Market overview

Bulgaria issued no transfer pricing rulings in the past year. The tax authorities are cautious when it comes to dealing with taxpayers on issues of transfer pricing.

"There is a trend, and it's shown in the legislation even, toward the tax authority prioritising revenue, so collecting taxes, fighting tax evasion, rather than taking steps toward co-operating with businesses," said Vesselina Petkova, partner at Delchev & Partners.

A tendency toward litigation in previous years had been noted to be a feature of the tax market in Bulgaria. On this issue, there seems to be change for the better from the taxpayers' point of view.

"After the financial crisis (of 2008 and 2009), there were a lot of tax assessments, and a lot of appeals. But during the last year, possibly the last two years, that trend has reversed. I can see that our work is more balanced between consultancy and litigation, much more so than was the case even a couple of years ago," said Petkova.

In Bulgaria there are no legally binding TP documentation requirements, however the tax authorities do have guidance on the subject which can be amended independently of the legislator. There have been few moves by the authorities to implement any BEPS-inspired legislation, except for the implementation of measures for the exchange of financial information. Banks and other financial institutions in Bulgaria are already obliged, as of February 19 2016, to gather and exchange information from businesses and individuals with the authorities of other participating states.

Further action on BEPS may come in the future, however advisers said that it is more likely that it will be implemented through EU directives, rather than on the initiative of the Bulgarian authorities.

On May 25 2016, the EU Council adopted amendments to the EU Administrative Co-operation Directive, which are intended to extend the type of information that has to be exchanged to include mandatory country-by-country reporting (CbCR). This means BEPS Action 13 has a practical expression in the 27 member states of the European Union, and in Bulgaria by extension.

Tax authorities

Ministry of Finance
102, G.S. Rakovski str. Sofia, 1040
Tel: +359 2 9859 2027
Email: feedback@minfin.bg
Website: www.minfin.bg

National Revenue Agency
Bul. 52 Dondukov, Sofia, Bulgaria
Web: www.nap.bg www.nra.bg

Tax rates at a glance

(As of August 2016)

Corporate income tax rate 10%
Capital gains tax rate 10%
Branch tax rate 10%
Withholding tax
Dividends 0% to 5% (a)
Interest 5% to 10% (b)
Royalties 5% to 10% (b)
Branch remittance tax
Net operating losses (years)
Carryback 0
Carryforwards 5

  1. Dividends paid to companies and other entities that are residents of EEA country are exempt from withholding tax.
  2. The rate on interest/royalties paid to an EU related party is 5% in certain cases. As from January 1 2015, Bulgaria must fully implement the EU interest and royalties directive and exempt interest and royalties paid to an associated company of another member state or to a PE of an associated company situated in another member state.

Source: Professionals from Eurofast Global, Sofia Office/Bulgaria