In view of the territorial scope of Bulgarian legislation, when examining the presence of a place of business activity outside the territory of Bulgaria, it is necessary to be taken into account the definition of this concept, which is contained in the agreements for the avoidance of double taxation between Bulgaria and the relevant country.
In general, the term “place of business activity” means a specific place of business activity through which the business of an enterprise is wholly or partly carried on. A place of business activity is usually designated as: a place of management; a branch; an office; a factory; a workshop; a mine; an oil or gas well; a quarry or any other place for extracting natural resources. A construction site, a construction or assembly object constitutes a place of business activity only if they last for more than six months.
A place of business activity does not include:
– the use of facilities solely for the purpose of storage, display and delivery of goods belonging to the enterprise;
– the maintenance of stocks of goods belonging to the enterprise solely for the purpose of storage, display or delivery;
– the maintenance of stocks of goods belonging to the enterprise solely for the purpose of their processing by another enterprise;
– maintaining a designated location solely for purchasing goods or gathering information about the business;
– the maintenance of a designated location solely for the purpose of carrying out any other activity which is preparatory or auxiliary to the enterprise;
– the maintenance of a designated location solely for any combination of the above activities, when the overall activity of this designated location is of a preparatory or auxiliary character.
Besides, in order for a Bulgarian company to have a place of business activity in another country, the following criteria must be cumulatively met:
– presence of a designated location in the foreign country – premises or parts of premises, facilities and equipment, fixed to a specific geographical point, which are available to the Bulgarian company for the purpose of carrying out business activity in that other country;
– regularity or duration of the activity – the most important requirement for this criterion is that the activity is not temporary in nature. The interpretation and application of the “duration” criterion is not uniform, but most countries perceive that a company’s activity carried out for more than six months in the territory of another country shall lead to the formation of a place of business activity;
– carrying out an economic activity – the activity must be aimed at generating revenue and must be carried out by staff or other persons who receive instructions from the Bulgarian company.
For questions related to a place of business activity, you can contact our experts.