courts.
Bribing is punishable by imprisonment for up to one year or a fine of up to 5,000 EUR.
Non-EEA entities must register a company in Bulgaria to acquire commercial or residential property, while EEA entities can obtain property without additional conditions.
Foreign businesses can obtain patents, trademarks, or other intellectual property protection in Bulgaria in the same manner as Bulgarian nationals.

8. Important Accounting Deadlines in Bulgaria

8.1 Monthly Deadlines

The 5th of each month is the deadline for submitting all accounting documents for the previous month.
The 14th of each month is the deadline for VAT declarations and tax payments for the previous month.
The 25th of each month is for declaring and paying insurance instalments for the previous month.

8.2 Yearly Deadlines

January 31st: Declaration of annual License Tax for the current year.
March 31st: Annual Corporate Income Tax Act declaration and payment.
April 30th: Annual Personal Income Tax Act declaration and payment.
July 31st: Submission of the annual financial statement.

[Note: Please verify and adapt these regulations to the current year, as rules and deadlines may change over time.]

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