December 2022 / Bulgaria

On 13 December 2022, the legislation with regard to windfall tax for the fossil fuel sector was gazetted. The new tax applies to companies engaged in the crude petroleum, natural gas, coal and refinery sectors. The windfall tax takes the form of a temporary solidarity contribution of 33% and applies to excess profits generated by EU companies and permanent establishments with activities falling within the scope of the tax.

The contribution will be calculated on the basis of taxable profits, for 2022 and 2023, above a 20% increase in the average taxable profits for the tax periods 2018, 2019, 2020 and 2021, as determined under the Corporate Income Tax Act. The deadline for payment of the temporary solidarity contribution will be the same as the deadline for payment of the annual corporate income tax, i.e. not later than 30 June of the year following the tax year.

The new legislation is in line with Council Regulation (EU) 2022/1854 of 6 October 2022 on an emergency intervention to address high energy prices.

The full text of the new legislation on the windfall tax was included in the additional provisions to the amendments to the Corporate Income Tax Act and is available here (in Bulgarian only), effective from 8 October 2022.

On 23 December 2022, the parliament approved at its second final reading the Bill on the continuation of the provisions of the State Budget Act for 2022, the Act on the Budget of the State Social Security for 2022 and the Act on the Budget of the National Health Insurance Fund for 2022.

This means, for example, that the social security and health insurance rates, as well as the related thresholds in 2023, will remain the same as those applicable in 2022.

The text of the approved proposal is available here (in Bulgarian only).

The excise duty rates of tobacco and tobacco products have been increased for the period between 2023 and 2026 under recently gazetted legislation. The amendments to the Excise Duties and Tax Warehouses Act (EDTWA) are the following.

Tobacco used for smoking:

• BGN 167 per kilogram from 1 March 2023;
• BGN 184 per kilogram from 1 January 2024;
• BGN 202 per kilogram from 1 January 2025; and
• BGN 222 per kilogram from 1 January 2026.

Specific excise duty rate:

• BGN 117.5 per 1,000 cigarettes as of 1 March 2023;
• BGN 126 per 1,000 cigarettes as of 1 January 2024;
• BGN 134.5 per 1,000 cigarettes as of 1 January 2025; and
• BGN 143 per 1,000 cigarettes as of 1 January 2026.

Ad valorem excise duty rate:

• 23.5% of the selling price as of 1 March 2023;
• 22% of the selling price as of 1 January 2024;
• 20.5% of the selling price as of 1 January 2025; and
• 19% of the selling price as of 1 January 2026.

Cigarettes (minimum excise duty rate):

• BGN 185.50 per 1000 pieces from 1 March 2023;
• BGN 194 per 1000 pieces from 1 January 2024;
• BGN 202.50 per 1000 pieces from 1 January 2025; and
• BGN 211 per 1000 pieces from 1 January 2026.

Additionally, the amendment also provides an explicit clarification that e-cigarette liquid containing nicotine is considered a tobacco product.

The full text of the Official Gazette No. 100, issued on 16 December 2022, is available here (in Bulgarian only).

Bulgaria has gazetted the provisions implementing the Amending Directive to the 2011 Directive on Administrative Cooperation (2021/514) (DAC7) into the Bulgarian Tax and Social Security Procedure Code.

An obligation is introduced for digital platform operators to report information on sellers using the platforms to sell goods and provide certain services. Also, joint audits are introduced to be carried out by the competent authorities of one or more EU Member States.

The full text of Official Gazette No. 100, issued on 16 December 2022, is available here (in Bulgarian only).