May 31 2019

Bulgaria to introduce obligatory transfer pricing documentation

Source: IBFD Tax Research Platform News

The Bulgarian Ministry of Finance initiated a public consultation on a bill for Amendment of the Tax and Social Security Procedures Code proposing obligatory transfer pricing documentation.

The bill will implement obligatory transfer pricing documentation to justify the application of an arm’s length principle to related parties transactions. The documentation will be obligatory for those entities fulfilling the balance sheet criteria and the "materiality" of transactions they have undertaken.

Entities concerned

Entities involved in related parties transactions that satisfy the specified financial limits as at 31 December of a given year, will need to prepare specific transfer pricing documentation for:

  • Balance sheet value assets exceeding BGN 8 million (EUR 4 million); and
  • Net sales revenue exceeding BGN 16 million (EUR 8 million).

Transactions to be covered

The following transactions exceeding the respective annual limits will need to be covered by transfer pricing documentation:

  • Sales of goods exceeding BGN 400,000;
  • Provision of services exceeding BGN 200,000;
  • Transactions with intangible assets exceeding BGN 200,000;
  • Transactions with financial assets exceeding BGN 200,000; and
  • Loan transactions exceeding BGN 2 million or interest payments exceeding BGN 100,000.


Concerned entities will need to prepare a local file and a master file when part of a multinational group of companies. The local file should be prepared by 31 March of the following year while the respective master file should be made available within 12 months after the deadline for preparation of the local file.

Procedure and expected application

Currently, the bill is undergoing public consultation, but it is expected that the amendments will come into force for 2019 and the first master files will need be prepared by 31 March 2020.