In the conditions of a changeable situation, some of the companies manage to adapt by implementing their commercial activity through remote work of their employees. A situation often arises when a person hired on work abroad has to perform his duties remotely from the territory of another country. Until one moment this person has paid taxes in the country where the company has its registered office, and subsequently, after beginning the remote performance of his duties in another country, the question arises about the tax treatment of the income realized through remote work.
When carrying out a transaction by courier in Bulgaria, a question arises about the documentary justification of the business operation. In order for the business operation to be documented, a primary accounting document must be issued, accurately reflecting the business operation. In this case, the costs incurred may be recognized as an accounting expense.
I. General provisions
In view of the tax advantages that Bulgaria provides for foreign investors, and taking into account the country’s membership in the European Union, one of the often preferred forms of commercial activity in Bulgaria by traders from other countries is the establishment of a branch of a foreign trader.
The registration of a branch of a foreign trader in Bulgaria does not lead to the creation of a new legal entity, but only to a territorially and organizationally separated part of it. The branch has its headquarters, object of activity, a person who manages it, workers, etc. However, the branch does not own separate property other than that of its principal. Continue reading “Branch of a foreign trader in Bulgaria”
In the situation of a sale of a company asset (e.g. a car) in a reporting period during which no commercial activity has been carried out in Bulgaria by a company, the question arises whether this company can be defined as a person that has not carried out activity within the meaning of the Law on accounting and whether it should declare the amount of the sale of the asset.
For the income acquired from his activity in Bulgaria, the self-insured person is obliged to issue a reporting document.
A self-employed person, who has acquired income from his activity and has declared to the payer of the income the circumstance that he is self-insured, owes in advance a tax on the difference between the taxable income and the legally recognized expenses for his activity, as well as the social security contributions, which he is obliged to make at his own expense for the months of the quarter during which the taxable income has been acquired.
The obligation for insurance of self-insured persons in Bulgaria arises from the day of commencement or resumption of employment activity and continue until its interruption or termination. Upon commencement, interruption, resumption or termination of any employment activity, the self-insured person submits a declaration according to a sample.
Taxable under the Bulgarian Personal Income Tax Act (PITA) are the incomes from all sources acquired by the taxable person during the tax year, with the exception of the incomes which are non-taxable under the law.
Bodies of the limited liability company (LTD.) in Bulgaria are a general meeting and a manager (managers), as the manager may not be a partner. The manager organizes and manages the activity of the company in accordance with the law and the general meeting’s decisions. The company is represented by the manager. Upon several managers each of them can act alone unless the Articles of association provides otherwise. In regard to the sole owner limited liability company (LTD.), the issues that are from the competence of the general meeting are decided by the sole owner of the company. The relations between the company and the manager are settled by a contract for assignment of the management. The contract is concluded in writing on behalf of the company through a person authorized by the general meeting of the partners or by the sole owner.
A civil partnership in Bulgaria is established by a contract for a partnership, as two or more persons agree to combine their activities to achieve a common business goal.
Most often, a civil partnership is terminated by achieving the objective of the company or with the expiration of the time for which the company has been formed. In these cases, if the company is at a profit, owes payment of a corporate tax, and the balance sheet profit is distributed among the partners.
This raises the question of accurately determining the source of income of the partners and whether it should be completed in an annual tax return.
Foreign legal entities that carry out economic activity in Bulgaria through a place of economic activity, dispose of property in such a place of economic activity or receive income from a source in Bulgaria are taxable persons under the Corporate Income Tax Act and should form a tax financial result.
From 01.01.2020 in Bulgaria the rules for tax regulation are applied in case of transfers between a part of one enterprise located in the country and another part of the same enterprise located outside the country, which rules have been introduced in connection with the application of Directive (EU) 2016/1164 of the Council of 12 July 2016 laying down rules against tax avoidance practices which directly affect the functioning of the internal market (Directive 2016/1164).