Double Taxation Agreement Bulgaria

New bilateral conventions for the avoidance of double taxation can have a considerable impact on foreign investors operating in Bulgaria The parent-subsidiary directive applies to Bulgarian companies and fulfils the task of eliminating taxes that may result from the distribution of profits between EU companies. This is done, as mentioned above, by abolishing withholding taxes on dividends that apply to companies established in different Member States; it also prevents the double taxation of parent companies on the profits of subsidiaries they have in other EU Member States. In accordance with the provisions of the Directive, the types of companies which are included are public limited companies, funds, savings banks, certain cooperatives and associations engaged in commercial activity. One of our lawyers in Bulgaria can give more details to EU investors on how these provisions apply. The following double taxation conventions provide for specific rules for frontier workers: Bulgaria Bulgarian tax treaties and international conventions In Bulgaria, withholding tax may not be necessary if the shareholders of Bulgarian companies are established for tax purposes in an EU country and are not established in a third country, in accordance with the provisions of a double taxation convention. In addition, if shareholders in their State of residence pay corporation tax and are not entitled to tax exemptions, they are not subject to withholding tax. This may also apply to non-residents who hold, for at least two years, 15 % or more of the shares in the Bulgarian company distributing the dividends. In recent years, Bulgaria has renegotiated some of the most frequently applied conventions for the avoidance of double taxation. As a result of this initiative, the old tax treaties with Austria, Germany, Switzerland and, more recently, the United Kingdom have been terminated and new contracts have entered into force.

Negotiations are also under way for a new tax treaty with the Netherlands. One of the practical issues to be taken into account when entering into force of a new treaty is the need to initiate a new prior authorisation procedure in order to be able to continue to apply contractual facilities, if at all available. .

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