November 28 2018

Amendments to Local Taxes and Duties Act gazetted

Source: IBFD Tax Research Platform News

On 27 November 2018, amendments to the Local Taxes and Duties Act were published in the State Gazette. A summary of the main changes is given below.

Increased real estate tax for certain immovable property in resorts

Immovable property in Bulgaria is subject to annual real estate tax of between 0.1‰–4.5‰ of the tax value of the property. However, as from 1 January 2019, increased rates will apply to immovable property that meets the following criteria:

  • located in a resort;
  • not the main home of a taxable person;
  • not leased; and
  • not registered as accommodation under the Tourism Act.

The increased rates for immovable property meeting the above criteria will be as follows:

  • 5‰-7‰ of the tax value for property in balneological, climatic mountain and climatic seaside resorts of national importance; and
  • 4.5‰-6‰ for immovable property in other resorts.

Changes to determining the real estate tax

The correction coefficient increasing the real estate tax for immovable property that has features such as aluminium joinery, air conditioning installation, etc., will be abolished.

Amendments to tax relief for main home

If more than one main home is declared, the full amount of the real estate tax will be due for all homes owned by the taxable person. Also, no reduction of the waste collection duty will be applied in such cases.

New concept for motor vehicles tax

The motor vehicle tax for cars and light commercial vehicles with a weight of up to 3.5 tonnes will be determined based on a formula including a property and an ecological component. The property component will take into account the engine power and the manufacturing year of the car. The ecological component will reflect the ecological category of the car based on the European Emission Standards (Euro 1, 2, 3, 4, 5 or 6).

In addition to the above, various other amendments to motor vehicle tax relief are introduced, e.g. abolishment of the tax relief for cars with catalytic converters, the possibility for applying tax relief for cars with engine power above 74 kW, etc.

New administrative simplifications

In the case of transactions involving motor vehicles, notaries public will be required to check in the relevant registers whether there is any unpaid tax on vehicles. In addition, the notaries public will be obliged to inform the local municipalities of the transfers of immovable property and motor vehicles performed, as well as the taxable base and local tax paid, within 7 days.

Postponed introduction of the new concept for calculation of waste collection duty

The new concept for the calculation of waste collection duty based on generated waste had initially been scheduled to be introduced as from 2020. However, this year it was decided to postpone introduction of the new concept until 2022.

The above changes will be applicable as from 1 January 2019.

In addition, an exemption from real estate tax is introduced for new buildings until they are put into use, but not later than 2 years after completion of the structural works. This rule will be applied as from 1 January 2020.