Law on VAT – Boteva & Kantutis Law Office
The Law on VAT has been recently amended and most of the new provisions shall enter into force on January, the 1st, 2015. The main amendments are related to the transposition of provisions of Council Directive 2008/8/EC amending Directive 2006/112/EC as regards the place of supply of servicesAccording to the new provisions adopted in compliance with Directive 2008/8/EC supplies of telecommunication services, radio and television broadcasting services and electronically supplied services, to a non-taxable person are levied in the state where the end-consumer is established or has his permanent address or usually resides.
The suppliers of such services shall be facilitated by the newly adopted so called “single point of electronic contact for VAT identification and declaration”. By the set web portal the suppliers shall be enabled to submit an electronic application for VAT registration in the member state in which they are identified to declare the VAT due in the Member State of their customer.
The suppliers shall also be entitled to choose how to register for VAT between two types of registration regimes depending on the place where the supplier is settled down – either in a Member State or not.
Law on Corporate Income Taxation
In accordance with the Council Directive 2003/49/EC on a common system of taxation applicable to interest and royalty payments made between associated companies of different Member States and the Treaty between the Member States of the European Union and Bulgaria and Romania concerning the accession of Bulgaria and Romania to the European Union Bulgaria has been authorized not to apply the provisions of Article 1 of Directive 2003/49/EC until 31 December 2014. Pursuant to Article 1 of the Directive interest or royalties arising in a Member State shall be exempt from any taxes imposed on those payments in that State, provided that the beneficial owner of the interest is a company of another Member State.
Within that transitional period of 8 years the withholding tax regarding payments of interest or royalties made by a local company to a related party in another Member State has been within the range of 5 % until 31 December 2014. Upon expiry of the transitional period and further to the latest amendments of the law Article 1 of the Directive has been transponed and interest and royalties shall be exempt from taxation provided that the income is paid by a local company to a foreign entity established in another Member State, and both companies are related parties.
Law on Personal Income Taxation
Pursuant to the latest amendments of the law for year 2015 the tax rate accrued on the interest paid on any type of bank deposit accounts shall remain at the amount of 8 %. Prior to the amendment the tax rate was planned to decrease to 6 % for year 2015.
On the 19 December, 2014 the Bulgarian Parliament voted its Budget 2015 on a second hearing. The Law provides for higher upper limit of the monthly income base for social security contributions. For year 2014 the income was capped at BGN 2400 per month, whereas for year 2015 it was raised to BGN 2600 per month.
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