Comments Treaty countries
(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.
(3) (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.
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