Asset protection through Bulgarian private foundation

Is it the end of financial privacy thanks to Common Reporting Standard (CRS), FATCA and other new laws? Can a Bulgarian foundation help you?

Back in the day, financial privacy was considered a basic human right but, with the rise of cross-border terrorism, tax evasion and money laundering, the major governments of the world are fighting to bring transparency to international financial transactions. This is a noble cause and we all support it. But due to this issue, the law-abiding citizens are at the risk of their privacy being invaded. The never-ending leaks from major banks are a new challenge and do not seem to stop.

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VAT on intra-EU services

These are the general rules for the Vat taxation of intra-EU services in accordance to the Bulgarian Value Added Tax Act (VATA).

The intra-EU goods supplies are subject to special rules. Here is the VAT taxation procedure for some of the most common intra-EU services provided:

 General intra-EU supply taxation rules

The general rules for this type of supplies are listed in Chapter 5 Taxation of intra-community supplies of VATA (articles 51 to 53). Continue reading “VAT on intra-EU services”

Advance payments in accordance with VATA

Advance payments are a key component of the Value Added Tax Act (VATA) in Bulgaria, due to the fact that they have a direct relation to the VAT charging obligation and with the tax credit deduction rights. Here is a short overview of the types of advance payments and their relationship with invoice issuance as well as the rights for tax deduction for advance payments and the deposits made as such payments:

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Required documentation and reporting in compliance with the Value Added Tax Act (VATA)

In accordance with the 2006/112 EC directive from 28.12 2016 issued by the EC for the adoption of a common VAT taxation system among member states, there are set rules for issuing invoices and for the harmonization of the tax laws related to VAT including the specific requirements for their contents and conditions for issuing in Bulgaria. Any tax registered supplier is obligated to issue an invoice for the supply of services or goods for an advance payment received except for the cases when the supplies are documented otherwise.

A person who is registered under VATA for taxable supplies can take advantage of the right for tax deduction only when the services and goods provided are used for the purposes said by the registered person.

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VAT charging and tax rates

Responsibility for charging VAT

Any person registered under the Bulgarian Value Added Tax Act (VATA) is obliged to charge value added tax and issue a tax document, such as an invoice, protocol or notice with the VAT amount indicated on a separate line. The document needs to be added to the purchase ledger for the relevant period in the VAT declaration issued in accordance to Art. 86 of VATA. If a document is not issued in the required period, the VAT is due for the period when the tax becomes chargeable.

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Supply of goods – types of places in accordance with Bulgarian VAT regulations

There are different ways for determining the place of supply of goods in accordance with the Bulgarian Value Added Tax Act (VATA). This is detrimental for the type of VAT taxation regime of each supply to Bulgaria. The basic principle for VAT taxation for each supply is that it is in accordance to the local laws on the territory of the supply.

General terms

Art. 6 (2) of VATA stipulates that when the goods are not shipped or forwarded but rather their ownership is passed by handing them over – the place of supply is where they are handed over to the buyer.

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OECD issues consultation documentation regarding the investment schemes involving misuse of residence for circumventing the Common Reporting Standard

A growing number of jurisdictions are offering Citizenship by investment (CBI) or Residence by investment (RBI) schemes allowing foreign citizens to obtain local citizenship or permanent or temporary residence rights in order to take advantage of the local flat fees or in exchange for local investments. These individuals may be interested in these opportunities for a number of legitimate reasons such as taking advantage of visa free travelling, increased mobility or better job or educational opportunities, or the choice of living in an economically stable country. But at the same time the information which is released on the market and obtained by the OECD CRS public disclosure facility stresses on the various RBI and CBI misuse schemes which are aimed at circumventing the requirements for reporting under the Common Reporting Standards (CRS).

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OECD has released its latest developments regarding the BEPS implementation

OECD has announced further actions to be taken for efficient Base erosion and profit shifting (BEPS) implementation for the collaboration among the country members of the Organization and their jurisdictions of potential tax avoidance schemes which use the existing mismatches and gaps in the tax rules for shifting profits toward locations with lower or no taxes. The latest developments are targeted towards assuring certainty for both Multinational Corporations and tax administrations and require Country-by-Country (CBC) reporting.

The Inclusive Framework includes the newly approved updates to the results of the preferential regime reviews of the Forum on Harmful Tax Practices (FHTP) regarding BEPS Action 5.

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Bulgarian temporary residence permit – Questions and Answers

What are the benefits of getting a Bulgarian temporary residence permit?

  • Foreigners will get a Bulgarian ID card allowing their stay in Bulgaria and multiple entries into the country.
  • Your Bulgarian ID card can be extended for up to 5 years and foreigners can later apply for permanent residence and full citizenship.
  • Access to a simpler visa process for Schengen Zone.
  • You can take your family to Bulgaria.

What duration of living does a temporary residence permit allow me in Bulgaria?

A Bulgarian temporary residence permit allows you to stay for either 6 or 12 months. You can renew yearly for up to 5 years.

When do I become qualified to apply for a Bulgarian permanent residence permit?

To be eligible for a permanent residence permit, a person should hold a valid Bulgarian temporary residence permit for a minimum of 5 years. Foreigners can get their temporary residence permit through the trade representative office in Bulgaria. The permit is issued for a duration of one year and can be renewed annually for up to five years.

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