Income Taxes on Natural Persons Act |
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Note: Present Act is shown here just for your general information and does not pretend for any accuracy, exactness or completeness. Printing mistakes are possible.(effective as of 1.01.2007) PART ONE GENERAL PROVISIONS Chapter One SUBJECT MATTER, SCOPE OF TAXATION AND TAXABLE PERSONS Subject Matter of Act Article 1. This Act regulates taxation of income accruing to natural persons, including income from activity in a sole-trader capacity. Scope of Taxation Article 2. Taxation under this Act shall apply to income accruing to resident and non-resident natural persons. Taxable Persons Article 3. Taxable persons under this Act shall be: 1. any resident and non-resident natural persons, who are liable to taxes under this Act; 2. any resident and non-resident persons, who are obligated to withhold and remit taxes under this Act. Resident Natural Persons Article 4. (1) Resident natural person, regardless of nationality, shall be any person: 1. who has a permanent address inBulgaria , or 2. who is present within the territory of Bulgaria for a period exceeding 183 days in any twelve-month period, or 3. who is sent abroad by the Bulgarian State, by bodies and/or organizations thereof, by Bulgarian enterprises, and the members of the family of any such person, or 4. whose centre of vital interests is situated inBulgaria . (2) For the purposes of Item 2 of Paragraph (1), a person shall be deemed to be a resident during the year where within the presence thereof [in Bulgaria ] exceeds 183 days. The day of exit from and the day of entry into the country shall be treated separately as days of presence in the country. (3) For the purposes of Item 2 of Paragraph (1), the period of residence inBulgaria for the sole purpose of study or medical treatment shall not be deemed to be a presence inBulgaria . (4) For the purposes of Item 4 of Paragraph (1), the centre of vital interests shall be situated in Bulgaria where the interests of the person are closely related to the country. Upon determination of such interests, consideration may be given to family, property, the place from which the person carries out a labour, professional or economic activity, and the place from which the person manages the property thereof. (5) Any person, who has a permanent address in Bulgaria but whose centre of vital interests is not situated in the country, shall not be a resident natural person. Non-resident Natural Persons Article 5. Non-resident natural person shall be any person who is not a resident person within the meaning given by Article 4 herein. Liability for Tax of Resident Natural Persons Article 6. Any resident natural person shall be liable to taxes in respect of any income acquired thereby from sources inside and outside the Republic of Bulgaria. Liability for Tax of Non-resident Natural Persons Article 7. Any non-resident natural person shall be liable to taxes in respect of any income acquired thereby from sources inside the Republic of Bulgaria. Sources of Income inside Republic of Bulgaria Article 8. (1) Any income derived from economic activity carried out through a fixed base within the territory of the Republic of Bulgaria or from disposition of the property of any such fixed base shall have its source inside the Republic of Bulgaria. (2) Any income derived from work performed within the territory of the Republic of Bulgaria, or from services performed within the territory of the Republic of Bulgaria, shall have its source inside the Republic of Bulgaria. (3) Any dividends and share in any liquidation surplus, arising from participating interests in resident legal persons and unincorporated associations, including agreements on joint activity, shall have their source inside the Republic of Bulgaria. (4) Any income derived from transfer of the enterprise of a sole trader registered in the Republic of Bulgaria shall have its source inside the Republic of Bulgaria, regardless of whether the transferor is a resident person. (5) Any remunerations for activity performed within the territory of the country by non-resident natural persons who are athletes, public figures, scientists, artists and cultural figures, including where the income has been paid/charged through a third party, such as a performer-management agency, a production company and other intermediaries, shall have its source inside the country. (6) The following income, charged/paid by resident persons, by representative offices, as well as by a permanent establishment or a fixed base in the Republic of Bulgaria, shall likewise have its source inside the Republic of Bulgaria: 1. any damages and indemnities accruing in lieu of or together with another income from a source inside the Republic of Bulgaria; 2. any cash prizes and merchandise awards awarded at games, competitions and contests which are not provided by an employer or a commissioning entity; 3. any remunerations other than remunerations under an employment relationship, paid to: an employee or a member of a management or supervisory body of a Bulgarian legal person, of a subsidiary wholly owned by a non-resident person, an employee of a representative office of a non-resident person, or to any other person who performs identical or similar functions; 4. any interest payments, including interest within payments under a lease contract; 5. any income from rent or other provision for use of movable or immovable property; 6. any payments received under franchising agreements and factoring contracts; 7. any copyright and licence royalties; 8. any technical assistance fees; 9. any compensations under management contracts. (7) Any income covered under Paragraph (6), which is charged by resident legal persons or by resident sole traders through a permanent establishment or a fixed base outside the country or which are paid by resident natural persons through a fixed base outside the country, shall not have its source inside the country if there is an effective convention for the avoidance of double taxation between the Republic of Bulgaria and the State in which the permanent establishment or the fixed base is situated. (8) Any income derived from shares, interests, compensation instruments, investment vouchers and other financial assets, issued by the [Bulgarian] State, the municipalities, resident legal persons, unincorporated associations and other forms of joint activity, as well as from any transactions therein, shall have its source inside Bulgaria. (9) Any income derived from agriculture, forestry, hunting ground management and fisheries within the territory of the country shall have its source inside the country. (10) Any income derived from use, sale, exchange or other transfer of immovable property, including any such transfer of an undivided interest in or a limited right to any such property situated within the territory of the country, shall have its source inside the country. (11) Upon determination of the source of income under this Article, the place of payment of the income shall be ignored. Documenting and Accounting for Income Article 9. (1) The taxable persons shall be obligated to register and account for any sale of goods and services as effected by means of issuing a fiscal cash receipt according to a procedure established by an ordinance of the Minister of Finance, except where payment is effected by bank transfer or through an offset. (2) Any taxable persons, who are not obligated to issue a fiscal cash receipt printed by a fiscal device according to Paragraph (1), shall issue a document on the income acquired thereby from sources referred to in Items 3 and 4 of Article 10 (1) herein, containing the essential elements covered under Article 7 (1) of the Accountancy Act . (3) The provisions of Paragraph (2) shall not apply to any income in respect of which, upon the acquisition thereof, the payer of the income issues a Statement of Amounts Paid or where a final tax has been levied on the income according to the procedure established by Chapter Six herein. Chapter Two INCOME AND TAXES Types of Income Article 10. (1) Depending on the source, there shall be the following types of income under this Act: 1. income from employment relationships; 2. income from economic activity in a sole-trader capacity; 3. income from other economic activity; 4. income from rent or from other onerous provision for use of rights or property; 5. income from transfer of rights or property; 6. income from sources referred to in Article 36 herein, as well as income taxable with final taxes under this Act. (2) Depending on the form of payment, income may be cash and non-cash. (3) Any income derived in a foreign currency shall be translated into Bulgarian leva terms along the exchange rate of the Bulgarian National Bank as applicable at the date of acquisition. (4) The non-cash income shall be translated into Bulgarian lev terms at market price at the date of acquisition. Acquisition of Income Article 11. (1) Save as otherwise provided for by this Act, any income shall be deemed to be acquired on the date of: 1. payment: in the case of cash payment; 2. crediting the account of the recipient of the income or receipt of the cheque: in the case of non-cash payment; 3. receipt of the consideration: in the case of non-cash income. (2) In the cases of sale, exchange or other onerous transfer of rights or property covered under Article 33 (3) herein, the income shall be deemed to be acquired as at the date of the transfer. (3) Income shall furthermore be deemed to be acquired by a natural person where the payment or consideration is received by a third party on the order of the said natural person or under an agreement between the said natural person and the payer. For determination of the date of acquisition, Paragraphs (1) and (2) shall apply. (4) Any income referred to in Article 33 (10) herein shall be deemed to be acquired on the date of the judgment of court on the transfer with deletion of the sole trader. Taxable Income Article 12. (1) Taxability under this Act shall apply to income derived from all sources acquired by a taxable person during the tax year, with the exception of the income which is non-taxable by virtue of a law. (2) Where deduction of expenses is provided for in this Act, the expenses determined under this Act shall be taken into consideration upon determination of the taxable income from the relevant source. Non-Taxable Income Article 13. (1) Taxability shall not apply to: 1. any income acquired during the tax year from the sale or exchange of: (a) one residential immovable property, regardless of the date of acquisition of the said property; (b) up to two immovable properties, as well as any number of agricultural and forest properties, provided that more than five years have elapsed between the date of acquisition and the date of sale or exchange; 2. any income accruing from the sale or exchange of movable property, with the exception of: (a) means of transport by road, air and water, provided that the period from the date of acquisition to the date of sale or exchange is less than one year; (b) works of art, collectors' items and antiques; (c) shares, interests, compensation instruments, investment vouchers and other financial assets, as well as the income accruing from trade in foreign exchange; (d) movable property delivered to persons who have the right to carry out collection, transport, recovery or disposal of waste in accordance with the Waste Management Act ; 3. any income accruing from transactions in shares in public companies, negotiable rights attaching to shares in public companies and units of collective investment schemes, effected on the regulated Bulgarian securities market; 4. any profit or another source of owners' equity distributed in the form of new interests and shares in commercial corporations, as well as any profit or another source of owners' equity distributed in the form of an increase of the nominal value of the previously issued interests and shares; 5. any income accruing to persons indemnified according to the procedure of a statutory instrument from the sale or exchange of compensation instruments and investment vouchers received as indemnity; 6. any income accruing from compulsory social insurance inBulgaria or abroad; 7. any income accruing from supplementary voluntary social insurance received after attainment of entitlement to supplementary pension; any income accruing from investment of the technical provisions received under contracts of insurance; and income accruing from investments of the assets of the supplementary retirement insurance funds, apportioned to the individual accounts of the insured persons; 8. any interest paid on accounts and deposits with any domestic commercial bank, branch of a foreign bank and with domestic mutual aid funds; 9. any interest paid and discounts made on Bulgarian government, municipal and corporate bonds; 10. any interest on claims established by a court of law, which are not subject to taxation, and any indemnities awarded for court costs; 11. any compensations and other such payments awarded for medium and grievous bodily harm, occupational disease or death; 12. any compensations for property taken by eminent domain for state and municipal needs; 13. any compensations for damage to property and personal injury, with the exception of the compensations for lost profit; 14. any insurance benefits, when an insured event has incurred; 15. any social assistance allowances and benefits received in pursuance of the Integration of Persons with Disabilities Act , the Child Protection Act , the Family Allowances Act or of another statutory instrument, as well as any unemployment benefits and allowances received in pursuance of a statutory instrument; 16. any assistance from organizations with social activity, established by a law, and from not-for-profit legal entities registered for pursuit of public benefit activities; 17. any amounts received in pursuance of the Family Allowances Act , as well as any alimony and child support payments received by entitlees according to the provisions of the Family Code ; 18. any scholarships in favour of natural persons for the study thereof inBulgaria and abroad; 19. any sums of money and merchandise awards received in pursuance of a statutory instrument by donors of blood, blood components and biological products for human purposes; 20. any winnings and merchandise awards received through participation in games of chance within the meaning given by the Gambling Act ; 21. any winnings and merchandise awards received through participation in games which are not games of chance within the meaning given by Article 3 of the Gambling Act , or in other games in which the winnings are determined by chance; 22. any government and national awards granted to creative artists in the field of culture and to athletes, as well as any prizes of laureates of competitions under projects and programmes financed in whole or in part by the Culture National Fund; 23. any sums received under non-employment relationships for travel and accommodation expenses, where for the account of the commissioning entity and where documented according to the procedure established by effective legislation, as well as the per diem expenses, but not more than their double amount fixed for persons under employment relationships; 24. any income derived from ground rent, rent charge or from other onerous provision for use of agricultural land; 25. any remunerations drawn by: the members of the staff of diplomatic missions in accordance with the Vienna Convention on Diplomatic Relations ; the members of consulates in accordance with the Vienna Convention on Consular Relations ; the employees of inter-state and inter-governmental organizations according to the international treaty concluded with the respective organization, and the members of the family of any such persons, insofar as this is provided for in the relevant international treaty; 26. any income accruing from the sale or exchange of any property acquired by legal or testamentary succession, as well as of any property restituted according to the procedure established by a statutory instrument; 27. any consumer dividends distributed by cooperatives established under the Cooperatives Act . (2) The following shall not be treated as income: 1. any property devolved by legal or testamentary succession or acquired by gift, as well as any property received through restitution according to the procedure established by a statutory instrument; 2. any shares and interests allotted in consideration of non-cash contributions to a commercial company. (3) Taxability shall not apply to any income accruing from the activity of natural persons registered as tobacco producers and agricultural producers, including such carrying out activity in a sole-trader capacity, for unprocessed plant and animal produce, with the exception of any income accruing from growing of ornamental plants. (4) The provisions of Paragraphs (1) and (2) shall not apply to any income accruing from economic activity in a merchant capacity within the meaning given by the Commerce Act , including in a sole-trader capacity. Taxation of Income Article 14. (1) A tax on the aggregate annual taxable amount shall be levied on the income covered under Chapter Five herein which has been acquired during the tax year. (2) A final tax shall be levied on the income covered under Chapter Six herein. (3) A final annual (licence) tax shall be levied on the income covered under Chapter Seven herein. PART TWO AGGREGATE ANNUAL TAXABLE AMOUNT Chapter Three GENERAL PROVISIONS Tax Year Article 15. The tax year shall be concurrent with the calendar year. Determination of Taxable Income and of Taxable Amount Article 16. (1) The taxable income and the taxable amount shall be determined for each source of income separately according to the provisions of this Act. (2) Any income subject to levy of final taxes according to the procedure established by this Act or of final taxes according to the procedure established by the Corporate Income Tax Act shall be excluded upon determination of the taxable income. Aggregate Annual Taxable Amount Article 17. The aggregate annual taxable amount shall be the sum total of the annual taxable amounts determined for each type of income, depending on the sources, net of the tax reliefs provided for in this Act. Chapter Four TAX RELIEVES Tax Relief for Persons with Reduced Working Capacity Article 18. (1) The sum total of the annual taxable amounts for any person who has lost 50 per cent and more than 50 per cent of the working capacity thereof, which loss has been determined by an effective decision of a competent authority, shall be debited with the double amount of the annual tax threshold, including for the year of occurrence of the loss of working capacity and for the year of expiry of validity of the decision. (2) The taxable income charged for any month during which the work was performed, in respect of income from employment relationships accruing to any person who has lost 50 per cent and more than 50 per cent of the working capacity thereof, shall be debited with the double amount of the monthly tax threshold, including for the month of occurrence of the loss of working capacity and for the month of expiry of validity of the decision. Tax Relief for Personal Voluntary Social and Commercial Insurance Contributions Article 19. (1) The sum total of the annual taxable amounts shall be debited with any personal voluntary social insurance contributions made during the year to an aggregate amount not exceeding 10 per cent of the sum total of the annual taxable amounts, as well as with any personal voluntary health insurance contributions and premiums/payments paid during the year under contracts of life assurance to an aggregate amount not exceeding 10 per cent of the sum total of the annual taxable amounts. (2) The taxable income charged for any month during which the work was performed, in respect of income from employment relationships, shall be debited with the personal supplementary social insurance contributions remitted during the month through an employer, to an aggregate amount not exceeding 10 per cent of the sum, as well as with the personal voluntary health insurance contributions and premiums/payments paid during the month under contracts of life assurance for the account of the person to an aggregate amount not exceeding 10 per cent of the sum. (3) The tax relief referred to in Paragraphs (1) and (2) shall be enjoyable where, according to the contract concluded with the commercial insurance company or social insurance company, the natural person who is liable for the tax is commercially or socially insured. (4) The tax relief referred to in Paragraphs (1) and (2) shall furthermore be enjoyable where, by agreement with the persons, the commercial insurance company or the social insurance company is replaced and the resources raised theretofore are moved by bank transfer. Tax Relief for Personal Contributions for Contributory Service upon Retirement Article 20. The sum total of the annual taxable amounts shall be debited with the social insurance contributions remitted during the year for the account of the person under § 9 of the Transitional and Final Provisions of the Social Insurance Code . Tax Relief for Children Article 21. (1) Any resident natural persons, including such carrying out activity in a sole-trader capacity, may enjoy tax relief for children by deducting from the sum total of the annual taxable amounts for the income of the said persons: 1. in respect of one child who has not attained legal majority: BGN 420; 2. in respect of two children who have not attained legal majority: BGN 840; 3. in respect of three and more children who have not attained legal majority: BGN 1,260. (2) The tax relief shall be enjoyable subject to the simultaneous fulfilment of the following conditions: 1. by the 31st day of December of the tax year, the child is a resident natural person and is a Bulgarian citizen or a foreigner whereto asylum or refugee status has been granted according to the procedure established by the Asylum and Refugees Act ; 2. the child has not attained legal majority; 3. by the 31st day of December of the tax year, the child has not been placed for fully public-financed rearing in a specialized child institution. (3) The tax relief shall be enjoyable by any person referred to in Paragraph (1) who, by the 31st day of December of the tax year, is: 1. a parent who has not been deprived of parental rights, and provided that: (a) the child is not placed outside the family, and (b) curator ship or tutorship is not instituted, or 2. a tutor or curator: in the cases of tutorship and curator ship, or 3. a member of the immediate or extended family: in the cases where the child is placed for a period of not less than six months with members of the immediate or extended family within the meaning given by the Child Protection Act , or 4. a foster parent: in the cases of long-term placement of the child for rearing with a foster family within the meaning given by the Child Protection Act . (4) The tax relief shall be enjoyed up to the amount of the sum total of the annual taxable amounts and provided that the person referred to in Paragraph (3) submits a written declaration from the other parent or from the other foster parent or member of the immediate or extended family, as the case may be, to the effect that the latter will not claim the rebate for the respective tax year. (5) A declaration under Paragraph (4) shall not be submitted where the other parent or foster parent or member of the immediate or extended family, as the case may be: 1. is not a resident person for the year for which the relief is enjoyed; 2. is unknown, deceased, or has been deprived of parental rights, or has not been awarded child custody in the cases of divorce. (6) The tax relief shall nonetheless be enjoyable by a person who has not been awarded child custody in the cases of divorce, where the conditions covered under Paragraphs (1) to (3) exist in respect of the said parent and where the said parent submits a written declaration under Paragraph (4) from the other parent. (7) The tax relief shall be enjoyable even for the years wherein the child was born and has attained legal majority. (8) The circumstances and the conditions covered under Paragraphs (1) to (7) shall be declared by a declaration completed in a standard form. Tax Relief for Donations Article 22. (1) The sum total of the annual taxable amounts shall be debited with any donations made during the year: 1. up to 5 per cent, where the donation is in favour of: (a) any health-care and medical-treatment facilities; (b) any specialized institutions for provision of social services according to the Social Assistance Act , as well as of the Social Assistance Agency and of the Social Assistance Fund under the Minister of Labour and Social Policy; (c) any specialized child institutions according to the Child Protection Act , as well as of any care homes for children deprived of parental care according to the Public Education Act ; (d) any creches, kindergartens, schools, higher schools or academies; (e) any public-financed enterprises, within the meaning given by the Accountancy Act ; (f) any religious denominations registered in the country; (g) any specialized enterprises or cooperatives of persons with disabilities, entered in the register referred to in Article 29 of the Integration of Persons with Disabilities Act , as well as in favour of the Agency for Persons with Disabilities; (h) any persons with disabilities, as well as for technical aids therefor; (i) any victims of crises within the meaning given by the Crisis Management Act , or of the members of the families thereof; (j) the Bulgarian Red Cross; (k) socially disadvantaged persons; (l) children with disabilities or parentless children; (m) any cultural institutes, or for the purposes of cultural, educational or research exchange under an international treaty whereto the Republic of Bulgaria is a party; (n) any not-for-profit legal entities, registered in the Central Register of Not-for-Profit Legal Entities for pursuit of public benefit activities, with the exception of organizations supporting culture within the meaning of the Financial Support for Culture Act ; (o) any scholarships instituted and provided for the instruction of schoolchildren and students at Bulgarian schools; (p) theBulgaria Energy Efficiency Fund; (q) any therapeutic communities for narcotics-dependent persons, as well as of narcotics-dependent persons for the therapy thereof; 2. up to 15 per cent for a donation for culture; 3. up to 50 per cent, where the donation is in favour of the Fund for Medical Treatment of Children Centre. (2) The aggregate amount of the tax relief for donations may not exceeding 65 per cent of the sum total of the annual taxable amounts referred to in Paragraph (1). (3) Where the donation is a non-cash asset, the amount thereof shall be the cost of acquisition as shown in the documents on acquisition of the gift by the donor, provided that the said acquisition occurred within three months before the date of donation. In the rest of the cases, the amount of the donation shall be the market price at the date of provision of the gift. (4) The date of acquisition of the donation by the donnee within the meaning given by Article 11 herein shall be deemed to be the date on which the donation was made. (5) The annual taxable amount [for the income] from activity carried out in a sole-trader capacity shall be excluded from the sum total of the annual taxable amounts referred to in Paragraph (1). Enjoyment of Tax Relieves Article 23. The tax relieves shall be enjoyed by submission of a tax return under Article 50 herein, attaching thereto: 1. a copy of a valid decision of the Territorial Medical Expert Board/National Medical Expert Board: in respect of the tax relief referred to in Article 18 herein; 2. copies of the documents certifying the contributions made: in respect of the tax relief referred to in Article 20 herein; 3. a declaration referred to in Article 21 (8) herein: in respect of the tax relief referred to in Article 21 herein; 4. copies of documents certifying that the donee is among the persons listed in Article 22 herein and that the gift has been received: in respect of the tax relief covered under Article 22 herein. Chapter Five ANNUAL TAXABLE AMOUNTS Section I Income from Employment Relationships Taxable Income Article 24. (1) The taxable income accruing from employment relationships shall comprehend the labour remuneration and all other payments in cash and/or in kind from an employer or for the account of an employer with the exception of the income covered under Paragraph (2). (2) The taxable income from employment relationships shall exclude: 1. the value of: (a) the free food and/or food additives, provided in kind under Article 285 of the Labour Code ; (b) the free preventive food and antidotes provided in kind according to the procedure established by other laws; (c) the free food provided in kind to: members of ships crews for the days of service, fishermen for the days of catch, and divers for the days of diving, to the duty personnel working 12-hour shifts at medical-treatment facilities, to surgical teams, emergency medical care teams and to blood collection teams; (d) the free food provided in kind to servicepersons according to Article 234 (3) of the Defence and Armed Forces of the Republic of Bulgaria Act ; (e) the monetary ration allowance paid in pursuance of the Civil Aviation Act , the Republic of Bulgaria Defence and Armed Forces Act , the Implementation of Penal Sanctions Act , and the amounts referred to in Article 204 (1) of the Ministry of Interior Act ; (f) the food vouchers received in the amount and according to the procedure established by the Corporate Income Tax Act ; 2. the value of the special working clothes and individual protective means which are provided in kind under terms and according to a procedure provided for in a statutory instrument; 3. the value of the working clothes, uniforms and presentable clothing provided under terms and according to a procedure provided for in a statutory instrument; 4. the general supplies and accoutrements ensured in pursuance of the Ministry of Interior Act and the Republic of Bulgaria Defence and Armed Forces Act ; 5. the value of: (a) any travel and accommodation expenses, where documented according to the procedure established by effective legislation; (b) any per diem expenses, but not more than the double amount thereof as stated in a statutory instrument; 6. any additional food expenses which are paid in lieu of per diem expenses to factory and office workers in road transport and rail transport, in dining cars, in mobile post offices, in mobile security protection and in other such activities whereat the work duties are performed during travel to another settlement or facility; 7. the compensation amounts referred to in Article 240 (4) of the Defence and Armed Forces of the Republic of Bulgaria Act and in Article 210 of the Ministry of Interior Act ; 8. any compensations covered under Article 200, Items 1 and 2 of Article 216 (1), Article 216 (2) and (3) , Article 222 (2) and (3) and Article 226 (3) of the Labour Code , any compensations covered under Article 235 , 237 and 239 of the Defence and Armed Forces of the Republic of Bulgaria Act , under Article 204 (4) and Article 252 of the Ministry of Interior Act , under Article 139d , Items 1 and 2 of Article 139f (1), Article 157a (3) and Article 188n of the Judicial System Act, and any compensations covered under Article 78 , Article 81b (4) , Article 82 (3), Article 85 (5) , Article 104 (3) and (4) and Article 106 (3) of the Civil Servants Act ; 9. any expenses on fringe benefits for the account of the employer, as taxed according to the procedure established by the Corporate Income Tax Act , as well as any expenses on transport from the place of residence to the place of work for the account of the employer, which are not subject to taxation according to the Corporate Income Tax Act ; 10. the lump-sum allowances for medical treatment, provided by the employer for the account of the expenses on fringe benefits: up to the value of the treatment; 11. the value of the lump-sum allowances provided by the employer for the account of the expenses on fringe benefits upon: child birth, contracting of civil marriage or death of a member of the family: not exceeding, in aggregate, the amount of the annual tax threshold; 12. the expenses incurred by the employer of up to BGN 60 monthly for each insured person on payments/premiums for supplementary voluntary social insurance, voluntary health insurance and/or life assurance, as reported by the enterprises and the representative offices, regardless of whether they carry out economic activity; 13. the expenses incurred by the employer on any commercial insurances defined as compulsory by a statutory instrument; 14. the benefits and allowances covered under Part One of the Social Insurance Code ; 15. the cash prizes and merchandise awards received in pursuance of and according to the procedure established by a statutory instrument; 16. the cash allowance referred to in Article 245 (1) of the Defence and Armed Forces of the Republic of Bulgaria Act and in Article 204 (5) of the Ministry of Interior Act . Annual Taxable Amount Article 25. The annual taxable amount for the income from employment relationships shall be determined by debiting the taxable income referred to in Article 24 herein, acquired by the taxable person during the tax year, with the compulsory social insurance contributions withheld by the employer which are for the account of the natural person, according to the procedure established by the Social Insurance Code and of the Health Insurance Act . Section II Income from Activity in Sole-Trader Capacity Taxable Income Article 26. (1) The taxable income accruing from activity in a sole-trader capacity shall be the taxable profit formed according to the procedure established by the Corporate Income Tax Act , including the financial result from the transfer of the sole trader's enterprise without deletion of the sole trader in the Commercial Register. (2) The taxable income referred to in Paragraph (1) shall exclude the accounting financial result formed by activities: 1. on which alternative taxes are levied under the Corporate Income Tax Act ; 2. on which a final annual (licence) tax is levied according to the procedure established by this Act; 3. referred to in Article 13 (3) herein, accruing to sole traders registered as tobacco producers and agricultural producers. (3) Upon formation of the tax profit, sole traders shall apply the provisions on carry-forward of a tax loss under the Corporate Income Tax Act . (4) For the purposes of determining the taxable income referred to in Paragraph (2), the portion of undistributable expenses corresponding to the activities referred to in Paragraph (2) shall be arrived at by multiplying the total amount of unidstributable income/expenses by the proportion of the net income accruing from the activities referred to in Paragraph (2) and all net income from sales. (5) Any sole traders, who carry out activities which are subject to levy of alternative tax within the meaning given by the Corporate Income Tax Act, shall be taxed under the terms and according to the procedure established by the said Act. (6) Taxability according to Paragraphs (1) to (5) shall furthermore apply to any income from economic activity accruing to a natural person who is a merchant within the meaning given by the Commerce Act but is not registered as a sole trader. Use of Natural Person's Personal Property for Activity in Sole-Trader Capacity Article 27. (1) Any natural person, who owns the sole trader's enterprise, may incorporate into the property of the sole trader any items of movable and immovable property acquired by the said person which: 1. are not in a co-ownership regime, or 2. are not part of community property. (2) The items of property referred to in Paragraph (1) shall be entered into the accounts of the sole trader at the documented cost of acquisition thereof. (3) In the cases under Paragraph (1), the natural person who owns the sole trader shall draw up a memorandum, stating therein the type of the item of property and the cost referred to in Paragraph (2). (4) In the cases referred to in Item 2 of Paragraph (1), the other spouse shall declare, by a notarized declaration, the consent thereof to incorporation of the item of property into the property of the sole trader. (5) If any item of property referred to in Paragraph (1) be subsequently excluded from the property of the sole trader and passes to the natural-person owner, for tax purposes the natural person who owns the sole trader shall be deemed to effect a sale of the said item of property at a market price, notwithstanding the circumstances covered under Article 13 herein. The taxable income shall be determined as a difference between: 1. the market price and the tax value: in respect of any tax depreciable assets under the Corporate Income Tax Act ; 2. the market price and the documented cost of acquisition: in respect of any other items of property. (6) The tax temporary differences, within the meaning given by the Corporate Income Tax Act , which are related to any item of property referred to in Paragraph (1), shall not be recognized for tax purposes at the time of the sale referred to in Paragraph (5) and in the subsequent years. (7) The market price referred to in Paragraph (5) shall be presumed as a cost of acquisition upon a subsequent sale or exchange of the item of property by the natural-person owner, as well as upon a subsequent application of Paragraph (2). Annual Taxable Amount Article 28. The annual taxable amount shall be determined by debiting the taxable income referred to in Article 26 herein for the tax year with the contributions which the self-insured person is obligated to make for the tax year for his or her own account according to the procedure established by the Social Insurance Code and of the Health Insurance Code . Section III Income from Other Economic Activity Taxable Income Article 29. The taxable income from economic activity accruing to any natural persons who are not merchants within the meaning given by the Commerce Act shall be determined by debiting the income acquired with operating expenses as follows: 1. for any income from the sale of produced, processed or unprocessed agricultural products, for copyright and licence royalties, including for income from sale of inventions, works of science, culture and art by the authors thereof: by 70 per cent; 2. for any income from the sale of produced, processed or unprocessed forestry products (including from harvesting of wild herbs, mushrooms and berries) and from hunting ground management, as well as for any income from the sale of produced, processed or unprocessed fisheries products: by 60 per cent; 3. for royalties for performance of performing artists, for income from the practice of a skilled craft on which a final annual (licence) tax is not levied; for any income from the sale of grown ornamental plants: by 50 per cent; 4. for any income from the practice of a liberal profession or remunerations under non-employment relationships: by 35 per cent; 5. for any income from management and control, from participation in management and supervisory bodies of enterprises: by 10 per cent. Annual Taxable Amount Article 30. The annual taxable amount shall be determined by debiting the taxable income referred to in Article 29 herein, acquired during the tax year, with the contributions which the self-insured person is obligated to make for the tax year for his or her own account or, if the person is not self-insured, with the social insurance contributions withheld, which are for the account of the said person, according to the procedure established by the Social Insurance Code and the Health Insurance Act . Section IV Income from Rent or from Other Onerous Provision for Use of Rights or Property Taxable Income Article 31. (1) The taxable income accruing from rent or from other onerous provision for use of rights or immovable property shall be determined by debiting the income acquired with 20 per cent expenses. (2) The payments acquired under a lease contract, which does not expressly provide for transfer of the right of ownership to the property, shall be treated as income from rent referred to in Paragraph (1). (3) The taxable income accruing from any payments under franchising agreements and factoring contracts, as well as under other contracts for provision for use of rights, shall be determined according to the procedure established by Paragraph (1). Annual Taxable Amount Article 32. The annual taxable amount for the income accruing to resident natural persons from rent or other onerous provision for use of rights and property shall be determined by debiting the taxable income referred to in Article 31 herein with the contributions which the person is obligated to make for the tax year for his or her own account according to the procedure established by the Health Insurance Act . Section V Income from Transfer of Rights or Property Taxable Income Article 33. (1) The taxable income accruing from the sale or exchange of immovable property, including of limited rights in rem to any such property, shall be determined by debiting the positive difference between the selling price and the cost of acquisition of any such property with 10 per cent expenses. (2) The taxable income shall be the positive difference between the selling price and the cost of acquisition upon sale or exchange of: 1. means of transport by road, air and water; 2. works of art, collectors' items and antiques. (3) The taxable income accruing from the sale or exchange of shares, interests, compensation instruments, investment vouchers and other financial assets, as well as from trade in foreign exchange, shall be the sum total of the profits realized during the year, determined for each particular transaction, debited with the sum total of the losses realized during the year, determined for each particular transaction. (4) The realized profit/loss referred to in Paragraph (3) shall be determined by debiting the selling price with the cost of acquisition of the financial asset. Where any financial assets of one and the same type, issued by one and the same person, have different costs of acquisition and part of the said assets is subsequently sold and it cannot be proven which part is sold, the cost of acquisition of each such asset shall be the weighted average price determined on the basis of the cost of acquisition of the financial assets of the same type and issuer held at the date of the sale. (5) The selling price shall include everything acquired by the person in connection with the sale/exchange, including any consideration other than money. (6) The cost of acquisition referred to in Paragraphs (1), (2) and (4) shall be: 1. the documented cost of acquisition of the property; 2. the documented cost of acquisition of the property, credited with the documented payment due by the natural person: in the cases of exchange with additional payment; 3. nil: where there is no documented cost of acquisition, including for any property acquired as a donation, or for any shares and interests received upon distribution of property or another source of owners' equity; 4. the documented additional payment due by the natural person: in the cases of exchange with additional payment, where there is no documented cost of acquisition of the property; 5. the portion of the non-cash contribution entered in the Memorandum of Incorporation, in the Memorandum of Association or in the Articles of Association of a commercial corporation, corresponding to the shares and interests sold or exchanged: in the cases of non-cash contributions made to a commercial corporation; 6. the market price referred to in Article 10 (4) herein of the property acquired upon exchange: in the cases of sale/exchange of property acquired upon exchange; 7. the documented cost of acquisition of the property, adjusted until 1997 inclusive for the overall consumer price index as announced by the National Statistical Institute: in the cases of sale or exchange of property acquired prior to the 1st day of January 1998. (7) Where the selling price referred to in Paragraph (1) is paid by instalments in different tax years, the taxable income shall be determined according to the following formula for each of the said tax years: TITY = [(SP – CA) – 0,10 х (SP – CA)] х PPR / SP where: TITY shall be the taxable income for the tax year; SP shall be the selling price; CA shall be the cost of acquisition; PPR shall be the part payment received during the tax year. (8) Where the selling price referred to in Paragraph (2) is paid by instalments in different tax years, the taxable income shall be determined according to the following formula for each of the said tax years: TITY = (SP – CA ) х PPR / SP where: TITY shall be the taxable income for the tax year; SP shall be the selling price; CA shall be the cost of acquisition; PPR shall be the part payment received during the tax year. (9) The income received in connection with the provision of property under a lease contract which expressly provides for transfer of the right of ownership to the property shall be subject to taxation notwithstanding the circumstances covered under Article 13 herein. The taxable income shall be determined according to the following formula: TITY = [ (CP – CA ) – 0,10 х (CP – CA ) ] х PR / CP where: TITY shall be the taxable income for the tax year; CP shall be the price of the property as set under the contract; CA shall be the cost of acquisition; PR shall be the payments received during the tax year net of interest paid. (10) The taxable income upon transfer of a sole trader's enterprise with expungement of the sole trader shall be the positive difference between the selling price as set by the contract and the owners' equity of the enterprise. Annual Taxable Amount Article 34. The annual taxable amount for the income from transfer of rights or property shall be the taxable income referred to in Article 33 herein, as acquired during the tax year. Section VI Income from Other Sources Taxable Income Article 35. The taxable income shall be the gross sum total of the taxable incomes acquired during the tax year from: 1. any compensations for lost profit and damages of such nature; 2. any cash prizes and merchandise awards awarded at competitions and contests which are not provided by an employer or a commissioning entity; 3. any interest, including such within payments under a lease contract; 4. any producer dividends distributed by cooperatives; 5. exercise of intellectual property rights by succession; 6. all other sources which are not expressly specified in this Act and whereon final taxes are not levied according to the procedure established by this Act or whereon final taxes are not levied according to the procedure established by the Corporate Income Tax Act . Annual Taxable Amount Article 36. The annual taxable amount for the income from other sources shall be determined by debiting the taxable income referred to in Article 35 herein, as acquired during the tax year, with the contributions which the person is obligated to make for the tax year for his or her own account according to the procedure established by the Health Insurance Act . PART THREE FINAL TAXES Chapter Six FINAL TAX ON INCOME FROM SOURCE INSIDE AND OUTSIDE BULGARIA Taxation of Non-resident Persons' Income Article 37. (1) A final tax, notwithstanding the circumstances covered under Article 13 herein, shall be levied on the following income from a source inside Bulgaria , charged/paid in favour of any non-resident natural person: 1. any compensations for lost profit and damages of such nature; 2. any scholarships for study inBulgaria and abroad; 3. any interest payments, including interest within payments under a lease contract; 4. any income from rent or from other onerous provision for use of movable or immovable property, including any payments under a lease contract which does not expressly provide for transfer of the right of ownership to the property; 5. any payments received under franchising agreements and factoring contracts; 6. any copyright and licence royalties; 7. any technical assistance fees; 8. any remunerations for activity performed within the territory of the country by non-resident natural persons who are athletes, public figures, scientists, artists and cultural figures, including where the income has been paid/charged through a third party, including where the income has been paid/charged through a third party, such as a performer-management agency, a production company and other intermediaries; 9. any income from management and control, from participation in management and supervisory bodies of enterprises; 10. any income from sale, exchange or other onerous transfer of immovable property; 11. any payments under a lease contract which expressly provides for transfer of the right of ownership to the property; 12. any income from sale, exchange or other onerous transfer of shares, interests, compensation instruments, investment vouchers and other financial assets, with the exception of the income from exchange covered under Article 38 (5) herein. (2) The final tax on the income covered under Items 1 to 9 of Paragraph (1) shall be assessed on the gross sum total of the incomes charged/paid, and the final tax on the income referred to in Items 10, 11 and 12 of Paragraph (1) shall be assessed on an amount equal to the taxable income as determined according to the procedure established by Article 33 herein. (3) No final tax shall be levied on any income under Paragraph 1, exempted from taxation under Article 13 herein and charged/paid in favour of non-resident natural persons established for tax purposes in a Member State of the European Union, as well as in another Member State of the European Economic Area. (4) The circumstances referred to in Paragraph (3) shall be certified to the payer of the income by a document issued by the tax administration of the State in which the person is established for tax purposes, and by a declaration by the person who has acquired the income, to the effect that the circumstances covered under Article 13 exist. Income of Resident and Non-resident Natural Persons Article 38. (1) A final tax shall be levied on the taxable income from dividends and from shares in any liquidation surplus in favour of: 1. any resident or non-resident natural person, where accruing thereto from a source insideBulgaria ; 2. any resident natural person, where accruing thereto from a source outsideBulgaria . (2) The final tax on any income from dividends shall be assessed on the gross amount as determined by the decision on the distribution of dividend. (3) The final tax on any income from dividends in the form of a hidden profit distribution shall be assessed on the gross amount of the expenses as charged. (4) The final tax on share in any liquidation surplus shall be assessed on the positive difference between the value of the said share and the documented cost of acquisition of the participating interest in the company/cooperative. (5) A final tax shall be levied on any taxable income acquired from exchange of shares and interests in connection with transformation of commercial companies: 1. by resident natural persons upon the exchange of shares and interests in domestic commercial corporations for shares and interests in domestic commercial corporations or in commercial corporations abroad; 2. by resident natural persons upon the exchange of shares and interests in commercial corporations abroad for shares and interests in commercial corporations abroad or in domestic commercial corporations; 3. by non-resident natural persons upon the exchange of shares and interests in domestic commercial corporations for shares and interests in domestic commercial corporations or in commercial corporations abroad. (6) The taxable income referred to in Paragraph (5) shall be determined at the time of the exchange and shall be the positive difference between the market price of the shares/interests acquired upon the exchange and the cost of acquisition under Article 33 (6) herein of the shares or interests in the transforming corporation. (7) The market price referred to in Paragraph (6) shall be presumed to be a cost of acquisition under Article 33 (6) upon a subsequent sale or exchange of the shares and interests in the acquiring/newly established corporation, as well as upon a subsequent application of Paragraph (6). (8) A final tax shall be levied on the gross sum total of the taxable income from supplementary voluntary social insurance, from voluntary health insurance and life assurances, acquired at the date of: 1. recovery of the amounts remitted for life assurances; 2. recovery of the amounts remitted for voluntary health insurance, with the exception of the cases of refund of expenses on health services and provision of health services and goods to the insured person upon occurrence of the events provided for in the contracts of health insurance; 3. receipt of the amounts remitted for supplementary voluntary social insurance prior to attainment of entitlement to supplementary pension; 4. transfer of amounts from an individual account to the account of a third party; 5. modification of the contract of insurance, in respect of which a relief under Article 19 herein has been enjoyed, into a contract for which the said relief may not be enjoyed; 6. drawing on the amounts under a contract for assurance for repayment of a loan, where a life assurance is used to secure an obligation of the natural person. (9) No final tax shall be levied on any income referred to in Paragraph (8), corresponding to the portion of the payments/premiums for which a tax relief has not been enjoyed according to the procedure established by Article 19 herein. (10) A final tax shall be levied on the gross amount of the income acquired by the person upon the sale or exchange of movable property under Item 2 (d) of Article 13 (1) herein. Chapter Seven LEVY OF FINAL ANNUAL (LICENCE) TAX Persons Subject to Levy of Final Annual (Licence) Tax Article 39. (1) A final annual (licence) tax shall be levied on any natural person, including a sole trader, who carries on any activity specified in the Annex hereto (licence activity), in respect of the income accruing from any such activity, provided that: 1. the turnover of the person for the last preceding year does not exceed BGN 50,000, and 2. the person is not registered under the Value Added Tax Act , with the exception of registration for intra-Community acquisition under Article 99 and Article 100 (2) of the said Act . (2) Where, within twelve successive months, any one natural person has ceased to carry out a licence activity and/or has formed a new enterprise which carries out a licence activity, and the aggregate turnover of the said two enterprises exceeds BGN 50,000 for twelve successive months, Paragraph (1) shall not apply to any such enterprise. In such a case, the newly formed enterprise shall be subject to taxation according to the standard procedure established by this Act for the current tax year. (3) Where, within the current tax year, the turnover of the person exceeds BGN 50,000 or the person registers under the Value Added Tax Act , the taxable person shall be taxed according to the standard procedure established by this Act. (4) In the cases under Paragraphs (2) and (3), the sole traders shall be obligated to make tax prepayments according to Article 43 (5) herein for the current year as from the quarter during which the circumstances referred to in Paragraphs (2) and (3) occurred. Any remittances made under Article 69 herein shall be treated as equivalent to tax prepayments. (5) Any natural persons who are not sole traders, in the cases under Paragraphs (2) and (3) shall not be obligated to make tax prepayments for the current year within the meaning given by this Act. Any remittances made under Article 69 herein shall be set off against the aggregate annual taxable amount of the person. (6) In the cases under Paragraphs (2) and (3), the final annual (licence) tax for the current year shall be payable until the end of the quarter preceding the quarter during which the circumstances referred to in Paragraphs (2) and (3) have occurred. (7) Where, within the current tax year the person deregisters under the Value Added Tax Act , the said person shall be taxed according to the standard procedure established by this Act for the entire tax year. Common Rules for Levy of Final Annual (Licence) Tax Article 40. (1) A final annual (licence) tax shall be due separately for each of the activities practised according to the Annex hereto. (2) The persons who carry out a licence activity at more than one establishment shall be liable to tax for each establishment separately. In such cases, the tax shall be assessed depending on the location of the establishments. (3) The natural persons and the sole traders who carry out a licence activity which is not carried out at an establishment shall assess the tax depending on the settlement where they have their permanent address. (4) Where the licence activity commences or ceases in the course of the year, with the exception of the activity specified in Items 1 and 2 of Section I of the Annex hereto, the tax shall be assessed in proportion to the number of quarters during which the said activity is carried out, including the quarter of commencement or cessation of the said activity. (5) Where within any single licence activity, with the exception of the activity specified in Items 1 and 2 of Section I of the Annex hereto, any circumstance in connection with the determination of the amount of the tax changes in the course of the year, the amount of the tax until the end of the year, including for the quarter of the change, shall be determined on the basis of the amount of the tax determined conforming to the changes in the circumstances. (6) Where within any single licence activity of those specified in Items 1 and 2 of Section I of the Annex hereto any circumstance changes in the course of the year and this leads to determination of the final annual (licence) tax in a larger amount, the larger amount of the tax, as determined conforming to the changes in the circumstances, shall be due for the tax year. (7) Any income accruing from any activity which is not specified in the Annex hereto shall be taxed according to the standard procedure. Tax Relieves upon Levy of Final Annual (Licence) Tax Article 41. (1) The taxable persons who are subject to levy of a final annual (licence) tax may enjoy tax relief in the following sequence: 1. any natural persons, including any sole traders, who have lost 50 per cent and more than 50 per cent of the working capacity thereof, which loss has been determined by an effective decision of a competent authority, shall enjoy a rate rebate of 50 per cent of the final annual (licence) tax as determined if they carry out the activity in person and do not hire workers for the said activity throughout the tax year; 2. any natural persons, including any sole traders, who carry out more than one type of any licence activity of those specified in Items 1 to 36 of Section I of the Annex hereto through work done in person throughout the tax year, shall pay 50 per cent of the final annual (licence) tax as determined for the relevant activity; 3. any natural persons, including any sole traders, who are pensioners and carry out a licence activity specified in Items 5, 6, 8 to 15, 18 to 20, 25, 27 to 29 and 31 of Section I of the Annex hereto, shall pay 50 per cent of the final annual (licence) tax as determined if they carry out the activity in person and do not hire workers for the said activity throughout the tax year; 4. any persons who use the workplace for training of apprentices within the meaning given by the Skilled Crafts Act and who carry out a licence activity of the ones specified in Items 10, 12 and 13 of Section I of the Annex hereto, shall pay 50 per cent of the final annual (licence) tax as determined for the relevant workplace; this rebate shall be enjoyable subject to the condition that a copy of the certificate on entry in the register of apprentices, issued by the competent regional chamber of skilled crafts, is attached to the return referred to in Article 59 herein. (2) Notwithstanding Article 40 (5) herein, the tax relief referred to in Item 1 of Paragraphs (1) shall be enjoyed for the entire tax year during which the loss of working capacity occurs or the validity of the decision expires. PART FOUR AMOUNTS OF TAX. TAX ASSESSMENT, WITHHOLDING AND REMITTANCE. DECLARING Chapter Eight WITHHOLDING OF TAX PREPAYMENTS Withholding of Tax Prepayments on Income from Employment Relationships Article 42. (1) The tax prepayment on income from employment relationships shall be determined by the employer monthly on the basis of the monthly taxable amount. (2) The monthly taxable amount referred to in Paragraph (1) shall be arrived at by debiting the taxable amount referred to in Article 24 herein, as charged for the relevant month, with: 1. the compulsory social insurance contributions, withheld by the employer, which are for the account of the natural person, according to the procedure established by the Social Insurance Code and the Health Insurance Act ; 2. the tax relief for reduced working capacity referred to in Article 18 (2) herein; 3. the tax relief referred to in Article 19 (2) herein, where the amounts have been withheld by the employer upon payment of the income from an employment relationship. (3) The amount of the tax due shall be determined according to the following table:
(4) The tax referred to in Paragraph (3) shall be withheld by the employer upon the final payment of the taxable income charged for the relevant month. (5) Where only part payments for the relevant month or another month have been made during the relevant month, the employer shall remit the tax referred to in Paragraph (3) determined on the gross amount of the sum total of the part payments. (6) The tax remitted by the employer under Paragraph (5) shall not be withheld from the part payment but shall be set off against the tax withheld under Paragraph (4). (7) Paragraph (5) shall not apply to part payments for the relevant month, where the full amount of the income from an employment relationship as charged by the employer is paid until the end of the next succeeding month. (8) The tax referred to in Paragraphs (1) to (7) shall be remitted within the time limits and according to the procedure established by Articles 65 and 66 herein. Tax Prepayment on Income from Economic Activity Article 43. (1) Any person, who has acquired income from economic activity referred to in Article 29 herein, shall be liable to make a tax prepayment when the taxable income accruing to the said person from all sources of income within the meaning given by Article 12 herein, debited with the compulsory social insurance contributions remitted during the year, exceeds the amount of the annual tax threshold. (2) The tax referred to in Paragraph (1) shall be at the rate of 15 per cent of the acquired taxable income referred to in Article 29 herein and shall be determined by: 1. the enterprises and the self-insured persons within the meaning given by the Social Insurance Code , which or who are payers of income from economic activity; 2. the persons who have acquired the income: in the rest of the cases. (3) In the cases referred to in Item 1 of Paragraph (2), the tax shall be withheld by the payer upon the payment of the income. (4) The tax referred to in Paragraph (2) shall be remitted within the time limits and according to the procedure established by Articles 65 to 68 herein. (5) Any persons who or which carry out economic activity in a merchant capacity within the meaning given by the Commerce Act , including any sole traders, shall remit tax prepayments at the rate of 15 per cent under the terms and according to the procedure established by the Corporate Income Tax Act . Tax Prepayment on Income from Rent or from Other Onerous Provision for Use of Rights or Property Article 44. (1) Any person, who has acquired income from rent or from other onerous provision for use of rights or property, shall be liable to tax prepayment when the taxable income accruing to the said person from all sources of income, debited with the compulsory social insurance contributions remitted during the year, exceeds the amount of the annual tax threshold. (2) The tax referred to in Paragraph (1) shall be at the rate of 15 per cent of the acquired taxable income referred to in Article 31 herein. (3) The tax referred to in Paragraph (2) shall be remitted within the time limits and according to the procedure established by Articles 67 and 68 herein. Certification of Tax Withheld Article 45. (1) Upon request by the person, the employer shall issue, not later than the 31st day of January of the next succeeding year, a certificate in a standard form showing the taxable income acquired during the year and the tax withheld during the year. (2) The certificate referred to in Paragraph (1) shall furthermore include the tax withheld or refunded to the factory or office worker upon determination of the annual amount of the tax by an employer under Article 49 herein, where the withholding/refund was effected until the 31st day of January of the next succeeding year. (3) If the circumstances referred to in Article 5 (10) of the Social Insurance Code apply, the certificate referred to in Paragraph (1) shall be issued by the competent local division of the National Social Security Institute whereto the payrolls and the attachments thereto have been delivered. (4) The enterprise or the self-insured person, which or who is a payer of income from economic activity, shall furthermore issue a certificate in standard forms, showing the income paid and the tax withheld according to the procedure established by Article 43 herein, and shall provide the said certificate to the person who has acquired the income. Chapter Nine RATE OF FINAL TAX UNDER CHAPTER SIX Rate of Final Tax under Chapter Six Article 46. (1) The tax referred to in Article 37 and Article 38 (5) herein shall be at the rate of 10 per cent, the tax referred to in Article 38 (1) herein shall be at the rate of 7 per cent, the tax referred to in Article 38 (8) and (10) herein shall be at the rate of 15 per cent. (2) In the cases of receipt of amounts after the expiry of the term of validity of a contract of life assurance, which term is fifteen years or more, the tax referred to in Article 38 (8) herein shall be at the rate of 7 per cent. (3) The tax referred to in Paragraphs (1) and (2) shall be withheld and remitted within the time limits and according to the procedure established by Articles 65 to 68 herein. Final Taxes Applicable to Sole Traders Article 47. Any persons who carry out economic activity in a merchant capacity within the meaning given by the Commerce Act , including any sole traders, shall apply the provisions of the Corporate Income Tax Act on taxation of expenses and on withholding taxes. Chapter Ten ANNUAL TAXATION Annual Tax Table Article 48. (1) The amount of tax on the aggregate annual taxable amount shall be determined according to the following table:
(2) The tax prepayments withheld and/or respectively remitted during the tax year shall be deducted from the tax as determined under Paragraph (1). (3) The final tax on income under Article 37 herein withheld from and/or respectively remitted by a natural person who is treated as a resident natural person for the tax year shall likewise be deducted from the tax as determined under Paragraph (1). (4) Any tax over remitted for the tax year shall be deductible from succeeding prepayments and annual payments for the same tax payable by a sole trader. Should it be ascertained that any sole trader deducts tax without reason in respect of unremitted prepayments and annual tax payments, interest shall be due under the Interest on Taxes, Fees and Other Such State Receivables Act . Annual Tax on Income from Employment Relationships Article 49. (1) Not later than the 31st day of January of the next succeeding tax year, the employer shall calculate the annual taxable amount, debited according to the procedure established by Paragraph (3), and shall determine the annual amount of the tax where the said employer is an employer under a principal employment relationship of the factory or office worker. (2) Where the factory or office worker has or has had an employment contract for additional work with another employer or has had a principal employment relationship with another employer during the tax year, the employer referred to in Paragraph (1) shall include the income acquired at the other employer upon calculation of the annual taxable amount and shall determine the annual amount of the tax if the factory or office worker submits thereto a certificate referred to in Article 45 herein from the other employer. (3) The annual taxable amount referred to in Article 25 herein shall be debited with the annual amount of: 1. the tax relieves referred to in Articles 19 and 22 herein, where the amounts have been withheld by the employer upon payment of the income from an employment relationship; 2. the tax relieves referred to in Articles 18, 20 and 21 herein. (4) Paragraph (3) shall apply where the factory or office worker provides to the employer, within a period commencing on the 30th day of November and ending on the 31st day of December of the tax year, the following documents: 1. a copy of a valid decision of the Territorial Medical Expert Board/National Medical Expert Board: in respect of the tax relief referred to in Article 18 herein; 2. copies of the contracts with the commercial insurance/social insurance company: in respect of the tax relief referred to in Article 19 herein; 3. copies of the documents certifying the contributions made: in respect of the tax relief referred to in Article 20 herein; 4. a declaration referred to in Article 21 (8) herein, certifying that the circumstances covered under Article 21 herein apply as at the date of submission of the said declaration: in respect of the tax relief referred to in Article 21 herein; 5. copies of documents certifying that the donee is among the persons listed in Article 22 herein and that the gift has been received: in respect of the tax relief covered under Article 22 herein. (5) Where the annual amount of the tax as determined is above the amount of the tax withheld from the factory or office worker during the year, the balance shall be withheld from the person not later than the 31st day of January of the next succeeding year. (6) Where the annual amount of the tax as determined is below the amount of the tax prepayments withheld, the employer shall refund the balance to the person not later than the 31st day of January of the next succeeding year. (7) The amount refunded under Paragraph (6) shall be set off from the employer successively against the succeeding payments to the executive budget in respect of taxes on income from employment relationships of the person or of other persons. Chapter Eleven DECLARING Section I Annual Tax Return Obligation to Submit Annual Tax Return Article 50. (1) The resident natural persons shall submit an annual tax return, completed in a standard form, in respect of: 1. the income acquired during the year and subject to levy of a tax on the aggregate annual taxable amount; 2. the income acquired during the year, referred to in Article 13 (3) herein, and the income subject to levy of a final annual (licence) tax; 3. the shares and participating interests held in companies, a permanent establishment, a fixed base and immovable property abroad. (2) The non-resident natural persons shall submit an annual tax return referred to in Paragraph (1) in respect of the income subject to levy of tax on the aggregate annual taxable amount. (3) Any resident and non-resident natural persons, who have acquired income from employment relationships referred to in Item 26 (f) of § 1 of the Supplementary Provision herein, shall submit an annual tax return referred to in Paragraph (1) in respect of the said income. (4) The certificates referred to in Article 45 herein, as well as documents certifying the remittance of the tax prepayment referred to in Articles 43 and 44 herein, shall be attached to the tax return referred to in Paragraph (1). (5) Where tax has been withheld from any resident natural person in another State, the said person shall attach to the annual tax return a certificate specifying the amount of the tax withheld, issued by the competent authorities of that other State, and a legalized translation of the said certificate into the Bulgarian language. Attachments to Annual Tax Return for Sole Traders Article 51. (1) Any persons who carry out economic activity in a merchant capacity within the meaning given by the Commerce Act , including any sole traders, shall present an annual financial statement, including the notes thereon, together with the annual tax return. (2) Any sole traders, whereof the annual financial statements are subject to mandatory financial audit according to the Accountancy Act , shall furthermore submit a copy of the report under the Independent Financial Audit Act . If the independent financial audit has not been completed by the 30th day of April, the auditor's report shall be submitted additionally but not later than one month after the date of the said report, together with a copy of the annual financial statement as certified by a registered auditor. (3) Where the annual financial statement as certified diverges from the annual financial statement referred to in Paragraph (1), as a result of which the taxable income referred to in Article 26 herein changes, an adjusting return under Article 50 herein shall be submitted together with the submission of the certified annual financial statement. Excuse from Obligation to Submit Annual Tax Return Article 52. The obligation to submit an annual tax return shall not apply to any persons who have received solely: 1. income from employment relationships, where the employer under the principal employment relationship has determined the annual amount of the tax for all incomes from employment relationships acquired during the tax year and the full amount of the tax for the tax year has been withheld until the 31st day of January of the next succeeding year, and/or 2. non-taxable income specified in this Act, with the exception of such referred to in Article 13 (3) herein, and/or 3. income on which a final tax is applicable under Article 38 herein, and/or 4. income accruing to non-resident persons, on which a final tax has been levied. Time Limit for Submission of Annual Tax Return Article 53. (1) The annual tax return shall be submitted on or before the 30th day of April of the year next succeeding the year of acquisition of the income. (2) Any person, who submits an annual tax return on or before the 10th day of February of the next succeeding year, shall enjoy a rate rebate of 5 per cent of the balance of tax due under the annual tax return where remitted on or before the same date. (3) Any person, who submits an annual tax return on or before the date referred to in Paragraph (1) by electronic means, shall enjoy a rate rebate of 5 per cent of the balance of tax due under the annual tax return where remitted on or before the same date, provided that the said person has not applied Paragraph (2). Place of Submission of Annual Tax Return Article 54. (1) The annual tax return shall be submitted to the National Revenue Agency territorial directorate exercising competence over the permanent address of the resident taxable person, including the sole trader, who is liable for the tax. (2) Where the annual tax return of a non-resident natural person is submitted through an attorney-in-fact who has a permanent address in the country, the said submission shall be effected at the National Revenue Agency territorial directorate exercising competence over the permanent address of the said attorney-in-fact. (3) Outside the cases referred to in Paragraphs (1) and (2), the annual tax return shall be submitted to the Sofia Territorial Directorate of the National Revenue Agency. Section II Tax Return in Respect of Income whereon Final Tax Is Applicable Obligation to Submit Tax Return in Respect of Income under Chapter Six Article 55. (1) The enterprises and the self-insured persons, which or who are payers of income and which or who have withheld the final tax on income charged to non-resident persons under Chapter Six, shall declare the said circumstances by a tax return completed in a standard form. (2) The tax return referred to in Paragraph (1) shall be submitted by the person who has acquired the income where the payer of the income is not obligated to withhold and remit the tax. (3) The tax return shall state particulars of the payer of the income, irrespective of who has submitted the return. Time Limit for Submission of Tax Return in Respect of Income under Chapter Six Article 56. (1) The tax return referred to in Article 55 (1) herein shall be submitted within the time limits for remittance of the tax under Articles 65 and 67 herein. (2) The tax return referred to in Article 55 (1) herein in respect of any income covered under Article 38 (5) herein shall be submitted by the person who has acquired the income not later than at the end of the month next succeeding the month of acquisition of the shares and interests in the acquiring/newly established company. Place of Submission of Tax Return in Respect of Income under Chapter Six Article 57. (1) The tax return referred to in Article 55 (1) herein shall be submitted to the National Revenue Agency territorial directorate exercising competence over the place of registration of the payer of the income or over the place where the payer of the income is subject to registration. (2) Where the tax return referred to in Article 55 (2) herein of a non-resident natural person is submitted through an attorney-in-fact who has a permanent address in the country, the said submission shall be effected at the National Revenue Agency territorial directorate exercising competence over the permanent address of the said attorney-in-fact. (3) Outside the cases referred to in Paragraphs (1) and (2), the tax return shall be submitted to the Sofia Territorial Directorate of the National Revenue Agency. Certificate on Tax Paid by Non-resident Natural Person Article 58. A certificate on tax paid according to the procedure established by this Act by a non-resident natural person shall be issued in a standard form at the request of any such person. Any such request shall be submitted to the National Revenue Agency territorial directorate whereto the tax return referred to in Article 55 herein has been submitted. Section III Tax Return on Levy of Final Annual (Licence) Tax Obligation to Submit Tax Return on Levy of Final Annual (Licence) Tax Article 59. (1) The persons subject to levy of a final annual (licence) tax under Chapter Seven herein shall submit a tax return completed in a standard form, declaring thereby the circumstances pertaining to the assessment of the tax. (2) By a return referred to in Paragraph (1), the persons shall furthermore declare all changes in the circumstances pertaining to the assessment of the tax. (3) The persons shall furthermore submit a tax return under this Article on the occurrence of any circumstances referred to in Article 39 (2) and (3) herein during the relevant period. Time Limit for Submission of Tax Return on Levy of Final Annual (Licence) Tax Article 60. (1) The tax return referred to in Article 59 (1) herein shall be submitted on or before the 31st day of January of the next succeeding year. In the cases of commencement of activity after the said date, the tax return shall be submitted immediately before commencement of activity. (2) The tax return referred to in Article 59 (2) herein shall be submitted within seven days after occurrence of the circumstances. (3) The tax return referred to in Article 59 (3) herein shall be submitted not later than at the end of the month next succeeding the month during which the circumstances referred to in Article 39 (2) and (3) herein have occurred. (4) Any person, who submits the tax return referred to in Article 59 (1) herein on or before the 31st day of January of the current year and pays the full amount of the final annual (licence) tax, as determined according to the circumstances as declared, on or before the same date, shall enjoy a rate rebate of 5 per cent. Place of Submission of Tax Return on Levy of Final Annual (Licence) Tax Article 61. (1) The tax returns referred to in Article 59 herein shall be submitted to the National Revenue Agency territorial directorate exercising competence over the permanent address of the resident natural persons, including the sole traders, who are liable for the tax. (2) Where the tax return of a non-resident natural person is submitted through an attorney-in-fact who has a permanent address in the country, the said submission shall be effected at the National Revenue Agency territorial directorate exercising competence over the permanent address of the said attorney-in-fact. (3) Outside the cases referred to in Paragraphs (1) and (2), the tax return shall be submitted to the Sofia Territorial Directorate of the National Revenue Agency. Section IV Time Limits and Place of Submission of Tax Returns on Alternative Taxes Payable by Sole Trader Obligation and Time Limits for Submission of Tax Returns on Alternative Taxes Payable by Sole Traders Article 62. In respect of the activities taxed under Article 26 (5) herein, the sole traders shall apply the provisions of the Corporate Income Tax Act on declaring of the tax. Place of Submission of Tax Returns on Alternative Taxes Payable by Sole Traders Article 63. The tax returns referred to in Article 62 herein shall be submitted to the National Revenue Agency territorial directorate exercising competence over the permanent address of the natural person. Section V Endorsement of Standard Forms Endorsement of Standard Forms Article 64. (1) The standard forms of the tax returns under this Act shall be endorsed by an order of the Minister of Finance. (2) The standard form of the declaration referred to in Article 21 (8) herein shall be endorsed by an order of the Minister of Finance. (3) The standard forms of a Statement of Amounts Paid and of a certificate under this Act, as well as of the certificate referred to in Article 58 herein and of the statement referred to in Article 73 (1) herein, shall be endorsed by an order of the Minister of Finance. (4) The orders and the standard forms referred to in Paragraphs (1) to (3) shall be promulgated in the State Gazette. Chapter Twelve TAX REMITTANCE Section I Time Limits and Place of Remittance of Taxes Withheld by Payer of Income Time Limits for Remittance of Taxes Withheld by Payer of Income Article 65. (1) The tax referred to in Article 46 herein on the income referred to in Article 37 (1) to (9) and Article 38 (10) herein shall be withheld and remitted by the enterprise or the self-insured person which or who is a payer of the income not later than at the end of the month next succeeding the month in which the income was charged. (2) The tax referred to in Article 46 herein on the income referred to in Article 38 (2) herein shall be withheld and remitted by the enterprise which is a payer of the income not later than at the end of the month next succeeding the month during which the decision on the distribution of dividend was made. (3) The tax referred to in Article 46 herein on the income referred to in Article 38 (3) herein shall be withheld and remitted by the enterprise which is a payer of the income not later than at the end of the month during which the expenses were charged. (4) The tax referred to in Article 46 herein on the income referred to in Article 38 (4) herein shall be withheld and remitted by the enterprise which is a payer of the income not later than at the end of the month during which the share in any liquidation surplus was charged. (5) Paragraph (4) shall not apply to any income from shares in any liquidation surpluses in the cases of transfer of property upon transformation according to the procedure established by Article 265 of the Commerce Act , in which cases the tax shall be remitted according to the procedure established by Article 67 herein by the sole trader who has acquired the income. (6) The tax referred to in Article 46 herein on the income referred to in Items 10 to 12 of Article 37 (1) and Article 38 (5) herein shall be remitted according to the procedure established by Article 67 herein by the person who has acquired the income. (7) The tax referred to in Article 46 herein on the income referred to in Article 38 (8) herein shall be withheld and remitted by the commercial insurance/social insurance company not later than at the end of the month next succeeding the month during which the income was acquired by the natural person. (8) The commercial insurance/social insurance company referred to in Paragraph (7) shall ascertain the portion of the non-taxable income referred to in Article 38 (9) herein on the basis of a written declaration provided by the natural person who is liable for the tax. (9) Where the income referred to in Article 37 and Article 38 (1) herein are in favour of any person who is resident in a State wherewith the Republic of Bulgaria has concluded a convention for the avoidance of double taxation, the tax referred to in Article 46 herein shall be withheld and remitted by the enterprise or by the self-insured person which or who is a payer of the income within three months after the commencement of the month next succeeding the month during which the income referred to in Paragraph (1) was charged, after the decision referred to in Paragraph (2) was made, after the expenses referred to in Paragraph (3) were charged, or after the share in any liquidation surplus was charged, as the case may be. (10) The tax which the payer of the income is obligated to withhold under Articles 42, 43 and Article 49 (2) and (5) herein shall be remitted on or before the 10th day of the month next succeeding the month during which the tax was withheld. (11) The tax referred to in Article 42 (5) herein shall be remitted not later than at the end of the month next succeeding the month during which the part payments were made. Place of Remittance of Taxes Withheld by Payer of Income Article 66. The tax referred to in Article 65 herein shall be remitted to the executive budget by crediting an account of the National Revenue Agency territorial agency exercising competence over the place of registration of the payer of the income. Section II Time Limits and Place of Remittance of Taxes by Person Who Has Acquired Income Time Limits for Remittance of Taxes by Person Who Has Acquired Income Article 67. (1) Where the payer of the income is not obligated to withhold and remit the tax, the tax referred to in Articles 43, 44 and 46 herein shall be remitted by the person who has acquired the income, on or before the 15th day of the month next succeeding the quarter of acquisition of the income. (2) Tax prepayment under Item 2 of Article 43 (2) and Article 44 herein shall not be remitted in respect of any income acquired during the fourth quarter of the tax year. (3) The tax referred to in Article 46 herein, as determined at the time of the exchange referred to in Article 38 (5) herein, shall be remitted by the person who has acquired the income on or before the 15th day of the month next succeeding the quarter during which a subsequent sale or exchange was effected of the shares and interests in the acquiring/newly established corporation, including upon a subsequent exchange of the shares or interests in connection with transformation of commercial corporations. (4) The tax due under Article 48 herein shall be remitted on or before the 30th day of April of the year next succeeding the year of acquisition of the income. Place of Remittance of Taxes by Person Who Has Acquired Income Article 68. (1) The tax referred to in Articles 43, 44, 46 and 48 herein shall be remitted to the executive budget by crediting an account of the National Revenue Agency territorial agency exercising competence over the permanent address of the resident natural person, including the sole trader. (2) The tax referred to in Paragraph (1) of any non-resident person who has received income through an attorney-in-fact who has a permanent address in the country shall be remitted to the executive budget by crediting an account of the National Revenue Agency territorial agency exercising competence over the permanent address of the said attorney-in-fact. (3) Where the place of submission of the tax cannot be ascertained according to the procedure established by Paragraphs (1) and (2), the tax shall be remitted to the executive budget by crediting an account of the Sofia City Territorial Directorate of the National Revenue Agency. Section III Time Limits and Place of Remittance of Final Annual (Licence) Tax Time Limits for Remittance of Final Annual (Licence) Tax Article 69. (1) The final annual (licence) tax under Chapter Seven herein shall be remitted in four equal payments, as follows: 1. for the first quarter: on or before the 31st day of January; 2. for the second quarter: on or before the 31st day of April; 3. for the third quarter: on or before the 31st day of July; 4. for the fourth quarter: on or before the 31st day of October. (2) Where an obligation to remit a final annual (licence) tax arises during the tax year, the portion of the tax due for the current quarter shall be remitted within seven days after the date of submission of the return referred to in Article 59 herein, and where a return has not been submitted, the said portion shall be remitted within seven days after expiry of the time limit for submission of the said return. Place of Remittance of Final Annual (Licence) Tax Article 70. The final annual (licence) tax shall be remitted to the executive budget by crediting an account of the National Revenue Agency territorial agency exercising competence over the permanent address of the resident natural person, including the sole trader. Section IV Time Limits and Place of Submission of Alternative Taxes by Sole Traders Time Limits for Submission of Alternative Taxes by Sole Traders Article 71. In respect of the activities taxed under Article 26 (5) herein, the sole traders shall apply the provisions of the Corporate Income Tax Act regarding the time limits for remittance of the tax. Place of Submission of Alternative Taxes by Sole Traders Article 72. The taxes referred to in Article 71 herein shall be remitted to the executive budget by crediting an account of the National Revenue Agency territorial agency exercising competence over the permanent address of the natural person. PART FIVE DISCLOSURE OF INFORMATION, APPLICABLE PROVISIONS OF OTHER ACTS AND REFUND OF TAX WITHHELD IN ANOTHER MEMBER STATE OF EUROPEAN COMMUNITY Chapter Thirteen DISCLOSURE OF INFORMATION Income Payers' Obligations to Disclose Information Article 73. (1) The enterprises and the self-insured persons within the meaning given by the Social Insurance Code , which or who are payers of income, shall prepare a statement in a standard form on the income paid to natural persons during the tax year other than income from employment relationships and pensions. (2) The statement referred to in Paragraph (1) shall be presented on or before the 30th day of April of the next succeeding year to the National Revenue Agency territorial directorate exercising competence over the place of registration of the payer of the income. (3) Where the persons referred to in Paragraph (1) have paid income to more than ten natural persons during the tax year, the statement referred to in Paragraph (1) shall be presented solely on an electronic data medium in a format and according to a procedure approved by an order of the Executive Director of the National Revenue Agency. (4) Employers shall periodically disclose information on the income paid under employment relationships and on the tax withheld on the said income. The Ministry of Finance shall issue an ordinance on the content, manner and procedure for presentation and storage of the data. State Bodies' Obligation to Disclose Information Article 74. (1) When so requested by the revenue authorities, the Ministry of the Interior shall provide the information necessary to ascertain whether a person is resident or non-resident according to Chapter One herein. (2) Annually, on or before the 15th day of December, the Ministry of Regional Development and Public Works shall provide the National Revenue Agency with up-to-date information on the population | ||||||||||||||||||||