On 4 February 2026, HM Revenue & Customs (HMRC) published the English-language “synthesized text” of the 2015 Double Taxation Convention between Bulgaria and the United Kingdom, updated to reflect the amendments resulting from the application of the Multilateral Instrument (MLI).
This publication represents a significant interpretative development, as it allows for a consolidated reading of the bilateral Convention and the MLI provisions effectively applicable between the two States.
What is the “Synthesized Text” and Why Is It Relevant?
The synthesized text does not constitute a new treaty, nor does it formally replace the original Convention. Rather, it is a technical document that integrates, in a coordinated and systematic manner, the provisions of the 2015 Convention with the effects arising from the MLI — the multilateral instrument developed within the OECD framework as part of the BEPS (Base Erosion and Profit Shifting) project.
Its purpose is to facilitate the joint interpretation of the treaty provisions by illustrating how the clauses of the Convention are modified or supplemented by the MLI provisions applicable between Bulgaria and the United Kingdom.
The text has been prepared in cooperation between the competent authorities of both States and reflects the impact of their respective MLI positions (options, reservations and notifications) exercised upon ratification.
Entry into Effect: Different Timing Depending on the Type of Tax
A key aspect concerns the effective dates of the amendments introduced by the MLI, which — as is customary — do not apply uniformly to all taxes.
As a general rule, a distinction must be made between:
- taxes levied by way of withholding at source (WHT), for which the application of the new provisions depends on the date of payment or credit of the income; and
- other taxes, for which the entry into effect is linked to the taxpayers’ fiscal periods.
In the specific case of the UK–Bulgaria Convention, the synthesized text provides for the following effective dates:
United Kingdom:
- for taxes withheld at source: application as from 1 January 2024;
- for Income Tax and Capital Gains Tax: application from 6 April 2024 (the start of the UK fiscal year);
Bulgaria:
- for other taxes: application to taxable periods beginning on or after 1 January 2024.
Careful verification of the applicable effective dates is therefore essential in managing cross-border flows and assessing tax positions relating to “transition” periods.
Areas Generally Affected by the MLI
From a broader perspective, experience with the MLI shows that amendments to double tax treaties may concern, inter alia:
- the introduction of anti-abuse provisions, in particular the Principal Purpose Test (PPT);
- permanent establishment rules, including anti-fragmentation measures;
- dispute resolution mechanisms, through the strengthening of the Mutual Agreement Procedure (MAP);
- additional measures aimed at countering aggressive tax planning practices (e.g., hybrid mismatches, where adopted by both States).
However, the effective application of each provision depends on the compatibility of the choices made by the two States upon signing and ratifying the MLI.
The Specific UK–Bulgaria Case
With regard to the Convention between Bulgaria and the United Kingdom, the synthesized text highlights in particular amendments relating to:
- Preamble and purpose of the treaty (Article 6 MLI) — introduction of an explicit reference to the prevention of tax evasion and avoidance, in line with BEPS standards;
- Principal Purpose Test (Article 7 MLI) — a general anti-abuse rule allowing treaty benefits to be denied where one of the principal purposes of an arrangement or transaction is to obtain such benefits;
- Mutual Agreement Procedure – MAP (Article 16 MLI) — strengthening procedural safeguards for taxpayers in cases of interpretative or application disputes;
- Corresponding adjustments (Article 17 MLI) — coordination rules concerning corresponding transfer pricing adjustments.
In the bilateral relationship under review, the most significant changes therefore concern anti-abuse provisions and improvements to dispute resolution mechanisms. Other areas sometimes affected by the MLI (such as detailed permanent establishment provisions or specific anti-fragmentation clauses) do not appear as defining features in the published synthesized text.
Legal Nature of the Synthesized Text
The synthesized text is explanatory in nature and does not constitute an autonomous source of law.
The legally binding instruments remain:
- the 2015 bilateral Convention;
- the Multilateral Instrument;
- the instruments of ratification and notifications deposited by Bulgaria and the United Kingdom.
The coordinated document therefore serves as a practical consultation tool for taxpayers, advisers and tax authorities, but does not replace the official legal texts.
Practical Implications for Businesses and Advisers
For multinational groups and economic operators active between Bulgaria and the United Kingdom, the publication of the updated text:
- enhances interpretative certainty;
- enables a consolidated reading of the amended treaty provisions;
- requires a careful reassessment of existing structures in light of the Principal Purpose Test.
In particular, it is advisable to:
- verify the correct application of the new rules based on the relevant effective dates for each tax;
- assess the robustness of cross-border structures under the new anti-abuse framework;
- review dividend, interest and royalty flows in light of the potential denial of treaty benefits.
The update of the UK–Bulgaria Convention through the MLI forms part of the broader evolution of international tax law, increasingly oriented toward systemic coherence, the prevention of base erosion, and the strengthening of cooperation mechanisms between States.
