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.
First of all, it should be borne in mind that taxpayers who are subject to corporate tax submit an annual tax return by a sample for the tax financial result and the due annual corporate tax between March 1 and June 30 of the following year. The annual activity report is also submitted with the annual tax return.
An exception to the rule for filing an annual tax return is provided when taxpayers have not carried out activities within the meaning of the Accounting Act during the tax period.
Non-operating enterprises are considered to be those for which the following four conditions are simultaneously met:
– during the reporting period they have not carried out commercial transactions;
– during the reporting period there have been no conditions for their income to be recognized in accordance with the Accounting Act and the applicable accounting standards;
– have not carried out any activity related to investment, production and / or sale;
– have not purchased goods and services for the purpose of obtaining income and profits.
In cases where one of the above conditions is not met, it is assumed that the company has operated.
With the sale of a company asset it is assumed that the company has made a commercial transaction and that conditions have arisen for revenue to be recognized in accordance with the Accounting Act. In this regard, it is considered to be an enterprise that has operated during the reporting period. It should file an annual tax return and publish an annual financial statement (AFS) in the commercial register.
An annual tax return is also filed when for the tax period during which the company has not carried out activities within the meaning of the Accounting Act, a liability for corporate tax or expense tax arises, as well as when a taxable person wishes to declare other data and circumstances in the sample of declaration.
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