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Generic Tax Name Corporate income tax
Tax name in the national language Корпоративен данък
Tax name in English Corporate income tax
Member State BG-Bulgaria
Tax in force since 1998/01/01
If abolished, date on which the tax ceases to apply
Business version date 2015/01/01
Version date 2015/02/17
This file was last updated on

Type of tax
Direct taxes Personal income tax
Corporate income tax
Other

Indirect taxes VAT
Excise duty (EU harmonised)
Alcoholic beverages
Energy products and electricity
Manufactured tobacco
Other

Social security contribution Employers
Employees
Other
 
Legal base

Promulgated, State Gazette No. 105/22.12.2006,Effective from 01.01.2007

Prom. SG. 105/22 Dec 2006, amend. SG. 52/29 Jun 2007, amend. SG. 108/19 Dec 2007, amend. SG. 110/21 Dec 2007, amend. SG. 32/25 Mar 2008, amend. SG. 69/5 Aug 2008, amend. SG. 106/12 Dec 2008, amend. SG. 32/28 Apr 2009, amend. SG. 35/12 May 2009, amend. SG. 95/1 Dec 2009, amend. SG. 94/30 Nov 2010, amend. SG. 19/8 Mar 2011, amend. SG. 31/15 Apr 2011, amend. SG. 35/3 May 2011, amend. SG. 51/5 Jul 2011, amend. SG. 77/4 Oct 2011, amend. SG. 99/16 Dec 2011, amend. SG. 40/29 May 2012, amend. SG. 94/30 Nov 2012, amend. SG. 15/15 Feb 2013, suppl. SG. 16/19 Feb 2013, amend. SG. 23/8 Mar 2013, amend. SG. 68/2 Aug 2013, suppl. SG. 91/18 Oct 2013, amend. SG. 100/19 Nov 2013, amend. SG. 109/20 Dec 2013, amend. SG. 1/3 Jan 2014, amend. and suppl. SG. 105/19 Dec 2014, suppl. SG. 107/24 Dec 2014, amend. SG. 12/13 Feb 2015

 
Who sets
The tax rate is set by




The tax base is set by




The reliefs are set by




Comments
 
Beneficiary





Comments

 
Geographical Scope Republic of Bulgaria.
 
Taxpayers
Domestic-source income of non-resident entities is Taxed
Not Taxed
Comments
 
Tax object and basis of assessment
As general rule, taxable income under corporate income tax includes also








Comments

Income considered Domestic income
Worldwide income (subject to double-tax relief)
Comments

Comments
 
Deductions, Allowances, Credits, Exemptions
Valuation of inventory
System First-in first-out (FIFO)
Last-in first-out (LIFO)
Average cost
Specific identification (unit method)

Comments

Depreciation rules
 
Buildings
System Straight-line method
Declining balance
Production method
Combination of above
Other
Not-depreciable

Comments

In Republic of Bulgaria for tax purposes there is no requirement for using of concrete depreciation method. The only one requirement for depreciation of buildings is that depreciation rate may not exceed 4% annually.

Average depreciation period 25  Years
Average depreciation rate 4.0 %
 
Movable (tangible) assets
System Straight-line method
Declining balance
Production method
Combination of above
Other
Not-depreciable

Comments

 

Average depreciation period 10  Years
Average depreciation rate 10.0 %
 
Movable fixed assets
System Straight-line method
Declining balance
Production method
Combination of above
Other
Not-depreciable

Comments

 

Average depreciation period 4  Years
Average depreciation rate 30.0 %
 
Intangible assets
System Straight-line method
Declining balance
Production method
Combination of above
Other
Not-depreciable

Comments

In Republic of Bulgaria for tax purposes there is no requirement for using of concrete depreciation method. The only one requirement for depreciation of intangible assets is that depreciation rate may not exceed 15% annually.

Average depreciation period 7  Years
Average depreciation rate 15.0 %
 
Land (if any)
System Straight-line method
Declining balance
Production method
Combination of above
Other
Not-depreciable

Comments
Average depreciation period
Average depreciation rate


Comments

Are there limits to interest deductions? Yes No
If yes:
Definition of deduction limit

Comments

Thin capitalization rule.


Is there an Allowance for Corporate Equity? Yes No
If yes:
Notional rate applied for allowance

Comments

Losses
Loss carry-forward exists? Yes No
If yes:
Time limit: Indefinite
5  Years  
Size limit:
 
Loss carry-backward exists? Yes No
If yes:
Time limit: Indefinite
 
Size limit:
 

Comments

Taxable persons shall have the right to carry forward the tax loss. Where a taxable person has elected to carry forward the tax loss, the said loss shall mandatorily be carried forward successively until the depletion thereof during the next succeeding five years.



Comments

Exemptions

- The licensed special purpose investment companies;

- Any transactions with shares in public companies, any marketable rights attaching to shares in public companies and any units of collective investment schemes in transactions effected on a regulated securities market in a Member State of the European Union, or in a State which is a Contracting Party to the Agreement on the European Economic Area.

 Deductions

- Any taxable person shall be allowed to retain up to 100 per cent of the corporation tax due there from on the manufacturing activities carried on thereby, including processing of materials supplied by customers;this deduction is for companies investing in regions with high unemployment rate where the certain conditions are simultaneously fulfilled

Any taxable persons, registered as agricultural producers, shall be allowed to retain up to 60 per cent of the corporate tax due therefrom in respect of the tax profit derived thereby from the business of production of unprocessed plant and animal produce  where the certain conditions are simultaneously fulfilled. 

- The Bulgarian Red Cross shall be allowed to retain 100 per cent of the corporation tax due there from.

 
Rate(s) Structure
Nominal corporate income tax rate Rate: 10.00 %

Central government surcharge Rate:
Regional government surcharge Rate:
Local government surcharge Rate:
Combined rate (all-in rate) Rate: 10.00 %


Comments

Special tax rate for SMEs
Special tax rates apply to SMEs: Yes No
If yes:
Nominal corporate income tax rate Rate:
Central government surcharge Rate:
Regional government surcharge Rate:
Local government surcharge Rate:
Combined rate (all-in rate) Rate:


Comments
 
International aspects
Treaty countries Non-treaty countries
 
Repatriated profits are taxed according to the following system Exemption system Exemption system
Tax credit Tax credit
Deduction Deduction
 
Interest received is taxed Yes No Yes No
Tax rate on interest received 10.00 % 10.00 %
Outgoing dividends withholding tax 0.00 % 5.00 %
Outgoing interest payments withholding tax 0.00 % 10.00 %
 
Foreign losses can be set-off Yes No Yes No
If yes:
Minimum direct or indirect shareholding to qualify loss-offset (if applicable)
 
Loss carry-forward exists? Yes No Yes No
If yes:
Time limit: Indefinite
 
Indefinite
 
Size limit:
 
Loss carry-backward exists? Yes No Yes No
If yes:
Time limit: Indefinite
 
Indefinite
 
Size limit:
 
Controlled foreign company (CFC-)rules exist? Yes No Yes No
If yes:
Time limit: Indefinite
 
Indefinite
 
Size limit:
 
Threshold for capital or voting power held directly or indirectly by resident in non-resident company
CFC-rules apply if foreign tax rate is lower than
CFC-rules apply for passive income only? Yes No Yes No

Comments   Treaty countries

Dividends which are distributed in favour of a legal person which is a resident for tax purposes in a Member State of the European Union or in another State which is a Contracting Party to the Agreement on the European Economic Area are not taxed with withholding tax.

Concerning foreign losses can be set-off:

According to our Corporate income tax act foreign losses can be set-off in the following way :

  • Loss from source outside Bulgaria upon application of Exemption with Progression Method
Article 73.
(1) Any tax loss, formed during the current year in a State wherewith the Republic of Bulgaria has concluded a convention for the avoidance of double taxation and the method of avoidance of double taxation with respect to profits is exemption with progression, shall not be deducted from the tax profits from a source inside the country or other States during the current or succeeding years.

(2) The tax loss referred to in Paragraph (1) shall be deducted in compliance with the requirements of this Chapter successively solely from the tax profits from the source outside Bulgaria from which the said loss has been incurred during the next succeeding five years.

(3) Upon cessation of the activity of a permanent establishment in a Member State of the European Union or of the European Economic Area, any tax losses from a permanent establishment which have not been carried forward and have not been recovered shall be carried forward according to the standard procedure established by this Act until lapse of the five-year period since the incurrence of the said losses.

  • Loss from source outside Bulgaria upon application of Credit Method
Article 74.
(1) Where a taxable person has formed a tax loss and the said loss or a part thereof has its source outside Bulgaria in respect of which source the credit method for avoidance of double taxation is applied, the loss which is not deducted during the current year shall be deducted during the next succeeding five years in compliance with the requirements of this Chapter successively solely from the tax profits from the source outside Bulgaria from which the said loss has been incurred.

(3) Paragraph (1) shall not apply to any losses from a source within a Member State of the European Union or of the European Economic Area.

 

(6) (new – SG 100/13, in force from 01.01.2014) At the source shall not be taxed:

1. (suppl. - SG 107/14, in force from 01.01.2015) incomes form interest from bonds or from other debt securities, issued by a local legal person, the state and municipalities and admitted to trade on a regulated market in the country or in a Member of the European Union state, or in another state – a party to the Agreement on the European Economic Area;

2. incomes from interests on a loan, disbursed by a foreign person – an issuer of bonds and other debt securities, where simultaneously the following conditions present:

a) the issuer is a local person for taxation purposes of a Member of the European Union State or another State – party to the European Economic Area Agreement;

b) the issuer had issued bonds or the other debt securities with the purpose to provide the inflows from them as a loan to a local legal person;

c) bonds or the other debt securities was admitted to trade on a regulated market in the country or in a Member of the European Union State, or of another country – party to the European Economic Area Agreement.

3. (new – SG, 105/14, in force from 1. 1. 2015) the interest revenues, copy rights and license remunerations under the conditions of Para. 7 – 12.

 

(7) (new – SG, 105/14, in force from 1. 1. 2015) The interest revenues, copy rights and license remunerations shall not be taxed at the source. Where the following conditions have been fulfilled:

1. the owner of the income is a foreign legal person from a Member State of the European Union, or a location of economic activity in a Member State of the European Union of a legal person from a Member State of the European Union;

2. the local legal person who is payer of the income or the person, whose location of economic activity in the Republic of Bulgaria is payer of the income, is a related person to the foreign legal person – owner of the income, or to the person whose location of economic activity is owner of the income.

 

(8) (new – SG 105/14, in force from 01.01.2015) Incomes from interests, copyrights and license remunerations may not be taxed at the source and before expiration of the term envisaged in Para 12, Item 2 under the condition that to the moment of calculation of the taxable income, possession of the required minimum of the capital has not been interrupted.

 

(9) (new – SG 105/14, in force from 01.01.2015) In the cases of Para 8, where possession of the required minimum of the capital has been interrupted before the elapse of the minimal two-years term, for the releaved under Para. 8 incomes from interests, copyright and license remunerations taxed under Para 2, fiscal rate of 10 per cent shall be applied. The due tax and license remunerations shall be taxed at the source by applying tax of 10 per cent. For the due tax at the source, a delay penalty for the period from the date on which the tax should be paid at the source shall be due.

 

(10) (New – SG 105/14, in force from 01.01.2015) Where income not taxable from interests, copy rights and license remuneration has been taxed the owner of the income shall be entitled to request restoration of the tax. The restoration shall be carried out under the order and within the time limits set out in the Tax-Insurance Procedure Code not later than one year from filing the request for restoration.

 

(11) (New – SG 105/14, in force from 01.01.2015) Para 7, 8, 9 and 10 shall not apply to:

1. income representing distribution of profit or restoration of capital;

2. income from debt receivables entitling to a share from the profits of the debtor;

3. income from debt receivables entitling the creditor to exchange his right to interest for the right to a share from the profits of the debtor;

4. income from debt receivables lacking a clause for repayment of the capital or the repayment is due more than 50 years from the date of emission of the debt;

5. income qualifying as non-recognised for taxation purposes costs of a location of economic activity in the Republic of Bulgaria, except those referred to in Art. 43;

6. income accrued by a foreign legal person from a non-Member State of the European Union through a location of economic activity in the Republic of Bulgaria;

7. income from transactions which primary objective or one of the primary objectives is diversion or avoidance of double taxation.

 

(12) (New – SG 105/14, in force from 01.01.2015) For the purposes of Para. 7 - 11:

1. foreign legal person from a Member State of the European Union shall be every foreign legal person meeting the following conditions:

a) the legal form of the foreign legal person complies to Appendix No 5;

b) the foreign legal person in accordance with the applicable tax laws is considered to be resident for tax purposes in that Member State of the European Union and is not, within the meaning of a Double Taxation Agreement concluded with a third state, considered to be resident for tax purposes of a state outside the European Union;

c) the foreign legal person is subject to one of the taxes listed in Annex No 6 without being exempt, or to a tax which is identical or substantially similar and which is imposed in addition to, or in place of, these taxes;

2. a person is "associated person" of a second person, if at the moment of income accrual at least:

a) the first person has a direct holding for the period of at least 2 years of 25 % at least in the capital of the second person;

b) the second person has a direct holding for the period of at least 2 years of 25 % at least in the capital of the first person.

c) a third person, which is a local legal person of a foreign legal person from an EU Member State has a direct holding of 25 % at least both in the capital of the first person and in the capital of the second person for a period of two years at least .

3. the foreign legal person shall be treated as the owner of the income only if it receives this income for its own benefit and not as an intermediary or agent for some other person;

4. a location of economic activity shall be treated as the owner of the income, if all of the following conditions have been met:

a) the debt-claim, right or use of information in respect of which interest or copyright and royalty payments arise is effectively connected with that location of economic activity;

b) the interest or copyright and royalty payments represent income in respect of which that location of economic activity is subject in the Member State of the European Union in which it is situated to one of the taxes mentioned in Annex No 6 or in the case of Belgium to the "impot des non-residents/belasting der niet-verblijfhouders" or in the case of Spain to the "Impuesto sobre la Renta de no Residentes" or to a tax which is identical or substantially similar and which is imposed in addition to, or in place of, those existing taxes.


Comments   Non-treaty countries

 

 

 
Measures against profit shifting
 
Do Thin Capitalization (TC) rules exist? Yes No
If yes:
Date of first introduction
1996/07/01
Introduced as Explicit TC law
Part of CIT law
Test for TC Ratio
Arm's length
If ratio
Value of numerical ratio: 3 : 1
Definition numerator
Definition denominator equity
 
Debt considered for test Internal
Internal and external
TC depends on shareholding? Yes No
Substantial shareholding threshold
 
Type of shareholding Direct
Indirect
Automatic remedy Yes No
Remedy Non-deductibility of interest
Reclassification as dividend
 
Rules apply to All companies
Foreign companies
Non-EU companies
Transfer pricing rules exists? Yes No
If yes:
Arm’s length principle applied? Yes No
 
Remedy Fee
Tax base increase
 
Tax due date

Corporate income tax for any relevant year shall be remitted on or before the 31st day of March in the next succeeding calendar year after deduction of the amounts of tax advanced payments already made.

 
Tax collector

 National Revenue Agency

 
Special features

 
Economic function







Comments
 
Environmental taxes



Comments
 
Tax revenue
ESA95 code d51ba

Year
Annual tax revenue (millions)
Currency
Tax revenue as % of GDP
Tax revenue as % of total tax revenue
2012 713.40 EUR 1.71
2011 677.30 EUR 1.65
2010 654.30 EUR 1.73
2009 823.40 EUR 2.21
2008 1,038.10 EUR 2.78
2007 1,260.20 EUR 3.85
2006 484.20 EUR 1.77
2005 379.40 EUR 1.58
2004 491.80 EUR 2.34
2003 461.10 EUR 2.46
2002 485.40 EUR 2.78
2001 567.60 EUR 3.58
2000 365.00 EUR 2.55

Comments