November 2020 / Bulgaria

On 29 October 2020, as part of the 2021 draft bill, Bulgaria officially proposed increases in the minimum monthly salary (from the current BGN 610 to BGN 650) and the minimum monthly social security income for self-insured persons (from BGN 610 to BGN 650) as from 1 January 2021.

In that context, the Council of Ministers submitted to the Bulgarian parliament the following draft acts:

• the Budget Act for 2021, available here; and
• the Act on the budget of the State Social Security for 2021, available here.

Furthermore, it was proposed that the maximum monthly social security income remain unchanged at BGN 3,000. Finally, no changes to the social security contribution rates are envisaged.

As a next step, the acts must be voted on at two readings by the parliament.

Further developments will be reported in due course.

On 6 November 2020, Bulgaria proposed that the thresholds for statutory audits of annual financial statements of small enterprises be increased to BGN 3 million for the book value of assets and to BGN 6 million for net sales revenue. Currently, subject to a statutory audit, among other things, are the annual financial statements of small enterprises that exceed at least two of the following criteria:

• the book value of the assets exceeds BGN 2 million;
• the net sales revenue exceeds BGN 4 million; and
• the average number of personnel for the reporting period exceeds 50.

The proposal was submitted to the Bulgarian parliament between the first and second reading of the 2021 draft bill for amendments to the Accountancy Act, which had been submitted to the parliament on 27 October 2020 by the Council of Ministers (technically included in the additional provisions of the draft bill for amendments to the Value Added Tax Act). As a next step, the proposal must be voted at second (final) reading by the parliament.

The proposal is available here (as a PDF and in Bulgarian only).

Further developments will be reported in due course.

On 19 November 2020, Bulgaria, as part of the tax package for 2021, officially adopted the extension of the deadline for the submission of corporate income tax (CIT) and personal income tax (PIT) returns and the publication of annual financial reports.

Several other substantial changes contained in the Bulgarian 2021 tax package include, without being limited to, the implementation of the voluntary use of approved software for sales, an exemption from transfer tax for deregistered vehicles and a refund of excise duties imposed on ethyl alcohol used for disinfection purposes.

The announcement of the adoption of the package can be found here (in Bulgarian only).

Bulgaria’s Cabinet approved, at a regular meeting on November 25, a treaty with the Netherlands on the avoidance of double taxation, according to a statement by the government information service.

The treaty, signed on September 14 2020, covers the avoidance of double taxation in income taxes and the prevention of tax evasion and circumvention.

It will be put to Bulgaria’s National Assembly for ratification.

The document creates tax-friendly opportunities for residents of each of the two countries to carry out business activities in the other country in various fields and industries, the Bulgarian government statement said.

“This will contribute to the deepening of bilateral economic and investment co-operation between the two countries,” the statement said.

The tax rules adopted in the signed agreement are in accordance with current Bulgarian tax legislation and modern principles and developments in international taxation, reflected in the current Model Agreement of the Organization for Economic Cooperation and Development (OECD).

The new guidelines in this area are also set out in the Base Erosion and Profit Shifting (BEPS) Project, which offers countries solutions to overcome differences in existing international tax rules that allow companies to minimise their tax liabilities by using aggressive tax planning schemes, artificially transferring their corporate profits to jurisdictions with low or zero tax rates, the statement said.

The measures under the BEPS Project open the way for greater tax predictability and legal certainty by creating conditions for more effective settlement of disputes between taxpayers and administrations in the application of international tax rules and requirements, it said.

Source: Bulgaria’s government approves new double tax treaty with the Netherlands | The Sofia Globe