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CORPORATE INCOME TAXATION ACT

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CORPORATE INCOME TAXATION ACT IN BULGARIA
Effective from 01.01.2007
Prom. SG. 105/22 Dec 2006, amend. SG. 52/29 Jun 2007, amend. SG. 108/19 Dec 2007, amend. SG. 110/21 Dec 2007, amend. SG. 32/25 Mar 2008, amend. SG. 69/5 Aug 2008, amend. SG. 106/12 Dec 2008, amend. SG. 32/28 Apr 2009, amend. SG. 35/12 May 2009, amend. SG. 95/1 Dec 2009, amend. SG. 94/30 Nov 2010, amend. SG. 19/8 Mar 2011, amend. SG. 31/15 Apr 2011, amend. SG. 35/3 May 2011, amend. SG. 51/5 Jul 2011, amend. SG. 77/4 Oct 2011, amend. SG. 99/16 Dec 2011, amend. SG. 40/29 May 2012, amend. SG. 94/30 Nov 2012, amend. SG. 15/15 Feb 2013, suppl. SG. 16/19 Feb 2013, amend. SG. 23/8 Mar 2013, amend. SG. 68/2 Aug 2013
Part one.
GENERALITIES
Chapter one.
GENERAL PROVISIONS
Objects of taxation
Art. 1. This Act shall regulate the taxation of:
1. the profit of local legal entities;
2. the profit of those legal entities which are not traders, including the religious organizations, this profit being derived from transactions under Art. 1 of the Commerce Act, or from leasing movable or immovable property;
3. (suppl. – SG 95/09, in force from 01.01.2010) foreign legal entities’ profit derived from a location of business activity within the Republic of Bulgaria or from administration of property in such a location of business activity;
4. local and foreign legal entities’ income specified in this Act where the income originates from a source within the Republic of Bulgaria;
5. those expenses which are specified in Part Four;
6. the activity of the organizers of gambling games;
7. the income from transactions under Art. 1 of the Commerce Act, and the income from leasing movable or immovable property to State-budget enterprises;
8. the activity of vessel operation on the part of persons performing maritime commercial navigation.


Taxable persons
Art. 2. (1) Taxable persons shall be the following ones:
1. local legal entities;
2. (suppl. - SG 95/09, in force from 01.01.2010) those foreign legal entities which carry out business activities within the Republic of Bulgaria through a location of business activity, carry out administration of property in such a location of business activity or receive income from a source within the Republic of Bulgaria;
3. (suppl. – SG 31/11, in force from 01.01.2011) sole proprietors as well as natural persons registered as tobacco producers and farmers, who calculate their taxable income pursuant to Art. 26 of the Income Taxes on Natural Persons Act – regarding the taxes withheld at the source, and the cases specified in the Income Taxes on Natural Persons Act;
4. natural persons-traders within the meaning of Art. 1, para. 3 of the Commerce Act – in the cases specified in the Income Taxes on Natural Persons Act;
5. the employers and the assignors under management and supervision contracts – regarding the tax on social expenses, provided for in Part Four.
(2) For the purposes of this Act the unincorporated companies and the insurance funds established under Art. 8 of the Social Insurance Code shall be treated as legal entities.
(3) For the purposes of taxation of income from a source within the Republic of Bulgaria, any foreign formation which is organisationally and economically autonomous (such as a trust, a fund and the like) which carries out business activities on its own or makes and manages investments and the owner of the income is impossible to identify, shall be a taxable person.


Local legal entities
Art. 3. (1) Local legal entities shall be the following ones:
1. legal entities established under Bulgarian law;
2. companies established under Regulation (ЕC) No. 2157/2001 of the Council, and cooperative societies established under Regulation (ЕC) No. 1435/2003 of the Council where they have their registered office within the country and are entered in a Bulgarian register.
(2) Local legal entities shall be taxed with taxes under this Act on their profit and income from all sources within the Republic of Bulgaria and abroad.


Foreign legal entities
Art. 4. (1) Foreign legal entities shall be those which are not local ones.
(2) (amend. - SG 95/09, in force from 01.01.2010) Foreign legal entities shall be taxed with taxes under this Act on their profit realized through a location of business activity within the Republic of Bulgaria, or from administration of property in such a location of business activity, as well as on the income specified in this Act from a source within the Republic of Bulgaria.


Types of taxes
Art. 5. (1) Profits shall be taxed with corporate tax.
(2) Local and foreign legal entities’ income specified in this Act shall be taxed with taxes withheld at the source.
(3) The expenses specified in this Act shall be taxed with tax on expenses.
(4) Instead of corporate tax, alternative tax shall apply to:
1. the activity of organizing gambling games;
2. the income from transactions under Art. 1 of the Commerce Act, and the income from leasing movable or immovable property to State-budget enterprises;
3. the activity of vessel operation.


Determining the amount of tax
Art. 6. The amount of tax shall be determined by way of multiplying the basis of taxation by the tax rate.


Tax returns
Art. 7. The standard forms of the tax returns and the other documents under this Act shall be approved by way of an Ordinance of the Minister of Finance and shall be promulgated in the State Gazette.


Paying the taxes
Art. 8. (1) The taxes due under this Act by the taxable persons shall be paid to the Central Budget.
(2) The taxes due shall be paid to the Central Budget by crediting the account of the territorial directorate of the National Revenue Agency either by registration of the taxable person or by the place in which the taxable person must have registered.
(3) The taxes due shall be regarded as paid on the date on which the amount enters the Central Budget as an amount credited to the account of the respective territorial directorate of the National Revenue Agency.


Interest on delayed payment
Art. 9. As for those taxes which have not been paid in due time, including the advance contributions, interest shall be due in accordance with the Act on Interest on Taxes, Fees and Other Similar State Receivables.


Documentary grounds
Art. 10. (1) The accounting expenses shall be recognized for tax purposes where they are grounded on a primary accounting document within the meaning of the Accountancy Act, this document presenting fairly the business operation.
(2) The accounting expenses shall also be recognized for tax purposes where a part of the primary document’s information required under the Accountancy Act is missing, provided that there are documents available which certify the missing information.
(3) Apart from the cases under para. 2, the accounting expenses shall also be recognized where the primary document is issued by a person that is not an establishment within the meaning of Art. 1, para. 2 of the Accountancy Act and a part of the primary document’s information required under the Accountancy Act is missing, provided that the document presents fairly the business operation documented.
(4) (amend. – SG 23/13, in force from 08.03.2013) The taxable persons shall be obligated to get registered and to report the sales they have made, as well as the services they have provided, by way of issuing a fiscal cash-register slip from a fiscal device (fiscal receipt) or by way of issuing a cash slip through an integrated business management system (system receipt) in accordance with the procedure set forth in an Ordinance of the Minister of Finance, except where the payment is made through the bank or by way of a set-off. The absence of a fiscal cash-register slip from a fiscal device or of a cash slip from an integrated business management system, where the issue of such is obligatory, shall form grounds for non-recognition of the accounting expenses for tax purposes.
(5) As for the international air transport, the accounting expense shall be documentarily grounded where it is documented by way of a primary accounting document and the boarding pass for the respective flight. Where the primary accounting document (record) is issued by a person who has performed the sale on behalf of and at the account of the carrier, the said person is assumed to be the issuer of the document.
(6) (new – SG 110/07, in force from 01.01.2008; suppl. – SG 23/13, in force from 08.03.2013) Documentary proof for the expenses under Art. 204, Items 1 and 3, which have been levied an expenses tax, shall be deemed available also where they have been documented only in a fiscal receipt from a fiscal device or in a cash slip from an integrated business management system . The expenses under Art. 204, Item 3, levied an expenses tax, shall be recognized for taxation purposes also in case of lack of a travel list.


Expenses which a statutory instrument defines as mandatory
Art. 11. Those expenses which a statutory instrument defines as being mandatory shall be recognized for tax purposes and shall not be taxed with tax on expenses, unless this Act provides otherwise.

Chapter two.
SOURCES OF PROFIT AND INCOME
Profit and income from sources within the Republic of Bulgaria
Art. 12. (1) (amend. - SG 95/09, in force from 01.01.2010) Foreign legal entities’ profit originating either from business activity performed through a certain location of business activity inside the territory of the Republic of Bulgaria or from disposal of the property of such a location of business activity shall be income from a source within the country.
(2) The income from financial assets issued by local legal entities, the State and the municipalities shall be income from a source within the country.
(3) The income originating from transactions in financial assets under para. 2 shall be income from a source within the country.
(4) The income from dividends and liquidation shares in local legal entities shall be income from a source within the country.
(5) The following types of income assessed by local legal entities, local sole proprietors or foreign legal entities and sole proprietors through a location of business activity or an establishment within the country, or paid by local natural persons or foreign natural persons, having an establishment within the country, in favour of foreign legal entities, shall be income from a source within the country:
1. interest, including interest comprised in financial leasing contributions;
2. income originating from rent or any other granting of the use of movable property;
3. author’s and licence remuneration;
4. remuneration for technical services;
5. remuneration under franchising contracts and factoring contracts;
6. remuneration under contracts for management and supervision of a Bulgarian legal entity.
(6) (amend. – SG 110/07, in force from 01.01.2008) The income referred to in para. 5 assessed to foreign legal entities through a location of business activity of a local person or through an establishment of local natural persons, the said location or establishment being outside the country, shall not be income from a source within the country.
(7) The income originating from agriculture, forestry, game husbandry and fish industry inside the territory of the country shall be income from a source within the country.
(8) (amend. – SG 94/10, in force from 01.01.2011) The following income shall be deemed to be from a source within the country:
1. income from renting or other grant of use pertaining to immovable property, including ideal share of immovable property located within the country;
2. income from disposal of immovable property, including ideal shares thereof or limited property rights thereupon, that is located within the country.
(9) (new – SG 94/10, in force from 01.01.2011) The following income accrued by local legal persons, local sole-entrepreneurs or foreign legal persons or sole-entrepreneurs through a place of economic activity or certain base in the country in favour of foreign legal persons established in jurisdictions of preferential tax regimes shall be deemed to be from a source within the country:
1. remunerations for services or rights with exception of cases, where the services or rights have been actually provided;
2. stipulated damages or compensations of any kind with exceptions of compensations accrued by virtue of insurance contracts.
(10) (prev. text of Para 09 – SG 94/10, in force from 01.01.2011) When determining the source of income under this Art. the place in which the income is paid shall not be taken into consideration.

Chapter three.
INTERNATIONAL TAXATION
International treaties
Art. 13. In those cases in which an international treaty ratified by the Republic of Bulgaria, which has been promulgated and has taken effect, contains provisions that differ from the provisions of this Act, it is the provisions of the respective international treaty that shall apply.


Tax input regarding tax paid abroad
Art. 14. (1) In those cases in which the provisions of an international treaty under Art. 13 do not apply, the taxable persons shall be entitled to recognition of tax input in accordance with the conditions and the procedure set forth in this Act.
(2) When determining the corporate tax or the alternative taxes referred to in this Act, the taxable persons shall be entitled to the recognition of tax input regarding any tax which is similar to the corporate one or has been levied instead of it and has been paid abroad.
(3) The taxable persons shall be entitled to the recognition of tax input for the tax levied abroad on the gross amount of dividends, interest, author’s and licence remuneration, remuneration for technical services and rent.
(4) The tax input referred to in paras. 2 and 3 shall be determined separately per each State and per each type of income and shall be limited to the amount of the Bulgarian tax on the said profit or income.

Chapter four.
PREVENTION OF TAX EVASION
Transactions involving related persons
Art. 15. (amend. - SG 95/09, in force from 01.01.2010) Where related persons perform their commercial and financial relationships under conditions influencing the amount of the taxable basis, these conditions differing from those between unrelated persons, the taxable basis shall be determined and taxed under those conditions which would be present for unrelated persons.


Tax evasion
Art. 16. (1) (amend. - SG 95/09, in force from 01.01.2010) Where one or more transactions, including those between unrelated persons, have been effected under conditions the fulfilment of which brings about tax evasion, the taxable basis shall be determined without taking into consideration the said transactions, or certain conditions thereof, or the legal form thereof, and what is taken into consideration shall be the taxable basis that would have been achieved if a customary transaction of the respective type has taken place, at the market prices, this transaction being aimed at achieving the same economic result, without bringing about tax evasion.
(2) The following shall also be regarded as tax evasion:
1. considerable excess of the quantities of materials and raw stuff used in manufacture or an excess of other manufacturing expenses in comparison with the usual ones used by the person in the activity he/she carries out, providing that the excess is not due to objective reasons;
2. the contracts for interest-free loans or other gratuitous granting of the use of tangible or intangible assets;
3. receipt or provision of credits at an interest rate which differs from the market rate at the time the transaction takes place, including the cases of interest-free loans or other gratuitous temporary financial aid, and remission of credits or repayment of credits at one’s own account, these credits not being connected with the activity;
4. (amend. – SG 94/10, in force from 01.01.2011) accrual of remuneration or compensation for services that have not been provided.
(3) In those cases where a simulated transaction covers another transaction, the tax liability shall be determined under the conditions of the covert transaction.


Transfers connected with the location of the business activity
Art. 17. This Chapter shall also apply to the transfers between the location of business activities and the other parts of the foreign person’s establishment which are situated outside the territory of the country, in accordance with the specificity of the location of business activity.

Part two.
CORPORATE TAX
Chapter five.
GENERAL PROVISIONS
Tax financial result
Art. 18. (1) (amend. – SG 110/07, in force from 01.01.2008) Tax financial result shall be the accounting financial result transformed in accordance with the procedure set forth in this Act.
(2) The positive tax financial result shall be the tax profit.
(3) The negative tax financial result shall be the tax loss.


Basis of taxation
Art. 19. The basis of taxation for determining the corporate tax shall be the tax profit.


Tax rate
Art. 20. The tax rate of the corporate tax shall be 10 percent.


Tax period
Art. 21. (1) The tax period for determining the corporate tax shall be the calendar year, unless this Act provides otherwise.
(2) As for the newly established taxable persons, the tax period thereof shall be the period from the date they were established until the end of the year, unless this Act provides otherwise.

Chapter six.
GENERAL PROVISIONS REGARDING THE TAX FINANCIAL RESULT
Determining the tax financial result
Art. 22. (amend. – SG 110/07, in force from 01.01.2008) The tax financial result shall be determined by way of transforming the accounting financial result in accordance with the procedure set forth in this Act, considering:
1. the tax permanent differences;
2. the tax temporary differences;
3. (amend. - SG 95/09, in force from 01.01.2010) other amounts in cases provided for in this Act.


Tax permanent differences and the use thereof in the transformation of the accounting financial result
Art. 23. (1) Tax permanent differences shall be those accounting receipts or expenses which are not recognized for tax purposes.
(2) When determining the tax financial result, if this Act provides that:
1. certain expenses (losses) are not recognized for tax purposes, the accounting financial result for the year of accounting the expenses (losses) shall be increased by the said expenses (losses), and the subsequent years’ accounting financial results shall not be transformed;
2. certain receipts (profits) are not recognized for tax purposes, the accounting financial result for the year of accounting the receipts (profits) shall be decreased by the said receipts (profits), and the subsequent years’ accounting financial results shall not be transformed.


Tax temporary differences and the use thereof in the transformation of the accounting financial result
Art. 24. (1) Tax temporary differences arise where certain receipts or expenses are recognized for tax purposes during a year which is not the year of their accounting.
(2) Tax temporary difference shall be:
1. certain expenses that have not been recognized for tax purposes during the year of their accounting, and shall be recognized during the subsequent years when the conditions for their recognition under this Part are fulfilled;
2. certain receipts that have not been recognized for tax purposes during the year of their accounting, and shall be recognized during the subsequent years when the conditions for their recognition under this Part are fulfilled.
(3) Tax temporary differences also arise in the cases of transformation of companies and cooperative societies in accordance with the procedure set forth in Chapter Nineteen.
(4) When determining the tax financial result, if this Act provides that:
1. certain expenses (losses), which are not recognized for tax purposes in the year of their accounting, shall be recognized in the subsequent years when the conditions for their recognition under this Part are fulfilled:
а) the accounting financial result for the year of accounting the said expenses (losses) shall be increased by the said expenses (losses) – occurrence of a tax temporary difference;
b) the accounting financial result for the year of fulfilment of the conditions for their recognition under this Part shall be decreased by the said expenses (losses) – reverse manifestation of the tax temporary difference;
2. certain receipts (profits), which are not recognized for tax purposes in the year of their accounting, shall be recognized in the subsequent years when the conditions for their recognition under this Part are fulfilled:
а) the accounting financial result for the year of accounting the said receipts (profits) shall be decreased by the said receipts (profits) – occurrence of a tax temporary difference;
b) the accounting financial result for the year of fulfilment of the conditions for their recognition under this Part shall be decreased by the said receipts (profits) – reverse manifestation of the tax temporary difference.


Receipts and expenses recognized for tax purposes
Art. 25. When determining the tax financial result, if this Act provides that certain receipts (expenses) or profits (losses) have been recognized for tax purposes in the year of their accounting, neither the accounting financial result for the current year, nor the one for the subsequent years shall be transformed therewith.

Chapter seven.
TAX PERMANENT DIFFERENCES
Expenses unrecognized for tax purposes
Art. 26. The following accounting expenses shall not be recognized for tax purposes:
1. expenses that are not connected with the activity;
2. (suppl. - SG 95/09, in force from 01.01.2010) receipts that have originated in connection with expenses that are unrecognized for tax purposes under Art. 26, item 3, 4, 5, 8 and 10 up to the amount of the unrecognized expenses;
3. expenses of the tax charged or the tax input used in accordance with the Value Added Tax Act in those cases where the expenses of the business operation relating to the value added tax have not been recognized for tax purposes;
4. (amend. – SG 110/07, in force from 01.01.2008) expenses accounted by a supplier under the Value Added Tax Act in respect of a value added tax levied by him or by the revenue authority for a completed delivery, except the tax levied in case of gratuitous deliveries and deliveries in connection with deregistration under the Value Added Tax Act; this Item shall not apply to expenses accounted in result of a taxation credit correction under the Value Added Tax Act;
5. (amend. – SG 110/07, in force from 01.01.2008) subsequent expenses accounted for in connection with a receivable that has occurred as a result of the tax charged or the tax input used under items 3, 4, 8 and 10;
6. (suppl. – SG 94/12, in force from 01.01.2013) expenses of fines, confiscations, including under Art. 307a of the Penal Code, and other sanctions imposed in connection with violation of statutory instruments, and interest on delayed payments for public liabilities or municipal ones;
7. expenses of donations except for those specified in Art. 31;
8. expenses of a tax which is subject to being withheld at the source and is at the account of the payer of the income;
9. those expenses of salary in the commercial companies having over 50 percent of State or municipal participation which exceed the expenses fixed in the statutory instruments;
10. (new – SG 110/07, in force from 01.01.2008) expenses accounted during realization of responsibility for due and not deposited value added tax in the cases of Art. 177 of the Value Added Tax Act;
11. (new – SG 110/07, in force from 01.01.2008) expenses, representing hidden distribution of revenue;
12. (new – SG 94/12, in force from 01.01.2013) expenses for bribery and/or hiding the bribery of an official or a foreign person in charge of a public duty.


Receipts unrecognized for tax purposes
Art. 27. (1) The following accounting receipts shall not be recognized for tax purposes:
1. (suppl. – SG 69/08, in force from 01.01.2009; amend. – SG 106/08, in force from 01.01.2009) receipts resulting from the distribution of dividends of local legal entities and of foreign persons, who are local persons for taxation purposes of a Member State of the European Union or of another state – party to the Agreement on European Economic Area;
2. (amend. – SG 94/12, in force from 01.01.2013) receipts that have originated in connection with expenses that are unrecognized for tax purposes under Art. 26, Items 3, 4, 5, 6, 8 and 10 up to the amount of the unrecognized expenses;
3. receipts originating from interest on public liabilities that have been unduly paid or collected, as well as from interest on value added tax charged by State or municipal bodies where the said tax has not been refunded in due time.
(2) Para. 1, item 1 shall not apply:
1. to receipts resulting from the distribution of dividends of licensed companies having a special investment objective under the Act on Special Purpose Investment Companies;
2. in the cases of covert distribution of profit.


Unrecognized expenses of missing assets and waste of assets
Art. 28. (1) The accounting expenses of missing fixed and current assets shall not be recognized for tax purposes, with the exception of the ones resulting from force majeure.
(2) The accounting expenses of missing material inventories and waste thereof shall not be recognized for tax purposes.
(3) Para. 2 shall not apply in those cases where the expenses are caused by:
1. force majeure;
2. technological waste or change in the physical and chemical properties, the waste or change being established by way of a statutory instrument or the company’s standards (if there is no such statutory instrument), and providing that the amount thereof is in accordance with the usual one for the respective activity;
3. an expiry of the term of validity under a statutory instrument or the company’s standards (if there is no such statutory instrument), and providing that the amount thereof is in accordance with the usual one for the respective activity;
4. (new – SG 110/07, in force from 01.01.2008) deficit of goods, resulting of the commercial activity in sites, where the clients have direct physical access to the offered goods, amounting to 0,25 percent of the amount of the net income from sales of the commercial site in question.
(4) The expenses of the tax referred to in Art. 79, para. 3 of the Value Added Tax Act on assets that are unrecognized ones under paras. 1 through 3 shall not be recognized for tax purposes.
(5) The subsequent accounting expenses accounted for in connection with a receivable that has occurred as a result of missing assets or waste of assets that are unrecognized ones under paras. 1 through 4 shall not be recognized for tax purposes.


Unrecognized receipts originating in connection with missing assets or waste of assets
Art. 29. The accounting receipts that have originated in connection with missing assets or waste of assets or a receivable connected therewith, shall not be recognized for tax purposes up to the amount of the unrecognized expenses referred to in Art. 28.


Recognition of a part of the non-distributable expenses of not-for-profit legal entities
Art. 30. (1) The non-distributable expenses of not-for-profit legal entities which have been accounted for and comply with the activity subject to taxation with corporate tax shall not be recognized for tax purposes.
(2) A part of the non-distributable expenses shall be recognized for tax purposes, this part being equal to the product of the multiplication of the non-distributable expenses by the ratio of the operating receipts from the activity subject to taxation with corporate tax to all the receipts of the not-for-profit legal entity.


Expenses of donations
Art. 31. (1) The accounting expenses of donation not exceeding 10 percent of the positive financial result (profit before taxation) shall be recognized for tax purposes in those cases where the donations have been made in favour of:
1. healthcare establishments and medical treatment establishments;
2. (amend. - SG 51/11) specialized institutions for the provision of social services under the Social Support Act, and the Social Support Agency, and the Social Protection Fund with the Minister of Labour and Social Policy;
3. (suppl. – SG 106/08, in force from 01.01.2009) specialized institutions for children under the Child Protection Act, and public establishments for raising children who are deprived of parent’s care, under the Public Education Act and homes for medical and social services for children under the Medical Establishments Act;
4. public nurseries, kindergartens, schools, higher schools and academies;
5. State-budget enterprises within the meaning of the Accountancy Act;
6. religions registered within the country;
7. specialized enterprises or cooperative societies of disabled persons, which are entered in the Register referred to in Art. 29 of the Integration of Persons with Disabilities Act, and the ones in favour of the disabled Persons Agency;
8. disabled persons, and technical relief devices for them;
9. (amend. - SG 35/09, in force from 12.05.2009) persons who have suffered damage in disastrous situations within the meaning of the Disaster Protection Act, or the families thereof;
10. the Bulgarian Red Cross;
11. low-income persons;
12. disabled children or children who have no parents;
13. cultural institutions, or for the purpose of cultural, educational or scientific exchange under an international treaty, the Republic of Bulgaria being a party thereto;
14. not-for-profit legal entities registered in the Central Register of not-for-profit legal entities for the purpose of carrying out activities for the public benefit, with the exception of those organizations which support culture within the meaning of the Arts Patronage Act;
15. (amend. – SG 32/09, in force from 01.01.2010; revoked – SG 68/13, in force from 01.01.2014)
16. (suppl. – SG 35/11, in force from 03.05.2011) the Power Efficiency and Renewable Sources Fund;
17. communes for treatment of drug addicts, as well as in favour of drug addicts for the purpose of their medical treatment;
18. (new – SG 106/08, in force from 01.01.2009) the United Nations Children’s Fund (UNICEF).
(2) (suppl. - SG 95/09, in force from 01.01.2010; amend. – SG 99/11, in force from 01.01.2012) The accounting expenses of donations in favour of the "Fund for Treatment of Children" and Centre, "Assisted Reproduction Fund", amounting to up to 50 percent of the profit before taxation shall be recognized for tax purposes.
(3) The aid provided freely under the conditions and in accordance with the procedure set forth in the Arts Patronage Act amounting to up to 15 percent of the profit before taxation shall be recognized for tax purposes.
(4) The expenses of donations of computers and their peripheral devices manufactured within one year prior to the date of donation, the latter being made in favour of Bulgarian schools, including higher-education ones, shall be recognized for tax purposes.
(5) The total amount of donation expenses recognized for tax purposes under paras. 1 through 4 may not exceed 65 percent of the accounting profit.
(6) The total expense of donation shall be unrecognized for tax purposes in those cases where those managers who grant it or those managers who dispose of it benefit from it, either directly or indirectly, or evidence is present showing that the donation has not been received.
(7) (new – SG 32/09, in force from 01.01.2010) Paragraphs 1 through 6 may also apply to donations provided to persons identical to the ones specified in paras 1 through 4 or similar to them, who are citizens of or established in another Member State of the European Union, or a state – party to the Agreement on the European Economic Area, provided that the person who made the donation, has an official legalized document, certifying the status of the person receiving the donation, issued or verified by a competent authority of the respective foreign country, along with a translation in Bulgarian language, carried out by a certified translator.


Expenses of founding a taxable person
Art. 32. (1) As for the taxable persons-founders, the accounting expenses of founding a legal entity shall not be recognized for tax purposes. The unrecognized expenses shall be recognized for tax purposes when determining the tax financial result of a newly established legal entity for the year of its establishment.
(2) The expenses referred to in para. 1 shall be recognized as the founders’ expenses for tax purposes if circumstances occur determining that no new legal entity shall be established. The expenses shall be recognized for the year in which the circumstances occur, providing that the requirements of this Act are fulfilled.


Tax treatment of income and expenditure, profit and loss, reported by a monitoring associate in a jointly monitored enterprise (New - SG 95/09, in force from 01.01.2010)
Art. 32a. (new- SG 95/09, in force from 01.01.2010) Bok income and expenditures, profit and loss, reported by a monitoring associate in a jointly monitored enterprise as a result of application of the proportional consolidation method shall not be recognized, where the jointly monitored enterprise is a taxable person.


Expenses of natural persons’ travelling and sojourn
Art. 33. (amend. – SG 110/07, in force from 01.01.2007) (1) The following accounting expenses for travelling and sojourn of natural persons shall be recognized for taxation purposes, where the travelling and sojourn are connected with the activity of the taxable person:
1. the expenses for travelling and sojourn of natural persons in employment relationship with the taxable person or hired by him under non-employment relationship, including managers, members of managing and control bodies of a taxable person;
2. the expenses incurred by a sole entrepreneur for travelling and sojourn of;
a) a natural person – owner of the undertaking of the sole entrepreneur, and
b) persons in employment relationship with the taxable person or hired by him under non-employment relationship.
(2) The accounting expenses for travelling and sojourn of shareholders or partners shall not be recognized for taxation purposes, where they travel and sojourn in their capacity of shareholders and partners.

Chapter eight.
TAX TEMPORARY DIFFERENCES
Non-recognition of receipts and expenses of subsequent appraisals (reappraisals and devaluations)
Art. 34. (1) (suppl. – SG 106/08, in force from 01.01.2009) The receipts and expenses of subsequent appraisals of assets and liabilities shall not be recognized for tax purposes in the year of their accounting. The income and expenses of subsequent assessments of receivables and expenses from deletion of non-collectable receivables shall not be recognized for tax purposes in the year of their accounting, provided that none of the circumstances referred to in Art. 37 has occurred in the same or the preceding year.
(2) Para. 1 shall not apply to accounting receipts and expenses of subsequent appraisals of pecuniary items in foreign currency at the fixing rate of the Bulgarian National Bank.


Recognition of receipts and expenses of subsequent appraisals (reappraisals and devaluations)
Art. 35. (1) Those receipts and expenses of subsequent appraisals which are unrecognized for tax purposes under Art. 34 shall be recognized for tax purposes in the year of the write-off of the respective asset or liability.
(2) Where the value of the material inventories of a specific type written off during the current year exceeds the value of the material inventories of the said type as at 31 December of the previous year, the unrecognized receipts and expenses under Art. 34 of this type of material inventories in the previous years shall be recognized for tax purposes in the current year.
(3) Paras. 1 and 2 shall not apply in the cases of missing assets or waste of assets that have not been recognized for tax purposes in accordance with the procedure set forth in Art. 28.


Receipts and expenses of initial recognition and subsequent appraisal of biological products and agricultural (farming) products
Art. 36. (1) The excess of the receipts (profits) of initial recognition and subsequent appraisal of biological products and agricultural (farming) products over the expenses accounted for in connection with the said assets shall not be recognized for tax purposes in the year in which these receipts and expenses are accounted for. The excess of the receipts referred to in the first sentence shall be recognized for tax purposes in the year of the write-off of the respective asset.
(2) The excess of the expenses, accounted for in connection with biological products and agricultural (farming) products, over the receipts (profits) of initial recognition and subsequent appraisal of the said assets shall not be recognized for tax purposes in the year in which these receipts and expenses are accounted for. The excess of the expenses referred to in the first sentence shall be recognized for tax purposes in the year of the write-off of the respective asset.
(3) The provisions of Arts. 34 and 35 shall not apply to biological or agricultural products.


Recognition of receipts and expenses of subsequent appraisals of receivables
Art. 37. (suppl. – SG 106/08, in force from 01.01.2009) Those receipts and expenses of subsequent appraisals and deletion of receivables which are unrecognized under Art. 34 shall be recognized for tax purposes in the year in which any of the following circumstances is present:
1. expiry of the period of limitation for the receivable, however, that should not be later than 5 years following the date on which the receivable became executable;
2. transfer of the receivable for consideration;
3. the debtor’s bankruptcy proceedings have been suspended with an approved rehabilitation plan, which provides for incomplete satisfaction of the taxable person; the unrecognized receipts and expenses shall be recognized for tax purposes only with regard to the decrease of the receivable;
4. an effective decision of the Court lays down that the receivable or a part thereof is not due; the unrecognized receipts and expenses shall be recognized for tax purposes only with regard to the undue part of the receivable;
5. prior to the expiry of the period of limitation for the receivable, the latter has been extinguished by virtue of law;
6. where the debtor is struck off and the receivable or a part thereof has remained unsatisfied, the recognition is up to the amount of the unsatisfied part.


Provisions for liabilities
Art. 38. (1) The expenses of provisions for liabilities shall not be recognized for tax purposes in the year in which they are accounted for.
(2) The unrecognized expenses of provisions under para. 1 shall be recognized for tax purposes in the year of extinguishment of the liability for which the provision is recognized, up to the amount of the extinguished liability.
(3) (amend. – SG 110/07, in force from 01.01.2008) Where the taxation financial result is being determined, the accounting financial result shall be reduced by the accounting income, respectively the amount of reduction of the accounting expenses, accounted in relation to a recognized provision.


Provisions which are not included in the tax amortizable value of a tax amortizable asset
Art. 39. (1) When determining the tax financial result, the accounting financial result shall be decreased by the extinguished liabilities connected with provisions which are not included in the tax amortizable value of a tax amortizable asset under Art. 53, para. 1. The decrease under the first sentence shall be made in the year in which the liability is extinguished.
(2) (amend. – SG 110/07, in force from 01.01.2008) Where the taxation financial result is being determined, the accounting financial result shall be reduced by the accounting income, respectively the amount of reduction of the accounting expenses, accounted in relation to a recognized provision.


Specific procedure for the recognition of expenses of provisions for liabilities in the cases of termination of the activity
Art. 40. (1) A taxable person that has applied Art. 38, para. 1 or Art. 53, para. 1, and totally terminates his basic activity in the year of extinguishment of the liabilities for which the provision unrecognized for tax purposes is charged, shall not apply the provisions of Art. 38, para. 2 or Art. 39, para. 1 and shall be entitled to withholding or refund of the overpaid corporate tax determined in accordance with the procedure set forth in para. 2.
(2) The overpaid corporate tax shall be determined as the product of the multiplication of the extinguished part of the liabilities for which the provision unrecognized for tax purposes is charged by the tax rate of the corporate tax for the year of extinguishment of the liabilities. For the purposes of the first sentence, the extinguished part of the liabilities may not exceed the aggregate of the tax financial results for the 10 years preceding the year of termination of the activity.


Unused leave of absence
Art. 41. (1) The expenses regarding the accumulated unused (compensable) leave of absence as at 31 December of the current year, as well as the expenses connected therewith regarding mandatory social and health insurance shall not be recognized for tax purposes in the year in which they are accounted for.
(2) The unrecognized expenses regarding the accumulated unused (compensable) leave of absence referred to in para. 1 shall be recognized for tax purposes in the year in which the absence of leave is actually paid to the personnel, up to the amount of the leave paid.
(3) The unrecognized expenses of mandatory social and health insurance referred to in para. 1 shall be recognized for tax purposes in the year in which the respective insurance contributions are made, up to the amount of the insurance contributions made.
(4) (amend. – SG 110/07, in force from 01.01.2008) Where the taxation financial result is being determined, the accounting financial result shall be reduced by the accounting income, respectively by the amount of reduction of the accounting expenses, accounted in relation to the obligations under Para 1.
(5) (new – SG 110/07, in force from 01.01.2008) Para 1 shall not apply to leaves and insurances, related thereto, the accounting of which does not lead to reduction of the accounting financial result for the year of their accounting.
(6) (new – SG 110/07, in force from 01.01.2008) Shall not be recognized for taxation purposes the expenses resulting of compensable leaves and insurances related thereto, leading to reduction of the accounting financial result in a year, other than the year of accounting the leaves and insurances, where they have not been paid by 31 December of the year of reduction of the accounting financial result. In such cases Para 2 and 3 shall apply respectively.
(7) (new – SG 110/07, in force from 01.01.2008) Para 1 – 6 shall not apply to compensable leaves and insurances related thereto, which according to the accountancy legislation have been capitalized as a part of the value of a taxation amortizable asset.


Expenses which constitute income of local natural persons
Art. 42. (1) The expenses of taxable persons which constitute income of local natural persons under the Income Taxes on Natural Persons Act, this income not being paid until 31 December of the current year, shall not be recognized for tax purposes in the year in which they are accounted for.
(2) Para. 1 shall not apply to those expenses which constitute:
1. basic or additional labour remuneration determined by virtue of a statutory instrument;
2. income of a sole proprietor.
(3) The unrecognized expenses under para. 1 shall be recognized for tax purposes in the year in which the income is paid, up to the amount of the income paid.
(4) (amend. – SG 110/07, in force from 01.01.2008) Where the taxation financial result is being determined, the accounting financial result shall be reduced by the accounting income, respectively by the amount of reduction of the accounting expenses, accounted in relation to the obligations for unpaid income under Para 1.
(5) (new – SG 110/07, in force from 01.01.2008) The expenses for mandatory insurance instalments related to the unrecognized expenses under Para 1 shall not be recognized for taxation purposes in the year of their accounting, where the compulsory insurance instalments have not been deposited by 31 January of the current year.
(6) (new – SG 110/07, in force from 01.01.2008) The unrecohnized expenses under Para 5 shall be recognized for taxation purposes in the year of deposit of the required mandatory insurance instalments, within the amount of the deposited insurance instalments. Where the taxation financial result is being determined, the accounting financial result shall be reduced by the accounting income, respectively by the amount of reduction of the accounting expenses, accounted in relation to obligations under Para 5.
(7) (new – SG 110/07, in force from 01.01.2008) Para 1 and 5 shall not apply to income and mandatory insurance instalments related thereto, the accounting of which does not lead to reduction of the accounting financial result for the year of their accounting.
(8) (new – SG 110/07, in force from 01.01.2008) Shall not be recognized for taxation purposes the expenses resulting of income and mandatory insurance instalments under Para 1 and 5, leading to reduction of the accounting financial result, in a year, other than the year of accounting the income and insurances, where they have not been paid by 31 December of the year of reduction of the accounting financial result. In such cases Para 3 and 6 shall apply respectively.
(9) (new – SG 110/07, in force from 01.01.2008) Para 1 – 8 shall not apply to income and insurances related thereto, which according to the accountancy legislation have been capitalized as a part of the value of a taxation amortizable asset.


Regulation of low-rate capitalization
Art. 43. (1) The interest expenses shall not be recognized for tax purposes in the year in which they are accounted for if the amount thereof has been calculated for the current year with the formula as follows:
UIE = IE - IR - 0,75 x FRPI, where:
UIE are the unrecognized interest expenses;
IE are the interest expenses determined in accordance with para. 3;
IR is the total amount of interest receipts;
FRPI is the accounting financial result prior to any interest expenses and receipts.
(2) The unrecognized interest expenses under para. 1 shall be recognized for tax purposes during the following 5 years until the full amount thereof has been recognized. The current year amount shall be calculated with the formula as follows:
RIE = 0,75 x FRPI + IR - IE, where:
RIE are the recognized interest expenses;
FRPI is the accounting financial result prior to any interest expenses and receipts;
IR is the total amount of interest receipts;
IE are the interest expenses determined in accordance with para. 3 for the current year.
(3) The interest expenses shall include any financial (interest) expenses accounted for in connection with financing with borrowed capital. The interest expenses shall not include the expenses of:
1. interest under financial leasing or bank credit, except where the parties to the transaction are related parties, or the leasing, and the credit, respectively, has been guaranteed or secured or extended by order of a related party;
2. penalty interest on delayed payments and indemnities;
3. interest that is unrecognized for tax purposes on any other legal grounds;
4. (new – SG 110/07, in force from 01.01.2008) interests and other expenses related to credits, which according to the accountancy legislation have been capitalized as a part of an asset value.
(4) In those cases where the financial result prior to any interest expenses and receipts is a negative value, it shall not be taken into consideration when determining the amount of the unrecognized and recognized interest expenses under paras. 1 and 2.
(5) As for the newly incurred unrecognized interest expenses, it is the provisions of this Art. that apply, in compliance with the succession of their incurrence.
(6) Para. 1 shall not apply where:

BC1 + BC2       EQ1 + EQ2, 
-------------- <= 3 x -------------, where
2       2 
          
BC1 is the borrowed capital as at 1 January of the current year;
BC2 is the borrowed capital as at 31 December of the current year;
EQ1 is the equity as at 1 January of the current year;
EQ2 is the equity as at 31 December of the current year.
(7) The interest expenses of the credit institutions shall not be regulated under the procedure set forth in paras. 1 through 6.

Chapter nine.
AMOUNTS INVOLVED IN DETERMINING THE TAX FINANCIAL RESULT
Securities traded in regulated markets
Art. 44. (amend. – SG 106/08, in force from 01.01.2009) In the process of determining the tax financial result the accounting financial result shall be decreased by the profit from disposal of financial instruments in the sense of § 1, Item 21 of the Additional Provision, determined as the positive difference between the sale price and the documented price of acquisition of the said financial instruments. The first sentence shall not apply to revenues from sources abroad for which "exemption with progression" has been stipulated as a method for avoiding double taxation in an agreement on avoidance of double taxation.
(2) In the process of determining the tax financial result the accounting financial result shall be increased by the loss from disposal of financial instruments in the sense of § 1, Item 21 of the Additional Provision determined as the negative difference between the sale price and the documented price of acquisition of the said financial instruments.


Reserve from subsequent appraisals of assets which are not tax amortizable assets
Art. 45. (suppl. - SG 110/07, in force from 01.01.2008) When determining the tax financial result, the accounting financial result shall be increased by the value of the written-off reserve of a subsequent appraisal (reappraisal reserve) on the write-off of assets that are not tax amortizable ones, providing that no accounting revenue or expenses are accounted for on the writing-off of the reserve. The increase is performed in the year in which the asset is written off. Where land is transformed into investment property, the increase shall be carried out in the year in which the investment property is written off.


Tax treatment of liabilities
Art. 46. (1) (amend.. - SG 110/07, in force from 01.01.2008) When determining the tax financial result, the accounting financial result shall be increased by the amount of the liabilities of the taxable person, the decrease being carried out in the year in which any of the following circumstances is present:
1. expiry of the period of limitation for the liabilities, but not later than 5 years following the date on which the liabilities became executable;
2. the taxable person’s bankruptcy proceedings have been suspended with an approved rehabilitation plan, which provides for incomplete satisfaction of the creditors; the amount of the increase shall be equal to the amount of the decrease of the liability;
3. an effective decision of the Court has laid down that the liability or a part thereof is not due;
4. the creditor has waived his receivable through the Court or has remitted it; the amount of the increase shall be equal to the remitted amount;
5. prior to the expiry of the period of limitation for the liability, the latter has been extinguished by virtue of law;
6. the taxable person has filed an application for being struck off.
(2) (amend. - SG 110/07, in force from 01.01.2008) Para 1 shall not apply where in the year of occurrence of the fact referred to in Para 1 the limitation period for the obligation has expired or accounting revenue resulting from deletion of the obligation has been recorded.
(3) (new - SG 110/07, in force from 01.01.2008) Where Para 1 was applied for the preceding year, the taxation financial result for the current year shall be determined by reducing the accounting financial result by:
1. the amount of the obligation for which the limitation has expired in the current year;
2. the recorded accounting revenue during the current year resulting from deletion of the obligation.
(4) (new - SG 110/07, in force from 01.01.2008) The reduction under Para 3 shall be within the amount of the increase under Para 1 during the preceding years in respect of the obligation in question.


Tax treatment of the tax input deducted for assets available at the time of registration or repeated registration under the Value Added Tax Act
Art. 47. (1) (suppl. - SG 110/07, in force from 01.01.2008) When determining the tax financial result, the accounting financial result shall be increased by the amount of the tax input deducted by the taxable person for assets available at the time of registration or repeated registration under the Value Added Tax Act, where no accounting revenue has been recorded in relation to the deducted tax input.
(2) (revoked - SG 110/07, in force from 01.01.2008)
(3) (amend. - SG 110/07, in force from 01.01.2008) Para 1 shall not apply where:
1. the value added tax was not included in the historical value of the asset, or
2. the asset is not a tax amortizable asset and was deleted in the year of registration or second registration under the Law on the Value Added Tax.
(4) (new - SG 110/07, in force from 01.01.2008) In case of deletion of an asset, which is not a tax amortizable asset and to which Para 1 was not applied during the preceding year, the tax financial result for the current year shall be determined by reducing the accounting financial result with the amount of deducted tax input for the assets in question, with which the accounting financial result was increased under the order of Para 1.


Tax treatment for distribution of dividends from investments, accounted by equity method of accounting (new title - SG 95/09, in force from 01.01.2010)
Art. 47a. (new - SG 95/09, in force from 01.01.2010) (1) For determination of the tax financial result of shareholders or partners, their book financial result shall be reduced by the distributed dividends by local legal entities or by foreign persons, which are local persons for taxable purposes of an European Union Member State – a party under the European Economic Area Agreement, or of another Member State of the European Economic Area Agreement, where the investment is accounted by the equity method of accounting.
(2) For the financial institutions, the reduction referred to in par. Shall be by the distributed dividends in the year. The reduction shall be done in the year of recognition of the distributed dividends in the annual financial statement of the financial institution.
(3) For tax liability of persons, who are not financial institutions, the reduction referred to in par. 1 shall be by the distributed dividends in the period of acquisition prior to investment writing off. The reduction shall be done in the year of investment writing off.
(4) Paragraphs 1 -3 shall not apply to:
1. dividends, distributed from profits, made prior to acquisition of the investment;
2. dividends, distributed by licensed companies with specific investment purpose as per the Act on Special Purpose Investment Companies;
3. dividends, representing a hidden distribution of profit.


Relocation of a place of business (New title - SG 95/09, in force from 01.01.2010)
Art. 47b. (new - SG 95/09, in force from 01.01.2010) (1) For determination of a taxable financial result in a place of business activity its book financial result shall be increased by the profit and shall be reduced by the loss from relocation of its place of business. Taxable temporary differences, related to the assets and liabilities of the place of business, shall be recognized for tax purposes in the year of relocation of the place of business under the general provisions of the law. For determination of the tax financial result of the place of business the provision of Art. 66, par. 1 and 2 shall apply.
(2) The profit and loss for the purposes of par. 1 shall be determined as a difference between the selling price of the place of business and the book cost of the assets, reduced by the book cost of liabilities of the place of business as of the date of relocation.
(3) Paragraphs 1 and 2 shall not apply, where the profit and loss from relocation of the place of business have been included in calculation of the book financial result of the place of business.

Chapter ten.
TAX AMORTIZABLE ASSETS
Tax amortizable assets
Art. 48. Tax amortizable assets shall be the following ones:
1. tax fixed tangible assets;
2. tax fixed intangible assets;
3. investment property, with the exception of land;
4. subsequent expenses referred to in Art. 64.


Goodwill
Art. 49. (1) The goodwill resulting from a business combination shall not constitute tax amortizable asset.
(2) The loss resulting from devaluation and the loss in goodwill shall not be recognized for tax purposes.


Tax fixed tangible assets
Art. 50. Tax fixed tangible assets shall be those amounts which meet the requirements regarding amortizable fixed tangible assets specified in the National Accounting Standards for Small and Medium-Sized Enterprises, and the value of the said assets either equals or exceeds the lower value of the following:
1. the value threshold of significance of the fixed tangible asset specified in the accounting policy of the taxable person;
2. (amend. - SG 110/07, in force from 01.01.2008) seven hundred BGN.


Tax fixed intangible assets
Art. 51. (1) Tax fixed intangible assets shall be:
1. those acquired non-financial resources which:
а) have no physical substance;
b) are used for a period longer than 12 months;
c) have a limited useful-life period;
d) have a value that either equals or exceeds the lower value of the following ones:
аа) the value threshold of significance of the fixed intangible asset specified in the accounting policy of the taxable person;
bb) (amend. - SG 110/07, in force from 01.01.2008) seven hundred BGN;
2. (revoked - SG 110/07, in force from 01.01.2008)
3. the amounts charged as a result of business operations bringing about an increase of the economic benefit from leased fixed assets or assets the use of which has been granted; these amounts do not form tax fixed tangible asset.
(2) Those accounting expenses which have been accounted for in connection with the acquisition of a tax fixed intangible asset prior to the coming into existence of the asset shall not be recognized for tax purposes in the year in which they are accounted for and shall be taken into consideration when determining the tax amortizable value of the asset. In those cases where in the course of the subsequent year circumstances are present evidencing that the taxable person shall not acquire the tax fixed intangible asset, the unrecognized expenses under the first sentence shall be recognized for tax purposes in the year in which the said circumstances are present, providing that the requirements of this Act are fulfilled.


Tax amortization plan
Art. 52. (1) The taxable persons forming a tax financial result shall draw and implement a tax amortization plan, and shall record therein all the tax amortizable assets.
(2) The tax amortization plan shall be a tax register containing the information specified in the requirements of this Chapter on the process of acquisition, subsequent implementation, amortization and write-off of tax amortizable assets.
(3) The tax amortization plan shall contain at least the following information regarding each of the tax amortizable assets:
1. designation;
2. month of putting the asset into operation;
3. tax amortizable value;
4. tax amortization charged;
5. tax value;
6. annual tax amortization rate;
7. annual tax amortization;
8. month of introducing changes in the value of the asset and the circumstances necessitating those changes;
9. month of suspension and resumption of the charging of tax amortizations and the circumstances necessitating it;
10. month of the write-off of the asset under Art. 60, para. 3 for accounting purposes and the circumstances necessitating it;
11. month of the write-off of the asset from the tax amortization plan.


Value of the tax amortizable assets
Art. 53. (1) The tax amortizable value shall be the historical value of the asset, decreased by the charged provisions and donations it comprises, the latter being connected with the asset. In the cases referred to in Art. 64, para. 1 and Art. 67 the tax amortizable value shall be the aggregate of:
1. the subsequent expenses – in the cases referred to in Art. 64, para. 1;
2. those expenses that have not been recognized for tax purposes – in the cases referred to in Art. 67.
(2) The annual tax amortization shall be the amortization charged under the tax amortization plan for the respective year in accordance with the requirements set forth in this Chapter.
(3) The tax amortization charged shall be the aggregate of the annual tax amortizations charged with regard to the respective asset. The tax amortization charged may not exceed the tax amortizable value of the asset.
(4) The tax value shall be the tax amortizable value of the asset decreased by the tax amortization charged for it.


Tax and accounting amortizations
Art. 54. (1) When determining the tax financial result, the annual tax amortizations determined in accordance with the procedure set forth in this Chapter shall be recognized for tax purposes.
(2) (suppl. - SG 110/07, in force from 01.01.2008) The accounting amortization expenses shall not be recognized for tax purposes. Where determining the tax financial result, the accounting financial result shall be increased by the accounting amortizations, regardless of whether their accounting leads to reduction of the accounting financial result for the year of their accounting.


Categories of tax amortizable assets
Art. 55. (1) When determining the annual tax amortizations, the tax amortizable assets shall be distributed in the following categories:
1. Category I – solid-structured buildings, including investment property, equipment, power transmission devices, communication lines;
2. Category II – machinery, production equipment, apparatuses;
3. Category III – means of transportation, with the exception of motor vehicles; pavement of roads and runways;
4. (suppl. - SG 110/07, in force from 01.01.2008) Category IV – computers, peripheral devices for computers, software and the right to software use, mobile phones;
5. Category V – motor vehicles;
6. Category VI – those tax fixed tangible and intangible assets the term of use of which is limited under contractual relationships or a legal obligation;
7. Category VII – all other amortizable assets.
(2) The annual tax amortization rate shall be determined as a fixed rate for the year and shall not exceed the following amounts:

Category of assets Annual tax
  amortization
  rate (%)
Category I 4
Category II 30
Category III 10
Category IV 50
Category V 25
Category VI 100/years of the legal
  limitation
  The annual rate may
  not exceed
  33 1/3
Category VII 15
  
(3) As for the assets of the Category II, the annual tax amortization rate may not exceed 50 percent in those cases where all of the following conditions are present:
1. the assets form part of the initial investment;
2. the assets are brand-new ones and have not been used prior to their acquisition.
(4) (revoked - SG 110/07, in force from 01.01.2008)
(5) (new - SG 110/07, in force from 01.01.2008) The acquisition of assets by conclusion of a leasing contract, classified as financial leasing according to the accountancy legislation, shall not serve as grounds for submission the assets in question under category VI.
(6) (new - SG 106/08, in force from 01.01.2009) Item 1 of Para 3 shall not apply, when the assets under Para 3 have been acquired in relation to an investment for increasing the energy efficiency, where voluntary agreements under the order of Chapter Five, Section II of the Energy Efficiency Act have been concluded.


General procedure for recording the assets in a tax amortization plan
Art. 56. The tax amortizable assets shall be recorded in the tax amortization plan with their tax amortizable values.


Specific procedure for recording the assets in a tax amortization plan
Art. 57. (1) A person that has his taxation regime altered, and as a result thereof an obligation arises for him to form a tax financial result, shall draw a tax amortization plan and shall record therein the available tax amortizable assets with their tax amortizable value and the tax amortization charged in accordance with the procedure set forth in paras. 2 and 3.
(2) The tax amortizable value of an asset under para. 1 shall be determined by way of:
1. increasing its historical value by those subsequent expenses made until that time which bring about future economic advantages relating to the asset, according to the accounting legislation, and
2. decreasing its historical value by the charged provisions and donations it comprises, the latter being connected with the asset.
(3) The tax amortization of an asset charged under para. 1 shall be the accounting amortization that would have been charged on the historical value of the asset until that time, revised in accordance with the procedure set forth in para. 2.
(4) When drawing the tax amortization plan, the assets for which the charged tax amortization equals or exceeds their tax amortizable value shall not be recorded in the plan.
(5) Paras. 1 through 4 shall not apply in those cases in which an asset is repeatedly recorded in the tax amortization plan.


Charging of tax amortizations
Art. 58. (1) (suppl. - SG 110/07, in force from 01.01.2008) The charging of a tax amortization commences from the beginning of the month in the course of which the tax amortizable asset is put into operation or from the beginning of the following month. The date on which the asset is put into operation must be evidenced by way of a document.
(2) In those cases where a statutory instrument provides for a procedure for putting the asset into operation, the asset may not be put into operation for tax purposes earlier than the time specified in the statutory instrument.
(3) The annual tax amortization shall be calculated using the following formula:
ATA = TAV x ATAR x M/12, where:
ATA is the annual tax amortization;
TAV is the tax amortizable value;
ATAR is the annual tax amortization rate determined by the taxable person in accordance with Art. 55, paras. 2 and 3;
М is the number of months in the year during which tax amortization is charged.


Suspension of the charging of tax amortization
Art. 59. (amend. - SG 110/07, in force from 01.01.2008) (1) The charging of tax amortization shall be suspended in those cases where the respective asset is temporarily out of use (it does not provide economic benefit) for a period which is longer than twelve months. The charging shall be suspended from the beginning of the month following the month of expiration of the term referred to in the first sentence, and shall be resumed at the beginning of the month in which the asset is put into operation again. The tax amortizable asset shall not be written off from the tax amortization plan.
(2) The tax financial result for the year of expiration of the twelve month term referred to in Para 1 shall be determined by reducing the annual tax amortization of the taxable person by the amount of the accrued tax amortization of the asset during the twelve months in which the asset has remained unused. The amount of the reduction referred to in the first sentence shall be used to correct the tax amortizable asset by the date of discontinuing the accrual of the tax amortization as follows:
1. the accrued tax amortization of the asset is reduced;
2. the tax value of the asset is increased.
(3) Any taxable person under liquidation or insolvency proceedings shall discontinue the accrual of tax amortizations of the assets, for which the accrual of accounting amortizations is discontinued according to the accounting legislation. By the date of discontinuance of the accrual of the tax amortization Art. 60, Para 5 shall apply respectively.
(4) The charging of tax amortizations for the assets under Art. 60, para. 3 shall not be suspended.


Write-off of assets from the tax amortization plan
Art. 60. (1) The asset is written of from the tax amortization plan when it has been totally amortized for tax purposes.
(2) Where an asset is written off for tax purposes prior to being totally amortized for tax purposes, it shall be written off from the tax amortization plan at the beginning of the month in which it is written off for tax purposes.
(3) Para. 2 shall not apply to the write-off of assets where:
1. (amend. - SG 110/07, in force from 01.01.2008) completely deprecated for account purposes;
2. the assets are written off as a result of an increase of the value threshold of significance.
(4) The assets referred to in para. 3 shall be written off from the tax amortization plan in accordance with the procedure set forth in para. 1.
(5) (suppl. - SG 110/07, in force from 01.01.2008) In those cases where an amortizable asset under the National Accounting Standards for Small and Medium-Sized Enterprises is transformed into a non-amortizable one, except for the transformation into investment property, the said asset shall be written off from the tax amortization plan from the beginning of the current month. The first sentence shall not apply to completely depreciated assets for account purposes and to assets, which remain temporarily unused (not economically profitable).
(6) Where the tax amortizable asset is no more used for an activity for which tax financial result is formed, the said asset shall be written off from the tax amortization plan from the beginning of the current month.


Preserving the values of the tax amortizable asset
Art. 61. The values of the tax amortizable asset shall not be changed in the cases of:
1. subsequent accounting appraisal (reappraisal and devaluation);
2. a change in the accounting policy, including a change in the applicable accounting standards;
3. accounting errors made in previous periods, with the exception of technical errors;
3. (revoked – SG 94/10, in force from 01.01.2011)


Changing the value of the tax amortizable asset
Art. 62. (1) (suppl. – SG 94/10, in force from 01.01.2011) A change in the value of the tax amortizable asset shall be made where circumstances are present necessitating a change under this Act or the Accountancy Act, with the exception of the cases referred to in Art. 61.
(2) The change in the value of the tax amortizable asset shall be reported in the tax amortization plan as at 1 January of the year in which the circumstances necessitating the change are established. No change in the tax amortization plan is made, neither is there any revision of the tax amortization charged for the previous years.
(3) The value of the tax amortizable asset following the change must be equal to the value that would have been determined if the circumstances necessitating the change had been known in the previous years.
(4) (suppl. – SG 94/10, in force from 01.01.2011) When determining the tax financial result, the annual tax amortization of the asset for the current year shall be corrected by the difference between the tax amortization charged for the asset during the previous years and the tax amortization that would have been charged if the circumstances necessitating the change had been known in the previous years. The first sentence shall not apply, where the fact requiring changes to the asset amounts is an error.
(5) In those cases where the established circumstances do not necessitate a change in the value of the asset for the previous years, the change in the value shall be reported in the tax amortization plan at the time the circumstance is established in the course of the current year.


Subsequent expenses relating to an asset included in the tax amortization plan
Art. 63. The tax amortizable value of an asset included in the tax amortization plan shall be increased by those subsequent expenses for which the Accountancy Act provides that they result in future economic benefits connected with the tax amortizable asset. The tax amortizable value shall be increased from the beginning of the month in which the subsequent expenses are completed.


Subsequent expenses relating to an asset which is written off from the tax amortization plan
Art. 64. (1) Where the asset has been written off from the tax amortization plan, but has not been written off for tax purposes, a separate tax amortizable value shall be recorded of those subsequent expenses for which the Accountancy Act provides that they result in future economic benefits connected with the tax amortizable asset.
(2) The tax amortizable asset referred to in para. 1 shall be recorded in the tax amortization plan from the beginning of the month in which the subsequent expenses are completed.
(3) For the purposes of Art. 55 the tax amortizable asset shall belong to the category of the asset in connection with which the subsequent expenses are made.
(4) Where the asset in connection with which the subsequent expenses are made is written off from the tax amortization plan prior to the time the tax amortizable asset under para. 1 is completely amortized, the latter shall be written off from the tax amortization plan under the conditions and in accordance with the procedure set forth in Art. 60.


Receipts and expenses of subsequent appraisals of tax amortizable assets
Art. 65. The accounting receipts and expenses of subsequent appraisals of tax amortizable assets shall not be recognized for tax purposes.


Transformation of the accounting financial result upon the write-off of a tax amortizable asset
Art. 66. (1) Where an asset is written off from the accounting amortization plan, when determining the tax financial result the accounting financial result shall be increased by the accounting balance-sheet value of the asset.
(2) Where an asset is written off from the accounting amortization plan, when determining the tax financial result the accounting financial result shall be decreased by the tax value of the asset.
(3) Paras. 1 and 2 shall not apply:
1. in those cases of unrecognized expenses of missing assets and receivables relating thereto in which the tax value exceeds the accounting balance-sheet value of the asset;
2. in those cases of write-off of an asset at the account of the equity in which the tax value exceeds the accounting balance-sheet value of the asset;
3. in those cases of write-off of an asset under Art. 60, para. 6 in which the tax value exceeds the accounting balance-sheet value of the asset;
4. in the cases of transformation of companies and restructuring of cooperative societies under Chapter Nineteen, Sections II and III.


Accounting expenses forming a tax amortizable asset
Art. 67. The accounting expenses forming a tax amortizable asset, including the subsequent expenses, shall not be recognized for tax purposes.


Receipts and expenses accounted for in connection with a donation relating to a tax amortizable asset
Art. 68. The accounting receipts and expenses accounted for in connection with a donation with which the historical value of the asset was decreased in determining the tax amortizable value thereof shall not be recognized for tax purposes.


Specific tax treatment of an asset formed as a result of research and development activities
Art. 69. (1) When determining the tax financial result, the taxable person shall be entitled to decrease the accounting financial result by the historical value of a fixed intangible asset, doing so only once in the year in which it is formed, providing that all of the following conditions are present:
1. the asset has been formed as a result of research and development activities;
2. the research and development activities have been carried out in connection with the occupation of the taxable person;
3. the research and development activities have been assigned by way of an order of a scientific research institute or a higher-education institution under free-market conditions.
(2) In those cases where the taxable person has exercised his right referred to in para. 1, the fixed intangible asset under para. 1 shall not be tax amortizable asset.

Chapter eleven.
CARRY-FORWARD OF A TAX LOSS
General provisions
Art. 70. (1) Taxable persons shall be entitled to carry forward the tax loss formed in accordance with this Part. Where a taxable person opts for the carry-forward of a tax loss, the latter must be carried forward gradually, in the course of the 5 subsequent years, until all of it has been carried forward.
(2) The taxable person shall exercise his right to opt for deducting the tax loss in the first year, following the year in which the tax loss occurred, in which the person has formed positive tax financial result prior to deducting the tax loss. In those cases where until the tax control date the taxable person has not formed positive tax financial result prior to deducting the tax loss, it shall be considered that the person has exercised his right to carrying forward the tax loss.


Procedure for deduction
Art. 71. (1) Upon determining the tax financial result, the tax loss shall be deducted from the positive tax financial result, which is the result prior to deducting the tax loss. Where the tax loss is smaller than the positive tax financial result, when determining the tax financial result the full amount of the tax loss shall be deducted.
(2) (revoked – SG 94/12, in force from 01.01.2013)


Newly incurred tax losses
Art. 72. As for newly incurred tax losses, it is the provisions of this Chapter that shall apply, in observance of the succession of their incurrence. The five years’ term for each of the newly incurred tax losses shall commence from the year which follows the year of incurrence of the respective loss.


Applying the method of "Exemption with progression" to a loss from a source abroad
Art. 73. (1) Where a tax loss is formed in the course of the current year in a State with which the Republic of Bulgaria has signed a treaty on avoidance of double taxation, and the method of avoidance of double taxation regarding profits is the "Exemption with progression" method, the loss shall not be deducted from the tax profits derived either in the current year or in the subsequent years from a source located either within the country or in other States.
(2) The tax loss referred to in para. 1 shall be deducted gradually in the course of the 5 subsequent years, in observance of the requirements of this Chapter, from the tax profits derived from the source abroad.
(3) (amend. - SG 106/08, in force from 01.01.2009) Upon suspension of the activity of a business establishment in a Member State of the European Union or the European Economic Area, those tax losses from the business establishment which have not been carried forward or recovered shall be carried forward in accordance with the general legal procedure, this being valid until the expiry of the five years’ period following the incurrence thereof.


Applying the method of tax input to a loss from a source abroad
Art. 74. (1) Where a taxable person has formed a tax loss and the said loss or a part thereof is from a source abroad to which the tax input method of avoiding double taxation applies, the current year’s loss that has not been deducted shall be deducted gradually in the course of the 5 subsequent years, in observance of the requirements of this Chapter, from the tax profits derived from the said source abroad.
(2) Where the tax loss for the year is formed from more than one sources (located in a foreign State or within the country), for the purposes of para. 1 it shall be distributed among the States in which it has occurred, in accordance with the formula as follows:
А = B x C/D, where:
А is the part of the taxable person’s tax loss for the year, allotted to the respective source (located in a foreign State or within the country);
B is the tax loss of the taxable person for the year;
C is the tax loss formed by the respective source (located in a foreign State or within the country);
D is the aggregate of the tax losses formed by all sources (located in a foreign State or within the country).
(3) (amend. - SG 106/08, in force from 01.01.2009) Para. 1 shall not apply to losses from a source in a Member State of the European Union or the European Economic Area.

Chapter twelve.
ACCOUNTING ERRORS
Eliminating the accounting errors
Art. 75. (1) Where, in the current year, an accounting error relating to years in the past is identified, the tax financial results for the respective years in the past shall be revised in accordance with the requirements of the laws that were effective in the respective years in the past, in a way as though the error had not been committed.
(2) It is the tax rate for the respective year in the past that shall apply in determining the tax liability for the tax financial result for the respective year in the past revised in accordance with para. 1.
(3) (amend. - SG 110/07, in force from 01.01.2008; amend. – SG 94/12, in force from 01.01.2013; suppl. – SG 15/13, in force from 01.01.2013) In the cases under Para 1 the taxable person shall notify in writing the competent income authority, which shall undertake actions for changing the taxation financial result and the duty for the respective taxation period within 30 day-term from the receipt of the notification.
(4) (amend. – SG 94/10, in force from 01.01.2011) When an error has been found that is related to a tax amortisation asset, the values of the asset shall be amended as set out in Art. 62. In those cases where, as a result of the identified error, it is established that the taxable person was obliged to form a tax amortizable asset for the respective year in the past, the annual tax amortization recognized in determining the tax financial results for the preceding years shall be equal to the accounting amortization that would have been charged for the said asset for the respective years, however, this annual tax amortization may not exceed the one that would have been charged if the maximum allowed annual tax amortization rates for the relevant years had been used. The tax amortizable asset referred to in the second sentence shall be recorded in the tax amortization plan as at 1 January of the year of identifying the error, with its tax amortizable value and the tax amortization charged under the second sentence.
(5) The tax temporary difference that would have occurred in a previous year if the error had not been committed shall be regarded as occurring in the course of the respective previous year and shall be recognized for tax purposes in accordance with the general procedure set forth in law.
(6) (amend. – SG 94/10, in force from 01.01.2011) Paras. 1 through 4 shall not apply to the tax financial result and the tax duty thereon for any past year that precedes the date of 1 January of the year of finding the error by at least 6 years.
(7) The accounting receipts and expenses accounted for in the current year in connection with the identification of an accounting error relating to years in the past shall not be recognized for tax purposes.


Specific cases of correcting of accounting errors
Art. 76. In those cases where, following the revision of the tax financial result under Art. 75, para. 1, a tax loss for the respective period in the past appears or changes, there shall apply the provisions of Chapter Eleven. The tax financial results for the years from the time the error was committed until the time it was identified shall be revised in accordance with Art. 75 as though the error had not been committed. The year in which the error was committed shall be regarded as the year of occurrence of the tax loss.


Expenses accounted for in violation of the accounting legislation
Art. 77. (1) Those expenses which have been accounted for in violation of the accounting legislation shall not be recognized for tax purposes in the year in which they are accounted for.
(2) The expenses under para. 1 that have not been recognized for tax purposes shall be recognized for tax purposes where this Act allows it and in observance of the requirements of this Chapter.


Receipts and expenses that have not been accounted for in accordance with the procedure set forth in a statutory instrument
Art. 78. When determining the tax financial result, the accounting financial result shall be corrected by the aggregate of those receipts and expenses which, according to the requirements of a statutory instrument, should have been accounted for in the current year but were not accounted for by the taxable person. In those cases where, later on, accounting receipts and expenses are accounted for under the first sentence, they shall not be recognized for tax purposes.


Rectification of Errors other than Accounting Errors (Title amend. – SG 94/10, in force from 01.01.2011)
Art. 79. (amend. – SG 94/10, in force from 01.01.2011) The provisions of this Chapter shall apply also to errors other than accounting errors, including errors in transformation of the accounting financial result for determining the tax financial result.


Interest on delayed payment
Art. 80. Interest on delayed payment shall also be due in the cases of applying Art. 75. The interest shall be due from the date on which the corporate tax for the respective year in the past should have been paid.


Correction of errors identified in the course of exercising tax control
Art. 81. Except for Art. 75, para. 3, the provisions of this Chapter shall also apply to those errors which have been identified in the course of exercising tax control.

Chapter thirteen.
CHANGING THE ACCOUNTING POLICY
Corrections in the cases of changing the accounting policy
Art. 82. (1) In those cases where the accounting policy is changed, when determining the tax financial result the accounting financial result for the current year shall be corrected in the way and by the amounts by which the tax financial results for the previous years would have been corrected if the changed accounting policy had been applied in the said years.
(2) The tax temporary differences that have occurred due to the accounting policy applied prior to the change shall be treated as if they had not occurred.
(3) In those cases where the changed accounting policy was applied in the previous years and, as a result thereof, tax temporary differences would occur, it shall be considered that they have occurred, and they shall be recognized in accordance with the general procedure of the law.
(4) Those accounting receipts and expenses which have occurred as a result of the change in the accounting policy shall not be recognized for tax purposes.
(5) (amend. - SG 110/07, in force from 01.01.2008) Para 1 through 3 shall not apply where the change in the accounting policy concerns tax amortizable assets.
(6) No interest on delayed payment shall be due in those cases in which the change in the accounting policy brings about an increase of the tax financial result.

Chapter fourteen.
ADVANCE CONTRIBUTIONS
General provisions
Art. 83. (1) (prev. text of Art. 83 - SG 110/07, in force from 01.01.2008; suppl. – SG 94/12, in force from 01.01.2013) The taxable persons shall make monthly or quarterly advance contributions for corporate tax on tha basis of prognosis tax revenue for the current year.
(2) (new - SG 110/07, in force from 01.01.2008) Exempt from advance contributions shall be:
1. (amend. – SG 94/12, in force from 01.01.2013) taxable persons, whose net income of sales for the preceding year does not exceed BGN 300 000;
2. newly constituted taxable persons for the year of their constitution, except those newly constituted as a result of a transformation under the Commerce Act.
(3) (new – SG 94/12, in force from 01.01.2013) The persons referred to in Para 2 may make quarterly advance contributions as set out in this Chapter, to which Art. 89 shall not apply.


Monthly advance contributions
Art. 84. (amend. – SG 94/12, in force from 01.01.2013) The monthly advance contributions shall be made by the taxable persons whose net income from sales for the preceding year exceed BGN 3 000 000.


Quarterly advance contributions
Art. 85. The quarterly advance contributions shall be made by the taxable persons that have no obligation to make monthly advance contributions.


Determining the monthly advance contributions
Art. 86. (prev. text of Art. 86 - SG 110/07, in force from 01.01.2008; amend. – SG 94/12, in force from 01.01.2013) The monthly advance contributions shall be determined on the grounds of the following formula:
ADVMONTHLY = (PTP/12) x TR, where:
ADVMONTHLY is the monthly advance contribution;
PTP is the prognosis tax profit for the current year;
TR is the tax rate of the corporate tax.


Determining the quarterly advance contributions
Art. 87. (amend. – SG 94/12, in force from 01.01.2013) The quarterly advance contributions shall be determined on the grounds of the following formula:
ADVQUARTERLY = (PTP/4) x TR,
where:
ADVQUARTERLY is the quarterly advance contribution;
PTP is the prognosis tax profit for the current year;
TR is the tax rate of the corporate tax.


Declaring advance contributions
Art. 87a. (new – SG 94/12, in force from 01.01.2013) (1) The advance contributions for the current calendar year determined under Art. 86 and 87 shall be declared with the annual tax declaration for the preceding calendar year.
(2) The quarterly advance contributions for the current calendar year determined under Art. 87 by a newly incorporated company resulting from a transformation shall be declared in a declaration according to a form within the time limit for making the first advance contribution following the transformation.
(3) The quarterly advance contributions for the current calendar year determined under Art. 87 by a newly incorporated company in the cases of Art. 83, Para 3 shall be declared in a declaration according to a form within the time limit for making the first chosen advance contribution.


Declaration for changes to the advance contributions (Title amend. – SG 94/12, in force from 01.01.2013)
Art. 88. (1) (amend. – SG 94/12, in force from 01.01.2013) The taxable persons shall be entitled to file declarations of a standard form for having their advance contributions decreased or increased, in those cases where they think the advance contributions will differ from the annual corporate tax due.
(2) (suppl. – SG 94/12, in force from 01.01.2013) The decrease or increase of the advance contributions shall be enjoyed after the declaration is filed.
(3) (new – SG 94/12, in force from 01.01.2013) The declaration referred to in Para 1 shall be filed also in the cases of transformation under Chapter Nineteen, where the amount of the advance contributions determined by the receiving company following the transformation has changed. The declaration shall be filed within the time limit for making the first advance contribution following the transformation.


Interest in case of the annual corporate tax exceeds the determined advance contributions (Title amend. – SG 94/12, in force from 01.01.2013)
Art. 89. (1) (amend. – SG 94/12, in force from 01.01.2013) Where the due annual corporate tax exceeds the amount of determined monthly advance contributions due for the respective year by more than 20 percent or where 75 percent of the due annual corporate tax exceeds the amount of the determined quarterly advance contributions for the respective year by more than 20 percent, interest shall be due for the excess above 20 percent.
(2) (amend. – SG 94/12, in force from 01.01.2013) The amount on which interest is due under para. 1 shall be determined according to the following formulas:
1. for the monthly advance contributions:
A = B – (C + 0,2 C), where:
A is the amount on which interest is due;
B is the due annual corporate tax;
C is the total amount of determined monthly advance contributions for the year;
2. for the quarterly advance contributions:
A = 0,75 B – (C + 0,2 C), where:
A is the amount on which interest is due;
B is the due annual corporate tax;
C is the total amount of determined quarterly advance contributions for the year;
(3) (revoked – SG 94/12, in force from 01.01.2013)
(4) (amend. – SG 94/12, in force from 01.01.2013) Within the meaning of this Art., determined advance contributions shall be:
1. the monthly advance contributions determined under Art. 86 or the quarterly advance contributions determined under Art. 87, for the first, second and third quarter – in respect of advance contributions before submission of the declaration for changes to the advance payments under Art. 88;
2. the decreased or increased monthly advance contributions or the decreased or increased quarterly advance contributions for the first, second and third quarter specified in the declaration under Art. 88 - in respect of advance contributions following the submission of the declaration for changes under Art. 88.
(5) (suppl. – SG 94/10, in force from 01.01.2011; amend. – SG 94/12, in force from 01.01.2013) The interest referred to in para. 1 shall be determined according to the Act on Interest on Taxes, Fees and Other Similar State Receivables and shall be calculated from 16 April to 31 December of the respective year, and in respect of newly incorporated companies resulting from a transformation – from the date, following the date of expiration of the time limit for making the first quarterly advance contribution, to 31 December of the year of the transformation.


Payment of the advance contributions
Art. 90. (amend. – SG 94/12, in force from 01.01.2013) (1) The monthly advance contributions shall be paid as follows:
1. for January, February and March – by 15 April of the current calendar year;
2. for April until December - by the 15th day of the month they are paid for.
(2) The quarterly advance contributions for the first and second quarter shall be payable until the 15th day of the month following the quarter they are paid for, and for the third quarter – by 15 December. No quarterly advance contribution is payable for the fourth quarter.


Exemption from advance contributions
Art. 91. (amend. – SG 94/12, in force from 01.01.2013) The taxable persons that are exempt from corporate tax for the current year shall also be exempt from the respective part of the advance contributions determined, the said part being in proportion to the amount of exemption.

Chapter fifteen.
DECLARING AND PAYING THE CORPORATE TAX
Declaring the corporate tax
Art. 92. (1) The taxable persons that are taxed with corporate tax shall submit an annual tax return of a standard form regarding the tax financial result and the annual corporate tax due.
(2) The annual tax return shall be submitted not later than 31 March of the subsequent year with the territorial directorate of the National Revenue Agency by registration of the taxable person.
(3) (amend. - SG 95/09, in force from 01.01.2010) The annual business report shall be submitted together with the annual tax return.
(4) (amend. - SG 95/09, in force from 01.01.2010) Annual business report shall not be submitted by taxable persons, who have met the following requirements in aggregate:
1. they have not carried out any business during the year;
2. they have not accounted income and expenditures in the year according to the Accountancy Acts.
(5) (amend. - SG 95/09, in force from 01.01.2010) The taxable persons that submit their annual tax returns and their annual business report until 31 March of the subsequent year electronically and pay their corporate tax within the same time limit, shall enjoy a relief of 1 percent of the annual corporate tax due, however, this relief may not exceed BGN 1,000.
(6) (new – SG 94/10, in force from 01.01.2011) The taxable persons shall enclose with their annual tax statement proof of the amount of taxes paid abroad. The first sentence shall not apply to profit/income from sources abroad which are exempt from double taxation by virtue of an "exemption with progression" method stipulated in an agreement for avoidance of double taxation.


Payment of the tax
Art. 93. After deducting the advance contributions paid for the respective year, the taxable persons shall pay the corporate tax for the respective year not later than 31 March of the subsequent year.


Overpaid tax
Art. 94. (revoked – SG 94/12, in force from 01.01.2013)

Chapter sixteen.
FINANCIAL INSTITUTIONS
Receipts and expenses determined by a regulatory body
Art. 95. In those cases where the amount of the receipts or expenses accounted for under the accounting policy of the financial institution differs from the amount determined by a regulatory body under a statutory instrument, it is the amount determined under the statutory instrument that is recognized when determining the tax financial result.


Receipts and expenses of subsequent appraisals (reappraisals and devaluations) of financial assets and liabilities (supp. - SG 95/09, in force from 01.01.2010)
Art. 96. (1) (prev. Art. 96 - SG 95/09, in force from 01.01.2010) The receipts and expenses of subsequent appraisals of financial assets and liabilities accounted for by financial institutions shall be recognized for tax purposes in the year in which they are accounted for. The financial institutions shall not apply Arts. 34, 35 and 37 to the financial assets and liabilities.
(2) (new - SG 95/09, in force from 01.01.2010) Where income and expenditures from subsequent valuations of financial assets and liabilities have not been recognized for tax purposes in a preceding period, they shall be recognized for tax purposes pursuant to the general provisions of the law. The provision of par. 1, second sentence shall not apply to those assets and liabilities.


Subsequent appraisals of financial assets and liabilities recognized directly in the equity
Art. 97. (1) When determining the tax financial result of financial institutions, their accounting financial result shall be increased by the profits of subsequent appraisals of financial assets and liabilities recognized directly in their equity in the current year.
(2) When determining the tax financial result of financial institutions, their accounting financial result shall be decreased by the losses of subsequent appraisals of financial assets and liabilities recognized directly in their equity in the current year.
(3) (amend. - SG 110/07, in force from 01.01.2008) Profits and losses recognized during the current year in the income and expenses account (the revenue account), which have participated in estimating the tax financial result under the order of para. 1 and 2, shall not be recognized for tax purposes.

Chapter seventeen.
SPECIFIC RULES ON DETERMINING THE TAX FINANCIAL RESULT OF COOPERATIVE SOCIETIES
Production and consumer dividends
Art. 98. (1) Production dividends shall be the amounts distributed for those products which the members of the cooperative society have produced and sold to the cooperative society. These dividends shall be determined on the grounds of the profit corresponding to the products sold, including products sold after being processed.
(2) Consumer dividends shall be the amounts distributed for those consumer goods which the members of the cooperative society buy from the latter. These dividends shall be determined on the grounds of the profit resulting from the difference between the sale price at which the cooperative society has sold the goods, this price being decreased by the expenses of selling the goods, and the price which the cooperative society has paid for acquiring the goods.


Tax treatment of production and consumer dividends
Art. 99. (1) When determining the tax financial result, the accounting financial result shall be decreased by those production and consumer dividends which are paid to the members of the cooperative society prior to 25 March of the subsequent year and are covered by the balance-sheet profit. The decrease under the first sentence shall be up to the amount of the positive accounting financial result.
(2) Those production and consumer dividends which are paid to the members of the cooperative society in the course of the year shall be accounted for but shall not be considered when determining the accounting financial result.
(3) Where the cooperative society has accounted for a balance-sheet loss or a balance-sheet profit which is insufficient to cover the production and consumer dividends paid during the year, the amount of those production and consumer dividends paid during the year which are not covered shall be accounted for as accounting expense that is not recognized for tax purposes.

Chapter eighteen.
DIVIDENDS WITHIN THE EUROPEAN COMMUNITY (REVOKED – SG 69/08, IN FORCE FROM 01.01.2009)
Section I.
Definitions (revoked – SG 69/08, in force from 01.01.2009)
Another Member State company
Art. 100. (revoked – SG 69/08, in force from 01.01.2009)


Local mother company
Art. 101. (revoked – SG 69/08, in force from 01.01.2009)


Member State mother company
Art. 102. (revoked – SG 69/08, in force from 01.01.2009)


Local subsidiary company
Art. 103. (revoked – SG 69/08, in force from 01.01.2009)


Member State subsidiary company
Art. 104. (revoked – SG 69/08, in force from 01.01.2009)

Section II.
Tax Treatment of the Distribution of Dividends (revoked – SG 69/08, in force from 01.01.2009)
Dividends distributed by a Member State subsidiary company
Art. 105. (revoked – SG 69/08, in force from 01.01.2009)


Nonfulfilment of the condition for exemption from taxation
Art. 106. (revoked – SG 69/08, in force from 01.01.2009)


Unrecognized expenses relating to unrecognized receipts from dividends
Art. 107. (revoked - SG 110/07, in force from 01.01.2008)


Dividends distributed by a local subsidiary company in favour of a Member State mother company
Art. 108. (revoked – SG 69/08, in force from 01.01.2009)


Security
Art. 109. (revoked – SG 69/08, in force from 01.01.2009)


Cooperative societies
Art. 110. (revoked – SG 69/08, in force from 01.01.2009)


Tax evasion
Art. 111. (revoked – SG 69/08, in force from 01.01.2009)

Chapter nineteen.
TRANSFORMATION OF COMPANIES AND COOPERATIVE SOCIETIES, AND TRANSFER OF ENTERPRISES
Section I.
General Provisions
Scope
Art. 112. The provisions of this Chapter shall apply to the transformation of companies and cooperative societies, and to the transfer of enterprises.


Transformation date
Art. 113. The transformation date for tax purposes shall be the date on which the transformation is entered in the Commercial Register.


Last tax period where a company under transformation is wound up
Art. 114. The last tax period where a company under transformation is wound up shall be the period commencing from the beginning of the year and ending on the date of transformation. As for the companies which are newly established in the year of transformation, the last tax period shall be the period commencing from the date of establishment and ending on the date of transformation.


Taxation regarding the last tax period
Art. 115. (1) The companies under transformation and the foreign persons’ business activity establishments under transformation shall be taxed with corporate tax for the last tax period in accordance with the general legal procedure. The taxation shall be final.
(2) For tax purposes the assets and liabilities as at the transformation date shall be considered realized at market prices and shall be written off.
(3) When determining the tax financial result, the accounting financial result shall be increased by the profit and decreased by the loss calculated as the difference between the market price of the asset or liability and its accounting value as at the date of transformation. Those tax temporary differences for the last tax period which relate to the asset or liability shall be recognized in accordance with the general legal procedure. Art. 66, paras. 1 and 2 shall apply to determining the tax financial result.
(4) Paras. 2 and 3 shall not apply in the cases of transformation under the conditions of Sections II and III.


Tax treatment of transformation by way of changing the legal form
Art. 116. (1) Arts. 115 and 117 shall not apply to the cases of transformation by way of changing the legal form under Art. 264 of the Commerce Act. The newly established company shall assume the obligations to determine the tax financial result and to pay the corporate tax due for the whole year of transformation.
(2) For tax purposes all those rights and obligations which arise from actions performed by the company under transformation both during the current period and during previous ones, including the transformations of the tax financial result, shall be regarded as being performed by the newly established company.


Tax treatment of transformation via transfer of property to the single owner
Art. 116a. (new - SG 110/07, in force from 01.01.2008) (1) In case of transformation via transfer of property to the single owner according to Art. 265 of the Commerce Act all rights and obligations resulting from acts of the company under transformation during current or previous terms, including transformations of the tax financial result, shall be considered performed by the sole entrepreneur.
(2) The sole entrepreneur shall submit a tax statement on the corporate tax for the most recent tax term of the company under transformation under the order of Art. 117, Para 1 and shall deposit the tax within the term under Art. 117, Para 2.
(3) After the transformation the sole entrepreneur shall deposit quarterly advance contributions in the year of transformation.
(4) The sole entrepreneur may not transfer the tax losses, incurred by the company under transformation.
(5) The sole entrepreneur may not recognize for tax purposes the unrecognised expenses for interests in the company under transformation resulting from the application of the weak capitalization regime.
(6) The company under transformation shall not apply Art. 115, Para 2 and 3.


Declaring and paying the tax for the last tax period
Art. 117. (1) (amend. and suppl. - SG 110/07, in force from 01.01.2008) In the cases of termination of companies under transformation the newly established companies or the acquiring ones shall submit a tax return regarding the corporate tax for the last tax period of the company under transformation within a period of 30 days following the date of transformation. The return shall be submitted to the Territorial Directorate of the National Revenue Agency of the newly established or the host company. In case of transformation in the form of division a return shall be submitted only by one of the newly established or host companies.
(2) The corporate tax for the last tax period shall be paid by the newly established companies or the acquiring ones within a period of 30 days following the date of transformation, after deducting the advance contributions made.
(3) (new - SG 110/07, in force from 01.01.2008) Para 1 and 2 shall apply also to cases of termination of the company under transformation according to Section II of the present Chapter.


Advance contributions of acquiring companies or newly established companies
Art. 118. (1) (amend. – SG 94/12, in force from 01.01.2013) In the year of transformation of the acquiring companies shall make, following the transformation, the same advance contributions as before the transformation, and the newly incorporated companies shall make quarterly advance contributions.
(2) (amend. – SG 94/12, in force from 01.01.2013) In the cases of transformation by way of changing the legal form under Art. 264 of the Commerce Act the newly established company shall make monthly advance contributions or quarterly ones in accordance with the general legal procedure, on the grounds of the prognosis tax revenue, determined by the company under transformation.


Carry-forward of a tax loss in the cases of transformation and transfer of an enterprise
Art. 119. (1) In the cases of transformation under the Commerce Act the acquiring companies or the newly established ones shall not be entitled to carry forward those tax losses which have been formed by the companies under transformation.
(2) In the cases of selling an enterprise under Art. 15 of the Commerce Act the legal successor shall not be entitled to carry forward those tax losses which have been formed by the alienator.
(3) Para. 1 shall not apply to the cases of transformation by way of changing the legal form under Art. 264 of the Commerce Act.


Regulation of low-rate capitalization
Art. 120. (1) In the cases of transformation under the Commerce Act the acquiring companies or the newly established ones shall not be entitled to recognize for tax purposes the unrecognized interest expenses of the companies under transformation, these expenses resulting from the application of the low-rate capitalization regime.
(2) In the cases of selling an enterprise under Art. 15 of the Commerce Act the legal successor shall not be entitled to recognize for tax purposes the unrecognized interest expenses of the alienator, these expenses resulting from the application of the low-rate capitalization regime.
(3) Para. 1 shall not apply to the cases of transformation by way of changing the legal form under Art. 264 of the Commerce Act.


Expenses of carrying out the transformation
Art. 121. (1) The accounting expenses the company under transformation has made in connection with the transformation shall not be recognized for tax purposes. The unrecognized expenses shall be recognized for tax purposes when determining the tax financial result of the acquiring company or the newly established company for the year in which the transformation is carried out.
(2) Where circumstances are present which determine that the transformation will not take place, those expenses of the companies under transformation which are referred to in para. 1 shall be recognized for tax purposes for the year in which the said circumstances occur, providing that the requirements of this Act are met.


Tax treatment in the cases of choosing an earlier date of transformation for tax purposes
Art. 122. (1) (amend. and suppl. - SG 110/07, in force from 01.01.2008) In the cases of choosing an earlier date of transformation for tax purposes under Art. 263g, para. 2 of the Commerce Act all the actions of the companies under transformation performed at the expense newly established companies or the acquiring ones in the period from the said date until the date of transformation for tax purposes shall be considered performed for taxation purposes by the companies under transformation.
(2) (suppl. - SG 110/07, in force from 01.01.2008) In the cases under para. 1 all the accounting receipts and expenses, profits and losses accounted for by the newly established companies or the acquiring ones shall be recognized for tax purposes for the company under transformation. The said receipts and expenses, profits and losses shall not be recognized for tax purposes for the newly established companies or the acquiring ones. For the purposes of the first and second sentence the account income and expenses, profits and losses shall be those, which would have been estimated by the company under transformation, if no earlier date has been fixed for account purposes under the order of Art. 263g, Para 2 of the Commerce Act.
(3) When determining the tax financial result, the transformations resulting from the actions under para. 1 shall be made by the companies under transformation.


Cooperative organizations and State-owned enterprises
Art. 123. The provisions of this Chapter regarding the transformation of commercial companies shall also apply to the cases of:
1. restructuring of cooperative organizations;
2. winding-up, closure or formation of State-owned enterprises within the meaning of Art. 62, para. 3 of the Commerce Act under the conditions of universal legal succession.


Responsibility in the cases of transformation and restructuring
Art. 124. (1) In the cases of transformation of commercial companies or restructuring of cooperative organizations the newly established companies/cooperative organizations or the acquiring ones shall bear joint responsibility for the tax liabilities of the companies or cooperative organizations under transformation up to the amount of the rights acquired.
(2) In the cases of transfer of an enterprise under Art. 15 of the Commerce Act the legal successor shall bear joint responsibility for the tax liabilities of the alienator up to the amount of the rights acquired.
(3) The rights acquired shall be assessed in accordance with the market prices.

Section II.
Specific Regime of Taxation in the Cases of Transformation
Scope
Art. 125. (1) (amend. - SG 106/08, in force from 01.01.2009) This Section shall apply to takeover, merger, split-up, separation, transfer of a separate activity and exchange of stocks and shares within the meaning of Arts. 126 through 131 in which local companies and/or companies of another Member State of the European Union are involved.
(2) (amend. - SG 106/08, in force from 01.01.2009) This Section shall also apply to the cases of restructuring of cooperative organizations, including ones of other Member States of the European Union where the conditions specified in this Section are present.


Takeover
Art. 126. (1) Takeover shall be any transformation in the course of which all of the following conditions are present:
1. all the assets and liabilities of one or more companies under transformation are transferred to an existing acquiring company, the companies under transformation being wound up without liquidation;
2. the shareholders or partners in the companies under transformation are issued stocks or shares in the acquiring company.
(2) Takeover shall also be any transformation in which all the assets and liabilities of the company under transformation are transferred to an acquiring company, the latter holding all the stocks or shares of the company under transformation, the latter being wound up without liquidation.


Merger
Art. 127. Merger shall be any transformation in the course of which all of the following conditions are present:
1. all the assets and liabilities of one or more companies under transformation are transferred to a newly established company, the companies under transformation being wound up without liquidation;
2. the shareholders or partners in the companies under transformation are issued stocks or shares in the newly established company.


Split-up
Art. 128. Split-up shall be any transformation in the course of which all of the following conditions are present:
1. (amend. - SG 110/07, in force from 01.01.2008) all the assets and liabilities of a company under transformation are transferred to two or more existing (host) or newly established companies, the company under transformation being wound up without liquidation;
2. the shareholders or partners in the company under transformation are issued stocks or shares in each of the existing or newly established companies in proportion to the stocks or shares held by the shareholders or partners in the company under transformation.


Separation
Art. 129. Separation shall be any transformation in the course of which all of the following conditions are present:
1. (amend. - SG 110/07, in force from 01.01.2008) one or more of the separate activities of a company under transformation are transferred to two or more existing (host) or newly established companies, the company under transformation not being wound up and preserving at least one of the separate activities;
2. the shareholders or partners in the company under transformation are issued stocks or shares in each of the existing or newly established companies in proportion to the stocks or shares held by the shareholders or partners in the company under transformation.


Transfer of a separate activity
Art. 130. (amend. - SG 110/07, in force from 01.01.2008) Transfer of a separate activity shall be any transformation in the course of which one or more than one or all of the separate activities of a company under transformation are transferred to one or more existing (host) or newly established companies, and in return thereof the existing or newly established companies issue stocks or shares in favour of the company under transformation, and the latter is not wound up.


Exchange of stocks and shares
Art. 131. Exchange of stocks and shares shall be a transformation in the course of which all of the following conditions are present:
1. as a result of the transformation, the acquiring company holds more than one half of the shares with voting rights or more than one half of the stocks of the acquired company, or, if it already holds such portion in the capital, it acquires an additional part of the stocks or shares;
2. the shareholders or partners in the acquired company exchange their stocks or shares for stocks or shares in the acquiring company.


Additional pecuniary payments and cases in which stocks or shares are not issued
Art. 132. (1) In the cases of takeover, merger, split-up, separation and exchange of stocks and shares, for the purpose of achieving an equivalent exchange, it shall be possible to make pecuniary payments to the shareholders or partners in the companies under transformation or the acquired companies, these being payments at the amount of up to 10 percent of the par value of the stocks or shares issued as a result of the transformation.
(2) (amend. - SG 110/07, in force from 01.01.2008) In the cases of takeover, division and separation it shall also be possible not to issue stocks or shares providing that the Commerce Act permits so.


Issue of stocks or shares
Art. 133. Within the meaning of this Chapter, issue of stocks or shares shall be present in the cases of provision of newly issued or owned stocks or shares in a newly established company, or an acquiring one, or a receiving one.


Separate activity
Art. 134. Separate activity shall be the aggregate of assets and liabilities of a company with which the company can carry out economic activity of its own, the latter being independent from the organizational, functional and financial point of view.


Companies under transformation
Art. 135. Within the meaning of this Section, companies under transformation shall be:
1. a local company under transformation;
2. (amend. - SG 106/08, in force from 01.01.2009) a company under transformation from another Member State of the European Union;
3. (amend. - SG 106/08, in force from 01.01.2009) a business activity establishment within the country of a company under transformation from another Member State of the European Union.


Receiving companies
Art. 136. Within the meaning of this Section, receiving companies shall be:
1. a local newly established company or an acquiring company;
2. (amend. - SG 106/08, in force from 01.01.2009) a newly established company or an acquiring company from another Member State of the European Union;
3. (amend. - SG 106/08, in force from 01.01.2009) a business activity establishment within the country of the newly established company or the acquiring company from another Member State of the European Union.


A company from another Member State of the European Community
Art. 137. (amend. - SG 106/08, in force from 01.01.2009) Within the meaning of this Section, a company from another Member State of the European Union shall be a company which meets all of the following conditions:
1. the legal form of the company is in accordance with Supplement No. 3;
2. (amend. - SG 106/08, in force from 01.01.2009) the company is a local person for tax purposes in another Member State of the European Union, in accordance with the respective tax legislation and by virtue of a treaty with a third State on avoidance of double taxation the company is not considered a local person for tax purposes in another State outside the European Union;
3. the profits of the company are taxed either with a tax under Supplement No. 4 or with another similar tax on profits, and the company is not entitled to choose it or to be exempt from taxation with the said tax.


Legal succession
Art. 138. For the purposes of this Section, in the cases of transformation all those rights and obligations which arise from the actions performed by the companies under transformation within the current period or during preceding periods and relate to assets and liabilities transferred under Art. 139, item 1, including the transformations in determining the tax financial result, shall be transferred to the acquiring companies.


Assets and liabilities subject to transformation
Art. 139. The assets and liabilities subject to transformation under this Section belong to the following categories:
1. assets and liabilities, the results of the utilization of which are considered, both before the transformation and after it, in determining the tax financial result under this Act;
2. assets and liabilities, the results of the utilization of which were considered before the transformation in determining the tax financial result under this Act, and as a result of the transformation are no longer considered in determining the tax financial result under this Act;
3. assets and liabilities, the results of the utilization of which were not considered before the transformation in determining the tax financial result under this Act, and as a result of the transformation are considered in determining the tax financial result under this Act.


Transferred assets and liabilities under Art. 139, item 1
Art. 140. (1) The accounting profits or losses that occur when assets and liabilities under Art. 139, item 1 are written off as a result of the transformation shall not be recognized for tax purposes.
(2) Those tax temporary differences connected with assets and liabilities referred to in Art. 139, item 1 which have occurred prior to the transformation shall not be recognized for tax purposes at the time of transformation and shall be regarded as occurring in the acquiring companies.
(3) Where, under the accounting legislation, an asset or a liability is recognized for the acquiring company and the value thereof differs from the value prior to the transformation, the difference between the two values either shall form a tax temporary difference of a subsequent appraisal or shall be an amount by which the tax temporary difference under para. 2 shall be revised.
(4) (suppl. - SG 110/07, in force from 01.01.2008) The subsequent valuation reserve (revaluation reserve) for those assets under Art. 139, item 1 which are not tax amortizable assets shall be transferred by the company under transformation and shall be regarded as occurring in the acquiring company. The latter shall not apply Art. 45. Where the transferred reserve of the subsequent valuation (revaluation reserve) referred to in the first sentence was not accounted by the acquiring company, in the year of writing off the asset, to which the reserve is related, shall be increased the accounting financial result by the amount of the reserve, if the reserve has a positive value, respectively reduced the accounting financial result, if the reserve has a negative value.
(5) (suppl. - SG 110/07, in force from 01.01.2008) The tax amortizable assets acquired under Art. 139, item 1 shall be recorded in the tax amortization plan of the acquiring company, their values being equal to the ones in the tax amortization plan of the company under transformation at the time of transformation. A copy of the tax depreciation plan of the transforming company at the moment of transformation shall be delivered to the revenue authority together with the copy of the reference under Para 6.
(6) (amend. - SG 110/07, in force from 01.01.2008) A reference report under Art. 141 shall be made on the transformation of each asset or liability under Art. 139, item 1.
(7) (new - SG 110/07, in force from 01.01.2008) Where as a result of the transformation the host company estimates under the accountancy legislation assets and debts, which were not estimated by the company under transformation, the accounted income and expense after the transformation related to these assets and debts shall not be recognized for tax purposes. Where the assets referred to in the first sentence are depreciable for accountancy purposes, they shall not be entered in the tax depreciation plan of the host company and no tax depreciation shall be accrued for them. The accountancy profit, which has occurred at the host company as a result of the transformation, respectively the accounted recognized income related to the negative reputation, which has arisen, shall not be recognized for taxation purposes.
(8) (new - SG 110/07, in force from 01.01.2008; amend. – SG 94/12, in force from 01.01.2013) Where an asset of the company under transformation was not recognized according to the accountancy legislation at the host company, the accountancy financial result shall be reduced by the asset in question, when determining the tax financial result of the host company for the year of transformation. Where a debt of the company under transformation was not recognized under the accountancy legislation at the host company, the accounting financial result shall be increased by the value of the debt in question, when determining the tax financial result of the host company for the year of transformation. The tax temporary differences, which have occurred before transformation and are related to an asset or a debt referred to in the first or second sentence, shall be recognized at the host company during the year of transformation under the general order of the law.
(9) (new - SG 110/07, in force from 01.01.2008) Para 3, 6 and 8 shall not apply to:
1. tax depreciable assets;
2. assets and debts related to deferred taxes;
3. the reputation, where the the accountancy income and expenses estimated in relation to it are not recognized for tax purposes;
4. amounts, which are assets for the company under transformation, and debts for the host company;
5. amounts, which are debts for the company under transformation, and assets for the host company;
6. shares or quotas of the hos company, owned by the company under transformation;
7. own shares repurchased by the company under transformation;
8. subscribed but non-deposited capital of the company under transformation
9. assets and debts under Art. 139, Item 2.
(10) (new - SG 110/07, in force from 01.01.2008) Para 4 shall not apply to the reserve formed by subsequent valuations of financial assets and debts of the financial institutions, when the accountancy financial result was transformed under the order of Art. 97 with the profits and losses under the subsequent valuations in question. This reserve shall not be noted in the references under Art. 141.


Reference reports on assets and liabilities under Art. 139, item 1
Art. 141. (1) The reference report under Art. 140, para. 6 made by the companies under transformation shall contain the following information on each asset and liability as at the date of transformation:
1. type and designation;
2. accounting value;
3. tax temporary difference;
4. (new - SG 110/07, in force from 01.01.2008) reserve from a subsequent valuation (revaluation reserve).
(2) A copy of the reference report under para. 1 shall be submitted to the acquiring companies and the revenue body not later than the end of the month following the month of transformation.
(3) In the cases under Art. 140, para. 3 a new reference report shall be made by the acquiring companies and a copy thereof shall be submitted to the revenue body together with the annual tax return. The reference report shall contain the following information on each asset and liability:
1. type and designation;
2. accounting value;
3. tax temporary difference before the transformation;
4. tax temporary difference after the transformation, determined under Art. 140, para. 3;
5. (new - SG 110/07, in force from 01.01.2008) reserve from a subsequent valuation (revaluation reserve).
(4) Where, following the submission under para. 3, corrections under the accounting legislation are made in the values of the assets and liabilities as a result of the transformation, the acquiring company shall make a revised reference report. The latter shall be submitted to the revenue body not later than the end of the month following the month of occurrence of those circumstances which have necessitated the revision.
(5) The reference reports under paras. 1 and 3 shall contain data identifying the companies under transformation and the acquiring companies, as well as the date of transformation and the court judgement on the entry thereof.
(6) (new - SG 110/07, in force from 01.01.2008) The copies of the references referred to in this article and from the tax depreciation plan under Art. 140, Para 5 shall be submitted to the Territorial Directorate of the National Revenue Agency at the place of registration of the host companies on a magnetic or optical carrier, or in an electronic way.


Transferred assets and liabilities under Art. 139, item 2
Art. 142. (1) (amend. - SG 106/08, in force from 01.01.2009) The accounting profits or losses that occur when assets and liabilities under Art. 139, item 2 are written off in connection with a business activity establishment of a local person in another Member State of the European Union shall not be recognized for tax purposes.
(2) Those tax temporary differences which are connected with assets and liabilities referred to in para. 1 shall not be recognized for tax purposes at the time of transformation, neither shall they be recognized in the subsequent years.
(3) Except for the cases under para. 1, for tax purposes the assets and liabilities present at the time of transformation under Art. 139, item 2 shall be regarded as realized at market prices and shall be written off.
(4) In the cases under para. 3, when determining the tax financial result, the accounting financial result shall be increased by the profit and decreased by the loss calculated as the difference between the market price of the asset or liability and its accounting value as at the date of transformation. Those tax temporary differences for the last tax period which relate to the asset or liability shall be recognized in accordance with the general legal procedure. Art. 66, paras. 1 and 2 shall apply to determining the tax financial result.


Transferred assets and liabilities under Art. 139, item 3
Art. 143. (1) For tax purposes the assets referred to in Art. 139, item 3 shall be evaluated by the acquiring companies in accordance with the value thereof determined under the national accounting legislation.
(2) The taxable amortizable assets referred to in Art. 139, item 3 shall be recorded in the tax amortization plan in accordance with the general legal procedure.


Carry-forward of tax losses
Art. 144. (1) In the course of transformation under this Section the acquiring companies shall not be entitled to carry forward those tax losses which have been formed by the companies under transformation.
(2) (amend. - SG 106/08, in force from 01.01.2009) Para. 1 shall not apply to the cases of takeover or merger under this Section resulting in setting up a business activity establishment, within the country, of a company from another Member State of the European Union, if prior to the transformation the said company did not have a business activity establishment within the country.


Tax losses of a business activity establishment
Art. 145. (1) (amend. - SG 106/08, in force from 01.01.2009) Those tax losses that have not been carried forward until the time of transformation and have been formed by a business activity establishment of a local company in another Member State of the European Union shall not be deducted.
(2) (amend. - SG 106/08, in force from 01.01.2009) When determining the tax financial result, the accounting financial result shall be increased by the transferred tax losses at the time of transformation, these losses being formed by the business activity establishment of a local company in another Member State of the European Union, providing that the said losses have not been deducted from the profits of the business activity establishment.


Regulation of low-rate capitalization
Art. 146. (1) In the cases of transformation under this Section the acquiring companies shall not be entitled to recognize for tax purposes the unrecognized interest expenses of the companies under transformation, these expenses resulting from the application of the low-rate capitalization regime.
(2) (amend. - SG 106/08, in force from 01.01.2009) Para. 1 shall not apply to those cases of takeover or merger under this Section as a result of which a business activity establishment is set up within the country of a company from another Member State of the European Union, and prior to the transformation the said company did not have a business activity establishment within the country.


Advance contributions on the part of acquiring companies
Art. 147. (1) (amend. – SG 94/12, in force from 01.01.2013) In the year of transformation the acquiring companies shall make, following the transformation, the same advance contributions as before the transformation, and the newly incorporated companies shall make quarterly advance contributions.
(2) (amend. – SG 94/12, in force from 01.01.2013) In the cases referred to in Art. 144, para. 2 the acquiring companies shall make monthly or quarterly advance contributions under the general legal procedure, on the grounds of the net revenue income of the companies under transformation.


Write-off of a share
Art. 148. (1) In those cases where an acquiring company holds a share in the capital of a company under transformation, the accounting profits or losses relating to the write-off of the share in the capital shall not be recognized for tax purposes.
(2) The income under para. 1 shall not be subject to taxation withheld at the source under the procedure set forth in Part Three.


Tax treatment of shareholders or partners in companies under transformation and acquired companies
Art. 149. (1) The accounting profits or losses occurring for shareholders or partners in companies under transformation or acquired companies as a result of the acquisition of stocks or shares in acquiring companies shall not be recognized for tax purposes in the year in which they are accounted for and shall form tax temporary difference of subsequent appraisal.
(2) Those tax temporary differences occurring for shareholders or partners prior to the transformation which are connected with the written-off stocks or shares in the companies under transformation or the acquired companies shall not be recognized for tax purposes at the time of transformation.
(3) The tax temporary differences under paras. 1 and 2 shall be regarded as occurring with regard to the newly acquired stocks or shares and shall be recognized for tax purposes in accordance with the general legal procedure.
(4) The income that has been realized by those foreign legal entities which are shareholders or partners in local companies under transformation or local acquired companies as a result of the acquisition of stocks or shares following a transformation shall be taxed or exempt from taxation at the source as at the date of transformation under the general legal procedure.
(5) The tax at the source under para. 4 shall be due by the shareholder or partner in cases of any disposal of the newly acquired stocks or shares and shall be payable within 60 days following the disposal.
(6) (amend. - SG 110/07, in force from 01.01.2008) It is until 31 January of the respective year that the foreign legal entities under paras. 4, 5 and 8 shall submit a declaration with the territorial directorate of the National Revenue Agency stating they have not disposed of the stocks or shares newly acquired as a result of the transformation. The persons submit a declaration under the first sentence each year until the year of disposal of the newly acquired stocks or shares.
(7) Where the declaration referred to in para. 6 is not submitted in due time, apart from the respective administrative sanction, for the purposes of this Act it shall also be assumed that the foreign legal entity has disposed of the newly acquired stocks or shares.
(8) (new - SG 110/07, in force from 01.01.2008) Shall not be treated as profit gained by a foreign legal person any acquisition of shares or quotas as a result of a transformation in form of a separation, except in case of separation, where shares of the company under transformation are being annulled. For the purpose of estimating the tax at the source, in case of a subsequent disposition of the shares or quotas referred to in the first sentence their documentary proved price of acquisition shall be zero.


Taxation of a company under transformation in the cases of transfer of a separate activity
Art. 150. (1) Those accounting profits or losses of a company under transformation which have occurred as a result of the transfer of a separate activity shall not be recognized for tax purposes in the year in which they are accounted for and shall form a tax temporary difference of subsequent appraisal.
(2) The tax temporary difference referred to in para. 1 shall be regarded as occurring with respect to the newly acquired stocks or shares and shall be recognized for tax purposes in accordance with the general legal procedure.
(3) In those cases where the stocks or shares referred to in para. 1 have been held by the company under transformation for a period of at least 5 years without interruption, the tax temporary difference under para. 1 shall not be recognized for tax purposes at the time of transformation, neither shall it be recognized for tax purposes in the subsequent years.


Tax evasion
Art. 151. The provisions of this Section shall not apply where the transformation is aimed at tax evasion or tax avoidance. Tax evasion is also presumed where the transformation either has no economic motivation or conceals disposal of assets.

Section III.
Relocation of the Registered Office of a European Company or a European Cooperative Society
Scope
Art. 152. Within the meaning of this Chapter, relocation of the registered office of a European company or a European cooperative society shall be an operation in which:
1. (amend. - SG 106/08, in force from 01.01.2009) without its being wound up and without a new legal entity being set up, the company relocates its registered office from the country to another Member State of the European Union, according to Art. 8 of Regulation (EC) No. 2157/2001 of the Council or according to Regulation (EC) No. 1435/2003 of the Council, the company’s assets and liabilities being effectively connected with the business activity establishment within the country, and the results of the utilization of the said assets and liabilities being taken into consideration when determining the tax financial result, or
2. (amend. - SG 106/08, in force from 01.01.2009) without its being wound up and without a new legal entity being set up, the company relocates its registered office from another Member State of the European Union into the country, according to Art. 8 of Regulation (EC) No. 2157/2001 of the Council or according to Regulation (EC) No. 1435/2003 of the Council, the business activity establishment’s assets and liabilities being effectively connected with the company within the country which has come into existence as a result of this operation, and the results of the utilization of the said assets and liabilities are taken into consideration when determining the tax financial result.


Legal succession
Art. 153. (1) For tax purposes, in those cases in which the registered office of a European company or a European cooperative society has been relocated under Art. 152, item 1:
1. all the actions performed by the company in the current and preceding periods, including the transformations of the tax financial result, shall be regarded as being performed by the business activity establishment;
2. the company shall not be taxed with corporate tax for the period starting from the beginning of the year until the date of the operation;
3. the business activity establishment shall be taxed with corporate tax under the general procedure for the period starting from the beginning of the year, and the activity performed by the company in the year of the operation shall be regarded as performed by the business activity establishment;
4. the business activity establishment shall have the right to carry forward those tax losses which have been formed by the company in accordance with the general procedure and have not been carried forward.
(2) For tax purposes, in those cases in which the registered office of a European company or a European cooperative society has been relocated under Art. 152, item 2:
1. all the actions performed by the business activity establishment in the current and preceding periods, including the transformations of the tax financial result, shall be regarded as being performed by the company;
2. the business activity establishment shall not be taxed with corporate tax for the period starting from the beginning of the year until the date of the operation;
3. the company shall be taxed with corporate tax under the general procedure for the period starting from the beginning of the year, and the activity performed by the business activity establishment in the year of the operation shall be regarded as performed by the company;
4. the company shall have the right to carry forward those tax losses which have been formed by the business activity establishment in accordance with the general procedure and have not been carried forward.


Provisions applicable to the cases of relocation of the registered office
Art. 154. The provisions of Section II of this Chapter regarding the assets and liabilities, the profits and losses, and the tax temporary differences shall also apply to the cases of relocation of the registered office of a European company or a European cooperative society.

Chapter twenty .
SPECIFIC RULES ON DETERMINING THE TAX FINANCIAL RESULT IN THE CASES OF TRANSFERS BETWEEN THE BUSINESS ACTIVITY ESTABLISHMENT WITHIN THE COUNTRY AND ANOTHER PART OF THE SAME ESTABLISHMENT LOCATED OUTSIDE THE COUNTRY
Revenues from a transfer to another part of the establishment
Art. 155. (1) Those accounting receipts accounted for in accordance with their market price which have occurred as a result of a transfer from a business activity establishment within the country to another part of the same establishment located outside the country shall be recognized for tax purposes in those cases where:
1. the specific transfer complies with the customary transactions of the said business activity establishment, these transactions being oriented to third persons, or
2. the customary activity of the said business activity establishment consists of similar transfers to the other parts of the establishment.
(2) The accounting receipts resulting from financial means granted by the business activity establishment to another part of the same establishment located outside the country shall not be recognized for tax purposes, with the exception of those financial institutions for which the raising of financial means and the lending of credits constitutes a basic activity.
(3) The accounting expenses relating to a transfer from the business activity establishment to another part of the same establishment located outside the country shall not be recognized for tax purposes in those cases where, as a result of the transfer, no accounting receipts recognized for tax purposes occur in the business activity establishment. In those cases where, as a result of the transfer to another part of the same establishment located outside the country, the business activity establishment assesses accounting receipts at the amount of the expenses actually incurred (the cost value), the accounting expenses relating to the transfer that have been assessed shall be recognized for tax purposes.


Expenses in the cases of transfer from another part of the establishment
Art. 156. (1) Those accounting expenses, accounted for at their market value, which are connected with goods, services and rights and result from a transfer from another part of the same establishment located outside the country shall be recognized for tax purposes in the business activity establishment within the country, providing that the expenses have been accounted for within the customary activity of the business activity establishment in connection with the realization of the transferred goods, services or rights in their modified or unmodified form.
(2) Those accounting expenses, accounted for at their market value, which result from a transfer of goods and services from another part of the same establishment located outside the country to a business activity establishment within the country shall be recognized for tax purposes in the business activity establishment in those cases where:
1. the specific transfer complies with the customary transactions of the said part of the business activity establishment, these transactions being oriented to third persons, or
2. the customary activity of the said part of the business activity establishment consists of similar transfers to the other parts of the establishment.
(3) Those accounting expenses, accounted for at the amount of the expenses actually incurred (the cost value), which result from a transfer of services from another part of the same establishment located outside the country, except for the cases under paras. 1 and 2, shall be recognized for tax purposes in the business activity establishment within the country. The first sentence shall also apply to those administrative and managerial services which are directly connected with the activity of the business activity establishment.
(4) Those accounting expenses, accounted for at the amount of the expenses actually incurred (the cost value), which result from a transfer of rights relating to know-how, patents and other objects of intellectual or industrial property, from another part of the same establishment located outside the country, except for the cases under para. 1, shall be recognized for tax purposes in the business activity establishment within the country. The accounting expenses, accounted for at their market value, shall be recognized for tax purposes in those cases where the said objects have been produced or acquired by that part of the establishment which is specialized in creating them or acquiring them.
(5) Where the rights transferred under para. 4 meet the criteria regarding fixed intangible assets, the expenses of their acquisition under para. 4 shall not be recognized for tax purposes and the amounts shall be recorded in the tax amortization plan. The tax amortizable value thereof shall be determined in accordance with the general procedure of the law.
(6) The accounting expenses resulting from financial means received in the business activity establishment from another part of the same establishment located outside the country shall not be recognized for tax purposes, with the exception of:
1. the financial institutions for which the raising of financial means and the lending of credits constitutes a basic activity, or
2. the cases in which the financial means have been lent by a third person as an interest-bearing loan for the purposes of the business activity establishment and are exclusively used in the activity of the business activity establishment; in this case the expenses accounted for at the amount of the interest payments due to the third person shall be recognized for tax purposes, providing that the other provisions of this Act are observed.


Treatment of assets in the cases of transfer from or to another part of the establishment
Art. 157. (1) Those assets granted to the business activity establishment within the country by another part of the same establishment located outside the country which are not connected with the activity of the business activity establishment, except for the cases under Art. 156, para. 1, shall be assessed for tax purposes in accordance with the amount of the expenses actually incurred (the cost value) by that part of the enterprise which transfers them. Those tax amortizable assets under the first sentence which have been used in the activity of the business activity establishment for a period of at least two years shall be recorded in the tax amortization plan of the business activity establishment in accordance with the general legal procedure.
(2) Where the tax amortizable assets under para. 1 are granted for temporary use for a period of up to two years, the business activity establishment within the country shall have recognized thereto for tax purposes the accounting expenses at the amount of the assets amortizations assessed by that part of the establishment which transfers them. The assessed expenses shall not exceed the annual tax amortization that would have been assessed if the maximum values of the tax amortization rates allowable under Art. 55 had been used.
(3) For tax purposes, in the cases of transfer of assets produced or acquired by the business activity establishment within the country to another part of the same establishment located outside the country the transferred assets shall be regarded as realized at the time of transfer at their market prices and shall be written off.
(4) When determining the tax financial result in the cases under para. 3, the accounting financial result of the business activity establishment shall be increased by the profit and decreased by the loss calculated as a difference between the market price of the asset and its accounting value as at the date of transfer. Those tax temporary differences which relate to the asset shall be recognized in accordance with the general legal procedure. Art. 66, paras. 1 and 2 shall apply to determining the tax financial result.
(5) Paras. 3 and 4 shall not apply where the transfer of assets results in accounting receipts (profits) or expenses (losses). It is the general legal procedure that shall apply to those cases.

Chapter twenty one.
TAX REGULATION IN THE CASES OF WINDING-UP THROUGH LIQUIDATION OR DECLARING BANKRUPTCY AND IN THE CASES OF DISTRIBUTION OF A LIQUIDATION SHARE
Section I.
General Provisions
General provisions
Art. 158. (amend. – SG 99/11, in force from 01.01.2012) In the cases of winding-up through liquidation or declaring bankruptcy, throughout the period prior to his being deleted the taxable person shall perform his obligations in accordance with the general procedure set forth in this Act and in observance of the requirements specified in this Chapter.

Section II.
Corporate Tax in the Cases of Winding-Up
Determining the tax in the cases of winding-up
Art. 159. (1) Corporate tax shall be due as at the date of entering the winding-up into the Commercial Register.
(2) The corporate tax referred to in para. 1 shall be determined on the grounds of the tax profit for the period from the beginning of the year until the date of registering the winding-up.
(3) When determining the tax, there shall be deducted the advance contributions paid within the period from the beginning of the year until the date of registering the winding-up.


Paying the tax in the cases of winding-up
Art. 160. (1) The corporate tax due under Art. 159 shall be paid within 30 days following the date of registering the winding-up.
(2) In the cases of winding-up the corporate tax paid shall be deducted either from the annual corporate tax due for the year of winding-up or from the corporate tax due for the last tax period if the date of filing the request for winding-up through liquidation, or the date of deletion in case of bankruptcy, respectively, is in the year of winding-up.
(3) (amend. – SG 99/11, in force from 01.01.2012) Where the date of winding-up and the date of filing the request for deletion in case of liquidation, or the date of deletion in case of bankruptcy, respectively, are in different years, the annual tax return for the year of winding-up shall be accompanied by the annual activity report as at the date of winding-up and the annual activity report prepared as at 31 December of the year of the taxable person’s winding-up.

Section III.
Corporate Tax for the Last Tax Period
Last tax period
Art. 161. (1) The last tax period of a taxable person wound up through liquidation shall start on 1 January of the year in which the request for deletion under Art. 273, para. 1 of the Commerce Act is filed and shall end on the date of filing the request.
(2) The last tax period of a taxable person wound up through being declared bankrupt shall start on 1 January of the year in which the deletion is carried out and shall end on the date of the deletion.
(3) The last tax period of a foreign person’s business activity establishment shall start on 1 January of the year in which its activity is suspended and shall end on the date of the suspension.
(4) (new - SG 95/09, in force from 01.01.2010) The last tax period of non-personified company or social insurance office shall cover the period from 1 January of the year, when the suspension has taken place to the date of the suspension.
(5) (prev. par. 4 - SG 95/09, in force from 01.01.2010) The taxable person shall be taxed with corporate tax on the tax profit realized in the last tax period, in accordance with the general legal procedure. The corporate tax due shall be final.
(6) (prev. par. 5 - SG 95/09, in force from 01.01.2010) For tax purposes, the assets produced or acquired by the business activity establishment within the country until the date of winding-up shall be regarded as realized at the time of winding-up at their market prices and shall be written off. When determining the tax financial result of the business activity establishment for the last tax period, the accounting financial result shall be increased by the profit and decreased by the loss calculated as the difference between the market price of the assets under the first sentence and their accounting value as at the date of transformation. Those tax temporary differences which relate to the asset shall be recognized for the last tax period in accordance with the general legal procedure. Art. 66, paras. 1 and 2 shall apply to determining the tax financial result.


Declaring the tax for the last tax period
Art. 162. (1) The tax return for the last tax period determined in accordance with Art. 161, para. 1 shall be submitted on the date of submission of the request for deletion together with a copy thereof.
(2) The tax return for the last tax period determined in accordance with Art. 161, para. 2 shall be submitted by the person holding the position of trustee in bankruptcy within 30 days following the date of deletion of the taxable person, together with a copy of the court decision on deletion.
(3) The tax return for the last tax period determined in accordance with Art. 161, para. 3 shall be submitted on the date the activity is suspended.
(4) (new – SG 95/09, in force from 01.01.2010) The tax return for the last tax period, determined pursuant to Art. 161, par. 4, shall be submitted on the date of suspension.
(5) (prev. par. 4 - SG 95/09, in force from 01.01.2010) Where the date of filing the request for deletion in case of liquidation, or the date of deletion in case of bankruptcy or suspension of the activity of a business activity establishment, respectively, is prior to 31 March and the annual tax return for the preceding year has not been submitted yet, the taxable person or the person holding the position of trustee in bankruptcy shall submit the said tax return within the terms under paras. 1, 2 and 3.
(6) (prev. item 5 - SG 95/09, in force from 01.01.2010; amend. – SG 99/11, in force from 01.01.2012) Where the date of winding-up and the date of filing the request for deletion in case of liquidation, or the date of deletion in case of bankruptcy, respectively, are in one and the same year, the tax return referred to in paras. 1 and 2 shall be accompanied by the annual activity report prepared as at the date of winding-up and by the annual activity report prepared as at the date of filing the request for deletion, or the date of deletion, respectively.


Paying the tax for the last tax period
Art. 163. (1) The corporate tax due for the last tax period, this tax being determined under Art. 161, para. 1, shall be payable until the date of filing the request for deletion of the taxable person. The tax shall be final.
(2) In the cases referred to in Art. 161, para. 2 the corporate tax due for the last tax period shall be payable until the date of deletion.
(3) In the cases referred to in Art. 161, para. 3 the corporate tax due for the last tax period shall be payable until the date of suspension of the activity. The tax shall be final.
(4) (amend. - SG 95/09, in force from 01.01.2010) In cases under Art. 161, par. 4 the due corporate tax for the last tax period shall be deposited by the date of suspension. The tax is final.
(5) (new - SG 95/09, in force from 01.01.2010) Where the date of filing of the request for deletion in case of liquidation, the date of deletion in case of bankruptcy, the date of suspension of the activity in the place of business or the date of suspension of a non-personified company or a social insurance office is prior to 31 March and the corporate tax for the preceding year has not been paid yet, the taxable person shall pay the corporate tax for the preceding year within the terms under par. 1 – 4.


Tax treatment in cases in which a taxable person wound up through liquidation continues the activity after the date of filing the request for deletion
Art. 164. (1) A taxable person wound up through liquidation continues the activity after the date of filing the request for deletion shall perform his obligations in accordance with the general legal procedure for the period from the date of filing the request for deletion until the date of deletion, including the obligation to declare and pay the corporate tax due. The liquidator and the taxable person shall bear joint responsibility for those tax liabilities of the latter which have arisen in connection with the continuance of the activity.
(2) In the cases referred to in para. 1 the last tax period shall start on 1 January of the year in which the deletion is carried out and shall end on the date of deletion, or shall start on the date of filing the request for deletion and shall end on the date of deletion where these two dates are in one and the same year.
(3) The taxable person shall be liable for corporate tax on the tax profit realized in the last tax period under para. 2 in accordance with the general legal procedure. The tax shall be final.
(4) In the cases referred to in para. 1 the tax return shall be submitted by the person holding the position of liquidator, within 30 days following the date of deletion of the taxable person, accompanied by a copy of the court decision on deletion. Where the date of deletion is prior to 31 March and the annual tax return for the preceding year has not been filed yet, the person who has held the position of liquidator shall submit this tax return within the time limits specified in the first sentence.
(5) In the cases referred to in para. 1 the corporate tax due for the last tax period shall be payable until the date of deletion. Where the date of deletion is prior to 31 March and the corporate tax for the preceding year has not been paid yet, the taxable person shall pay the corporate tax for the preceding year within the terms under the first sentence.


Tax treatment in the cases of distribution of a liquidation share or dividends (Title suppl. – SG 94/10, in force from 01.01.2011)
Art. 165. (1) (suppl. – SG 94/10, in force from 01.01.2011) For tax purposes the assets distributed as a liquidation share or dividends shall be regarded as realized by the taxable person at the time of distribution at their market prices and shall be written off.
(2) (suppl. – SG 94/10, in force from 01.01.2011) In the cases referred to in para. 1, when determining the tax financial result, the accounting financial result shall be increased by the profit and decreased by the loss calculated as a difference between the market price of the assets and their accounting value as at the date of distribution of the liquidation share or the dividends. Those tax temporary differences which relate to the assets shall be recognized in accordance with the general legal procedure. Art. 66, paras. 1 and 2 shall apply to determining the tax financial result.
(3) (suppl. – SG 94/10, in force from 01.01.2011) Those accounting receipts and expenses which are accounted for in connection with the distribution of the liquidation share or the dividends in the form of assets shall not be recognized for tax purposes.

Chapter twenty two.
ABATEMENT, ASSIGNMENT AND EXEMPTION FROM TAXATION WITH CORPORATE TAX
Section I.
General Provisions
Notion of assignment
Art. 166. Assignment of corporate tax shall be the taxable person’s right not to pay into the central budget those amounts of the corporate tax determined under this Act which remain in the patrimony of the taxable person and are used for purposes determined by law.


General requirement regarding assignment or abatement of corporate tax
Art. 167. (1) The corporate tax shall be assigned or abated under this Chapter, and the accounting financial result shall be decreased when determining the tax financial result, providing that as at 31 December of the respective year the taxable person has no:
1. public liabilities subject to enforcement, or
2. sanctions under effective penalty warrants connected with violations of statutory instruments relating to public liabilities, or
3. interest relating to nonpayment in due time of the liabilities under items 1 and 2.
(2) The fulfilment of the requirement under para. 1 shall be certified by the taxable person in his tax return.


Accounting the corporate tax that has been assigned or abated
Art. 168. (1) The corporate tax that has been assigned or abated under this Chapter shall be accounted for in the equity.
(2) (revoked - SG 110/07, in force from 01.01.2008)


Recognition of a part of the non-distributable receipts or expenses
Art. 169. (1) The part of the non-distributable receipts or expenses which corresponds to those activities for which the assignment of the corporate tax is enjoyed shall be determined by multiplying the aggregate of the non-distributable receipts or expenses by the ratio of the net receipts from sales from the activities for which the assignment is enjoyed to all the net receipts from sales.
(2) Where the non-distributable amounts with which the accounting financial result is transformed are not attributable to a separate activity only and are connected with the performance of an activity for which assignment is enjoyed, the said amounts shall be allotted to the activity for which the corporate tax is assigned, the tax financial result for this activity being determined on the grounds of the ratio referred to in para. 1.


Declaring assigned or abated corporate tax
Art. 170. Where a taxable person’s corporate tax is assigned or abated on various grounds under this Chapter, the taxable person shall be obligated to declare in his tax return the succession in which he has enjoyed the various grounds for assignment or abatement of the corporate tax.


Assignment of an additionally established corporate tax
Art. 171. (1) A taxable person whose corporate tax for a year in the past was assigned is entitled to assignment of an additionally established undeclared corporate tax for the same year providing that he fulfils all the requirements of this Chapter regarding the respective assignment of corporate tax.
(2) The term for the fulfilment of the said requirements commences on the date on which the additional corporate tax is established.


Suspension of the right to assignment
Art. 172. (1) The right to abatement or assignment under this Chapter shall be suspended in the cases of transformation of the taxable person, with the exception of transformation by way of changing the legal form under Art. 264 of the Commerce Act, and transfer of an establishment under Art. 15 of the Commerce Act.
(2) Para. 1 shall also apply to the restructuring of cooperative organizations.


Nonfulfilment of requirements
Art. 173. (1) Where the requirements regarding subsequent use (spending) of assigned corporate tax have not been fulfilled, the latter is due for the respective year, in accordance with the general legal procedure.
(2) Para. 1 shall not apply to those cases of transformation in which the acquiring or newly established companies perform the liabilities of the companies under transformation in observance of those conditions and procedure set forth in this Chapter which concern the companies under transformation. In the cases under the first sentence the acquiring or newly established companies shall be jointly answerable for the assigned corporate tax of the companies under transformation.
(3) Para. 2 shall also apply to the restructuring of cooperative organizations.

Section II.
Exemption from Taxation with Corporate Tax
Collective investment schemes and closed-type investment companies
Art. 174. (amend. – SG 77/11) Those collective investment schemes which are admitted to being offered to public at large in the Republic of Bulgaria, and the licensed closed-type investment companies under the Act on the Operation of Collective Investment Schemes and other Collective Investment Undertakings shall not be liable for corporate tax.


Companies of a special investment purpose
Art. 175. The companies of a special investment purpose under the Act on the Companies of a Special Investment Purpose shall not be liable for corporate tax.


Bulgarian Red Cross
Art. 176. The Bulgarian Red Cross shall not be liable for corporate tax.

Section III.
General Tax Relief
Tax incentives in the cases of employing unemployed persons
Art. 177. (1) When determining his tax financial result, the taxable person shall be entitled to abate his accounting financial result providing that he has employed a person under an employment contract for at least 12 consecutive months and at the time of his being employed, the said person:
1. has been registered as an unemployed person for more than a year, or
2. is a registered unemployed person aged 50 or more, or
3. is an unemployed person of reduced capacity for work.
(2) The abatement concerns the amounts paid as remuneration and the contributions paid at the expense of the employer in the State Social Insurance Fund and the National Health Insurance Fund for the first 12 months of the employment. The abatement is enjoyed once in the year in which the 12 months’ period expires.
(3) (suppl. – SG 16/13) The abatement shall not concern the amounts received under the Employment Promotion Act and pursuant to Art. 22e of the Investment Promotion Act.
(4) (revoked - SG 106/08, in force from 01.01.2009)


Tax incentives in case of awarding of scholarship
Art. 177a. (new - SG 95/09, in force from 01.01.2010) (1) For taxation purposes the accounted expenses for an instituted and awarded scholarship to students, accomplishing high school or to students studying at schools in an European Union Member State, or in another state which is a party to the Agreement for the European Economic Area for a period of not less than 12 and not more than 24 months shall be recognized and as of the time of awarding of the scholarship the following conditions are complied with:
1. the scholarship holder is a student at the last two years of acquisition of secondary education level or is a student at the last two years for acquisition of the educational degree of "bachelor" or "master" and is under the age of 25;
2. the profession of the scholarship holder is applicable in the activity of the taxable person;
3. the taxable person has become bound by the scholarship awarding agreement to appoint the scholarship holder for a period which is not less than the total number of months for which the scholarship has been awarded.
(2) The taxable person may institute and award following the provision of par. 1 a scholarship to one or more school or university students.
(3) In case the taxable person fails to appoint the scholarship holder by the end of the calendar year, following the year of accomplishment of education, for determination of the taxable financial result for the year of occurrence of this circumstance the accountable financial result shall be increased by the amount of the awarded scholarship.
(4) Should the taxable person appoint the scholarship holder for a part of the period referred to in par. 1, item 3, for the determination of the taxable financial result for the year of termination of the employment relationship, the accountable financial result shall be increased by the part of the awarded scholarship, pro rata the non-fulfilled obligation under par. 1, item 3.
(5) Where the scholarship holder refuses to start working by the end of the calendar year following the year of accomplishment of education, for determination of the taxable financial result for the year of occurrence of this circumstance the accountable financial result shall be increased by:
1. the entire amount of the awarded scholarship, where no compensation in favour of the taxable person for the awarded scholarship has been agreed upon;
2. the difference between the awarded scholarship and the agreed compensation, where the compensation has been agreed in an amount which is less than the awarded scholarship.


Art. 177b. (new – SG 68/13, in force from 01.01.2014) Article 177 shall not apply to appointed persons under employment agreements to whom the provision of Art. 177a has been applied.


Enterprises employing disabled persons
Art. 178. (1) The corporate tax shall be totally assigned to those legal entities- specialized enterprises or cooperative societies within the meaning of the Integration of Persons with Disabilities Act which as at 31 December of the respective year are members of the national representative organizations of disabled people and for disabled people, and in which at least:
1. twenty percent of the total number of staff are people of poor eyesight, or
2. thirty percent of the total number of staff are people of poor hearing, or
3. fifty percent of the total number of staff are people suffering from other impairments.
(2) In those cases where the requirements under para. 1 regarding the number of the employed persons have not been fulfilled, the corporate tax of the legal entities referred to in para. 1 shall be assigned in proportion either to the number of people suffering from impairments, or to the number of people with reduced capacity for work reassigned to suitable jobs, versus the total number of staff.
(3) The assignment shall be allowable where the assigned tax is spent only on the integration of the disabled people or on maintaining and creating new jobs for people with reduced capacity for work who should be reassigned to suitable jobs within a period of two years following the year for which the assignment is enjoyed. The planning, spending and accounting for the financial means shall be carried out by way of Ordinances of the national organizations of disabled people, in coordination with the Minister of Finance.


Agricultural products
Art. 179. (revoked - SG 95/09, in force from 01.01.2010)


Air Transport Directorate
Art. 180. (revoked - SG 95/09, in force from 01.01.2010)


Social and health insurance funds
Art. 181. (1) There shall be assigned 50 percent of the corporate tax due by the social and health insurance funds, created by virtue of law, on activity that is either directly connected with or helpful to the performance of their basic activity.
(2) The assignment shall be allowable in those cases where the assigned tax is invested in the basic activity not later than the end of the year following the year for which the assignment is enjoyed.

Section IV.
De Minimis or Regional State Aid in Form of Tax Relief (Title amend. - SG 110/07, in force from 01.01.2007)
Taxable persons that may not enjoy tax relief
Art. 182. (1) (prev. text of Art. 182, amend. - SG 110/07, in force from 01.01.2007) The tax relief under this Section shall not be enjoyed by those taxable persons which:
1. carry on activities in the branches of coal mining, steel manufacture, shipbuilding, synthetic fibres manufacture, fish industry, as well as the production of those agricultural products which are specified in Supplement 1 of the Treaty establishing the European Community, with regard to the respective activity, or
2. (amend. - SG 110/07, in force from 01.01.2007) are parties to liquidation or rehabilitation proceedings, or
3. are defined as establishments in a difficult position.
(2) (new - SG 110/07, in force from 01.01.2007) Tax relief in form of de minimis aid shall not apply to:
1. taxable persons engaged in the sector of fishery and aquacultures according to Council Regulation (EC) No 104/2000 of 17 December 1999 on the common organisation of the markets in fishery and aquaculture products;
2. taxable persons carrying out primary production of agricultural products under ANNEX I of the Treaty Establishing the European Community;
3. taxable persons carrying out processing and marketing of agricultural products under ANNEX I of the Treaty Establishing the European Community;
4. taxable persons engaged in the sphere coal production according to Council Regulation (EC) No 1407/2002 of 23 July 2002 on State aid to the coal industry;
5. undertakings in difficulties;
6. investment in trucks, when provided to a taxable person, carrying out road transportation of loads for other people, or provided against a remuneration;
7. investment in assets, used for activities, related to export to third countries or Member States.
(3) (new - SG 110/07, in force from 01.01.2007) A tax relief in form of state aid for regional development may not be granted also to a taxable person in respect of whom any of the conditions referred to in Para 1 have arisen during the period of performing the initial investment.
(4) (new - SG 110/07, in force from 01.01.2007) A tax relief in form of minimal aid may not be granted to also a taxable person in respect of whom any of the conditions referred to in Para 2 have arisen during the investment period.
(5) (new - SG 95/09, in force from 01.01.2010) A tax relief in the form of a state aid for agricultural producers, shall not apply to enterprises with difficulties.


Municipalities in which the unemployment rate is higher than the country’s average unemployment rate
Art. 183. (1) Those municipalities in which the unemployment rate is 35 percent or more above the country’s average unemployment rate shall be determined annually by way of an Ordinance of the Minister of Finance at the suggestion of the Minister of Labour and Social Policy, and the said Ordinance shall be promulgated in the State Gazette.
(2) (revoked - SG 95/09, in force from 01.01.2010).
(3) (amend. - SG 95/09, in force from 01.01.2010) A municipality the administrative centre of which is also a centre of another municipality shall be included in the list referred to in paras. 1 on the grounds of the weighted average rate of unemployment in the respective municipalities, this weighted average rate being determined on the grounds of the number of the economically active population therein.


Tax relief in the cases of carrying out production activities in municipalities in which the unemployment rate is higher than the country’s average unemployment rate
Art. 184. (amend. - SG 110/07, in force from 01.01.2007) The corporate tax on tax profit shall be assigned in amount of up to 100 per cent in those cases where the taxable person carries out production activities, including work done with materials supplied by the customer, and all of the following conditions are present:
1. the taxable person carries out production activities only in municipalities in which in the year preceding the current year the unemployment rate was at least 35 percent higher than the country’s average unemployment rate for the said period;
2. (amend. - SG 110/07, in force from 01.01.2007) the conditions under:
a) Arts. 188 – in cases of de minimis aid, or
b) Art. 189 – in cases of state aid for regional development.


Specific cases of assignment
Art. 185. (1) Where, as a result of an increased employment rate, the municipality falls off the list of the municipalities referred to in Art. 183, the person that has acquired the right to assignment of the corporate tax shall preserve that right for the next 5 consecutive years, this period commencing from the year in which the municipality falls off the list, providing that the other conditions for assignment are present.
(2) Where a taxable person fulfilled the conditions under Art. 184, item 1 in the year preceding the year in which the municipality falls off the list of municipalities referred to in Art. 183, but did not carry out production activities at that time because of doing preparatory works, and the production activity starts next year, the right to tax assignment accrues in the year in which production activity is started and the said right is preserved for the next 4 consecutive years providing that the other conditions for assignment are present.


Investment tax input
Art. 186. (amend. - SG 110/07, in force from 01.01.2007; revoked - SG 95/09, in force from 01.01.2010)


Tax relief for cooperative societies
Art. 187. (revoked – SG 94/10, in force from 01.01.2011)


Tax relief in form of de minimis aid (Title amend. - SG 110/07, in force from 01.01.2007)
Art. 188. (amend. - SG 110/07, in force from 01.01.2007) (1) (amend. - SG 106/08, in force from 01.01.2009) There shall be a state relief in form of de minimis aid, when the amount of the de minimis aid granted to the taxable person in the course of the last three years including the current one, regardless of their form and source, does not exceed the BGN equivalent of EUR 200 000, and in respect of taxable persons involved in the road transport sector – the BGN equivalent of EUR 100 000, determined in accordance with the official exchange rate of the BGN towards the EUR. These thresholds shall apply irrespective of whether the aid is fully or partially financed with funds of the European Union. The amount of the granted de minimis aid shall include also the abated or assigned corporate tax of the taxable person for the last three years including the corporate tax subject to abatement or assignment for the current year. The amount of the granted de minimis aid shall not include the assigned corporate tax, in respect of which have been fulfilled the conditions of Art. 189.
(2) (amend. – SG 94/10, in force from 01.01.2011) The assigned tax referred to in Art. 184 shall be invested in long-term tangible or intangible assets according to the accounting legislation within 4 years from the beginning of the year for which the tax has been assigned.
(3) (amend. - SG 95/09, in force from 01.01.2010) The assigned tax, invested in the assets referred to in Para 2, shall accumulate to other state aid, approved in decision of the European Commission or admitted under Art. 9 of the State Aid Act in respect of the specified assets, by the maximum allowed intensity of the aid, specified in a National regional State aid map (OJ, C 73 from 30 March 2007).
(4) The taxable person shall declare the amount of granted de minimis aid for the last three years including the current year, regardless of their form and source, in the annual tax statement for the year of assignment of the corporate tax.


Tax relief, which is state aid for regional development (Title amend. - SG 110/07, in force from 01.01.2007)
Art. 189. (amend. - SG 110/07, in force from 01.01.2007) (1) The taxable persons shall have to fulfil the following requirements regarding the provision of state aid for regional development:
1. the assigned corporate tax shall be invested in tangible and intangible assets, which are part of a project for initial investment;
2. the initial investment shall be made within 4 years from the beginning of the year of assignment of the tax;
3. the initial investment shall be made in municipalities, where during the year of assignment the unemployment amounts to or exceeds 35 per cent more than the state average unemployment for the same period;
4. the activity related to the initial investment shall continue within the same municipality for at least 5 years from the year of completion of the initial investment; this fact shall be stated annually by expiration of the 5 years term in the annual tax statements;
5. at least 25 percent of the value of the tangible and intangible assets in the initial investment must be financed by way of the taxable person’s own means or borrowed ones; the assigned corporate tax and other means containing an element of State aid shall not be regarded as the taxable person’s own means or borrowed ones;
6. the tangible and intangible assets in the initial investment must have been acquired under market economy conditions corresponding to those between unrelated parties; the intangible assets in the initial investment shall be depreciable assets;
7. the amount of the admissible expenses for intangible assets in the initial investment shall not exceed 50 per cent of the amount of the admissible expenses for tangible and intangible assets in the initial investment;
8. the intangible assets in the initial investment shall be used inly in the activity of a taxable person and shall be part of its assets for a term of at least 5 years;
9. the assigned tax shall not exceed 50 per cent of the current value of the tangible and intangible assets in the initial investment, as established by 31 December of the year of assignment; for the purpose of determining the current value of the initial investment the interest rate shall be equal to the reference interest rate for the year of assignment determined by the European Commission;
10. the expected amount of the initial investment and the term of its performance shall be stated in the annual tax statement for the year of assignment of the corporate tax.
(2) The assigned corporate tax shall accumulate to other state aid, approved in a decision of the European Commission or granted under Art. 9 of the State Aid Act for the same initial investment, by the maximum admissible intensity of the aid, determined in the National regional State aid map.
(3) Where a tax relief has been granted to a large investment project, which was granted aid from all sources, the total amount of which exceeds the BGN equivalent of EUR 37,5 million, calculated according to the official exchange rate of the BGN towards the EUR, the state relief may be used during the specified year only if:
1. the taxable person has notified the revenue authority about the project before the beginning of its performance;
2. a positive decision was delivered by the European Commission in response to a notification made under the order of Art. 88, Para 3of the Treaty Establishing the European Community. The Minister of Finance shall notify the European Commission according to the order and the procedures, established in the State Aid Act. The taxable person shall be obliged to provide to the Minister of Finance the information required to deliver a notification to the European Commission.
(4) Where Para 3 shall not apply to a large investment project, the tax relief may be used, provided that the adjusted limit for regional aid for large investment projects has been complied with as defined in the European Commission Decision on approval of the National regional State aid map.
(5) For the purposes of Para 3 the value of the aid and the value of the acceptable expenses for tangible and intangible assets in a large investment project shall be determined according to the current value at the date of notification of the European Commission under the order of Art. 88, Para 3 of the Treaty Establishing the European Commission. For the purposes of Para 4 the value of the aid and the value of the acceptable expenses for tangible and intangible assets in a large investment project shall be determined according to the value at the date the performance of the project has started.


Art. 189a. (*) (new – SG 106/08, in force from 01.01.2009; revoked - SG 95/09, in force from 01.01.2010)


Tax relief in the form of a state aid for agricultural producers (new title - SG 95/09, in force from 01.01.2010)
Art. 189b. (new - SG 95/09, in force from 01.01.2010) (1) The corporate tax shall be remitted in the amount of up to 60 per cent to taxable persons, registered as agricultural producer, for their taxable profit from activity of production of non-processed plant and animal products.
(2) The corporate tax shall be remitted where the following requirements have been met in aggregate:
1. the remitted tax is invested into new buildings and new agricultural equipment, required for carrying out of the activity referred to in par. 1, by the end of the year, following the year, for which the remittance is applied;
2. the assets under item 1 are acquired under market conditions, corresponding to those for non-affiliated persons;
3. the activity under par. 1 must continue being carried out for a period of at least three years after the year of remittance; this circumstance shall be declared every year up to the expiration of the three- year term together with the annual tax returns;
4. the remitted tax must not exceed 50 per cent of the cost of the assets under item 1.
5. (new – SG 19/11, in force from 08.03.2011) the assets under item 1 do not replace the existing assets;
6. (new – SG 19/11, in force from 08.03.2011) as regards to the assets under item 1 the farmer is not e recipient (beneficiary) under any of the following aid:
a) aid within the meaning of Art. 107, paragraph 1 of the Treaty on the Functioning of the European Union;
b) minimum aid pursuant to Commission Regulation (EC) No 1535/2007 of 20 December 2007 on the application of Articles 87 and 88 of the EC Treaty to de minimis aid in the sector of agricultural production (OJ L 3337 of 21.12.2007);
c) financial aid under the Rural Regions Development Programme;
d) other public financial aid from the national budget and/or from the European Union budget.

(3) (revoked – SG 19/11, in force from 08.03.2011)
(4) revoked – SG 19/11, in force from 08.03.2011)


Restrictions on the use of tax relief (Title amend. - SG 110/07, in force from 01.01.2007)
Art. 190. (amend. - SG 110/07, in force from 01.01.2007) (1) A taxable person shall not be entitled to more than one tax relief under this Section during the same year.
(2) The assets, in which an assigned tax has been invested according to Art. 188, Para 2, shall be excluded of the scope of the initial investment.

Section V.
Tax Relief in the Cases Where the Requirements Regarding Admissible State Aid for Employment Are Fulfilled (Revoked – SG 106/08, in force from 01.01.2009)
Taxable persons that may not enjoy tax relief
Art. 191. (revoked – SG 106/08, in force from 01.01.2009)


Tax relief for employment promotion
Art. 192. (revoked – SG 106/08, in force from 01.01.2009)


General conditions
Art. 193. (revoked – SG 106/08, in force from 01.01.2009)

Part three.
TAX WITHHELD AT THE SOURCE
Chapter twenty three.
OBJECTS OF TAXATION
Tax withheld from the income originating from dividends and liquidation shares
Art. 194. (1) Tax at the source is due on the dividends and liquidation shares distributed (personified) by local legal entities in favour of:
1. foreign legal entities, except for the cases in which the dividends are realized by a foreign legal entity through a business activity establishment within the country;
2. local legal entities that are not traders, including municipalities.
(2) The tax referred to in para. 1 shall be final and shall be withheld by local legal entities distributing dividends or liquidation shares.
(3) Para. 1 shall not apply where the dividends and liquidation shares are distributed in favour of:
1. a local legal entity which participates in the capital of a company as a representative of the State;
2. contractual fund;
3. (new – SG 69/08, in force from 01.01.2009; amend. – SG 106/08, in force from 01.01.2009; suupl. - SG 95/09, in force from 01.01.2010) a foreign legal entity, which is a local persons for taxation purposes of a Member State of the European Union or of another state – party to the Agreement on European Economic Area, except for the cases of hidden distribution of profit.


Tax withheld from the income of foreign persons
Art. 195. (1) (suppl. – SG 94/10, in force from 01.01.2011) Where the income of foreign legal entities from a source within the country specified in Art. 12, Para 2, 3, 5 and 8 is not realized through a business activity establishment within the country, and the income of foreign legal entities from a source within the country specified in Art. 12, Para 9, established in preferential tax regime jurisdictions, if not realised thought a place of business activity within the country, the said income shall be subject to tax at the source, and that tax shall be final.
(2) (amend. – SG 94/10, in force from 01.01.2011) The tax under para. 1 shall be withheld by the local legal entities, the sole proprietors or the business activity establishments within the country that assess the income of the foreign legal entities, with the exception of the income under Art. 12, Para 3 and Para 8, Item 2.
(3) (amend. – SG 94/10, in force from 01.01.2011) Where the payer of the income is not a taxable person under Art. 2, and the income is not one of those referred to in Art. 12, Para 3 and Para 8, Item 2, the tax shall be withheld by the recipient of the income.
(4) Paras. 1 and 2 shall also apply where, through a business activity establishment within the country, the foreign person assesses the said income to other parts of his establishment which are located outside the country, with the exception of those cases in which the accounting expenses are not recognized for tax purposes, or accounting expenses or assets accounted for at the amount of the expenses actually incurred (the cost value) are recognized for tax purposes in the business activity establishment.
(5) The advance payments in connection with the income referred to in para. 1 shall not be subject to taxation with a tax at the source.


Securities traded in a regulated market
Art. 196. (amend. – SG 106/08, in force from 01.01.2009) No tax at the source shall be due on income from disposal of financial instruments under § 1, Item 21 of the Additional Provisions.

Chapter twenty four.
BASIS OF TAXATION
Basis of taxation for the tax withheld at the source from the income from dividends
Art. 197. The basis of taxation for determining the tax withheld at the source from the income from dividends shall be the gross amount of the distributed dividends.


Basis of taxation for the tax withheld at the source from the income from liquidation shares
Art. 198. The basis of taxation for determining the tax withheld at the source from the income from liquidation shares shall be the difference between the market price of the shares due to the respective shareholder or partner and the acquisition price of his stocks and shares, this price being evidenced with documents.


Basis of taxation for the tax withheld at the source from the income of foreign persons
Art. 199. (1) The basis of taxation for determining the tax withheld at the source from the income referred to in Art. 195, para. 1 shall be the gross amount of the said income, with the exception of the cases under paras. 3 and 4.
(2) The basis of taxation for determining the tax withheld at the source from the interest income of foreign legal entities under financial lease contracts shall be determined on the grounds of the market interest, unless the contract provides otherwise.
(3) The basis of taxation for determining the tax withheld at the source from foreign persons’ income originating from actions of disposal of financial assets shall be the positive difference between their sale price and their acquisition price, the latter being evidenced with documents.
(4) The basis of taxation for determining the tax withheld at the source from foreign persons’ income originating from disposal of immovable property shall be the positive difference between the sale price of the property and the acquisition price of the property, the latter being evidenced with documents.
(5) For the purposes of paras. 3 and 4, the sale price shall be the consideration under the transaction, including the remuneration other than money assessed in accordance with the market prices as at the date of assessing the income.
(6) In those cases where a financial lease contract is terminated prior to the expiry thereof and without transferring the ownership of the respective assets forming the subject matter of the contract, those lease contributions which are not subject to repayment shall be regarded as income originating from the use of property, this income being received by the foreign legal entity at the time of termination of the contract. The tax withheld at the source and paid on interest income until the lease contract is terminated shall be deducted from the tax due at the source on the income originating from the use of property.

Chapter twenty five.
TAX RATES
Tax rates
Art. 200. (1) (amend. - SG 110/07, in force from 01.01.2008) The tax rate of the income tax referred to in Art. 194 shall be 5 percent.
(2) (suppl. – SG 94/10, in force from 01.01.2011) The tax rate of the income tax referred to in Art. 195 shall be 10 percent except of the cases referred to in Art. 200a.


Tax rate for interest, copyright and royalty payment taxes
Art. 200a. (new – SG 94/10, in force from 01.01.2011) (1) The tax rate for interest, copyright and royalty payments shall be 5 percent, if all of the following conditions have been met:
1. the owner of the income is a foreign legal person from a Member State of the European Union, or a location of economic activity in a Member State of the European Union of a legal person from a Member State of the European Union;
2. the local legal person who is payer of the income or the person, whose location of economic activity in the Republic of Bulgaria is payer of the income, is a related person to the foreign legal person – owner of the income, or to the person whose location of economic activity is owner of the income.
(2) Where income taxable according to the tax rate referred to in Para 1 has been taxed with a higher tax rate, the owner of the income shall be entitled to request restoration of the tax. The restoration shall be carried out under the order and within the time limits set out in the Tax-Insurance Procedure Code within one year from filing the request for restoration.
(3) Para 1 and 2 shall not apply to:
1. income representing distribution of profit or restoration of capital;
2. income from debt receivables entitling to a share from the profits of the debtor;
3. income from debt receivables entitling the creditor to exchange his right to interest for the right to a share from the profits of the debtor;
4. income from debt receivables lacking a clause for repayment of the capital or the repayment is due more than 50 years from the date of emission of the debt;
5. income qualifying as non-recognised for taxation purposes costs of a location of economic activity in the Republic of Bulgaria, except those referred to in Art. 43;
6. income accrued by a foreign legal person from a non-Member State of the European Union through a location of economic activity in the Republic of Bulgaria;
7. income from transactions which primary objective or one of the primary objectives is diversion or avoidance of double taxation.
(4) For the purposes of this Article:
1. foreign legal person from a Member State of the European Union shall be every foreign legal person meeting the following conditions:
a) the legal form of the foreign legal person complies to Appendix No 5;
b) the foreign legal person in accordance with the applicable tax laws is considered to be resident for tax purposes in that Member State of the European Union and is not, within the meaning of a Double Taxation Agreement concluded with a third state, considered to be resident for tax purposes of a state outside the European Union;
c) the foreign legal person is subject to one of the taxes listed in Annex No 6 without being exempt, or to a tax which is identical or substantially similar and which is imposed in addition to, or in place of, these taxes;
2. a person is "associated person" of a second person, if at the moment of income accrual at least:
a) the first person has a direct minimum holding of 25 % in the capital of the second person, or
b) the second person has a direct minimum holding of 25 % in the capital of the first person, or
c) a third person has a direct minimum holding of 25 % both in the capital of the first person and in the capital of the second person.
3. the foreign legal person shall be treated as the owner of the income only if it receives this income for its own benefit and not as an intermediary or agent for some other person;
4. a location of economic activity shall be treated as the owner of the income, if all of the following conditions have been met:
a) the debt-claim, right or use of information in respect of which interest or copyright and royalty payments arise is effectively connected with that location of economic activity;
b) the interest or copyright and royalty payments represent income in respect of which that location of economic activity is subject in the Member State of the European Union in which it is situated to one of the taxes mentioned in Annex No 6 or in the case of Belgium to the "impot des non-residents/belasting der niet-verblijfhouders" or in the case of Spain to the "Impuesto sobre la Renta de no Residentes" or to a tax which is identical or substantially similar and which is imposed in addition to, or in place of, those existing taxes.

Chapter twenty six.
DECLARING THE TAX
Declaring the tax. Certificate of tax paid on foreign persons’ income
Art. 201. (suppl. - SG 110/07, in force from 01.01.2008; amend. – SG 94/10, in force from 01.01.2011; amend. – SG 94/12, in force from 01.01.2013) The persons obliged to withhold and pay tax at the source under Arts. 194 and 195 shall declare the due tax for the quarter through a declaration according to a form by the end of the month following the quarter. The declaration shall be filed with territorial directorate of the National Revenue Agency either by registration of the payer of the income or by the place in which the payer of the income must have registered.
(2) In those cases where the payer of the income is not subject to registration, the tax return shall be filed with the territorial directorate of the National Revenue Agency in Sofia.
(3) (suppl. – SG 23/13, in force from 08.03.2013) In those cases where the payer of the income is a person that is not obligated to withhold and pay a tax, the tax return shall be filed by the recipient of the income within the term fixed in para 1.
(4) Upon the request of the person concerned, a certificate of a standard form shall be issued regarding the tax paid under this Act on the income of foreign legal entities. The said certificate shall be issued by the territorial directorate of the National Revenue Agency in which the declaration under Para 1 is filed or should be filed.

Chapter twenty seven.
PAYING THE TAX
Paying the tax
Art. 202. (1) (amend. – SG 94/12, in force from 01.01.2013) The payers of income that have withheld the tax at the source under Art. 194 shall be obligated to pay the taxes due by the end of the month following the quarter, in which the decision for allocation of dividends or liquidation shares is taken.
(2) (amend. – SG 94/12, in force from 01.01.2013) The payers of income withholding a tax at the source under Art. 195 shall be obligated to pay the taxes due by the end of the month following the quarter of receipt of the income.
(3) The tax due under paras. 1 and 2 shall be paid in the respective territorial directorate of the National Revenue Agency by registration of the payer of the income or by the place in which the payer of the income must have registered.
(4) (amend. – SG 94/10, in force from 01.01.2011) Where the payer of the income is not a taxable person under Art. 2, and the income is not one of those referred to in Art. 12, Para 3 and Para 8, Item 2, the tax shall be paid by the recipient of the income within the time limits specified in para. 2, the income being regarded as assessed on the date on which it is received by the foreign legal entity. The tax due shall be paid in the respective territorial directorate of the National Revenue Agency either by registration of the payer of the income or by the place in which the payer of the income must have registered. In those cases where the payer of the income is not subject to registration, the tax shall be paid in the territorial directorate of the National Revenue Agency in Sofia.
(5) The overpaid tax shall be recovered by the territorial directorate of the National Revenue Agency in which the tax is payable.


Re-calculation of the tax at source(new title - SG 95/09, in force from 01.01.2010)
Art. 202a. (new - SG 95/09, in force from 01.01.2010) (1) A foreign legal entity which is not a local person for tax purposes of an European Union Member State or of another country- a party under the European Economic Area Agreement, shall be entitled to choose to recalculate the tax at source of income under Art. 12, par. 2, 3, 5 and 8. Where the foreign person chooses to recalculate the tax at source, the recalculation shall be done for all received by him/her income under Art. 12, par. 2, 3, 5 and 8 over the year.
(2) Where the foreign person chooses to recalculate the tax at source on the received by him/her income, the recalculated tax shall be equal to the corporate tax, which would have been payable for that income, provided that they are received by a local legal entity. Where the foreign person has incurred expenses, related to the income under sentence one, for which tax on expenses would have been payable, provided that they have been incurred by a local legal entity, the amount of the recalculated tax shall be increased by this tax.
(3) Where the amount of the deposited tax at source under Art. 195, par. 1 exceeds the amount of the recalculated tax under par. 2, the difference shall be refundable up to the amount of the tax at source under Art. 195, par. 1, which the foreign person cannot deduct from the tax payable to the state, where it is a local person.
(4) The choice of recalculating the tax at source shall be exercises by submitting an annual tax return in an approved form. The tax return shall be submitted by the foreign person to the Territorial Directorate of the National Revenue Agency – Sofia, not later than 31 December of the year, following the year of calculation of incomes.
(5) Tax refund under par. 3 shall be done according to the provisions of the Core of Tax Insurance Procedure by the Territorial Directorate of the National Revenue Agency.
(6) Paragraphs 1 – 5 shall not apply where the foreign person is a local person for tax purposes of a country – a party under the European Economic Area Agreements, which is not a European Union Member State, with which the Republic of Bulgaria:
1. does not have an enforced agreement for avoidance of double taxation, or
2. has got an enforced agreement for avoidance of double taxation, where the following is not provided:
a) exchange of information, or
b) cooperation in collection of taxes.


Responsibility
Art. 203. Where the tax referred to in Arts. 194 and 195 has not been duly withheld and paid, the persons liable with regard to the respective income shall be jointly responsible for it.

Part four.
TAX ON EXPENSES
Chapter twenty eight.
GENERAL PROVISIONS
Objects of taxation
Art. 204. Tax on expenses shall be due on the following expenses certified by way of documents:
1. the expenses of representation relating to the activity;
2. social expenses provided in kind to workers and employees employed under management and supervision contracts (employees); the social expenses provided in kind shall also include:
а) (amend. – SG 106/08, in force from 01.01.2009) expenses of contributions (premiums) for additional voluntary insurance, for voluntary health insurance and for life insurance;
b) the expenses of vouchers for food;
3. the expenses connected with the operation of vehicles in those cases where managerial activity is performed therewith.


Social expenses which are not in kind
Art. 205. Those social expenses which are not in kind and constitute income of a natural person shall be taxed in accordance with the terms and procedure set forth in the Income Taxes on Natural Persons Act.


Recognition of the tax on expenses
Art. 206. (1) The expenses and the tax thereon shall be recognized for tax purposes in the year in which they are assessed, and shall not form a tax temporary difference under Chapter Eight.
(2) The tax on expenses shall be final.


Taxable persons
Art. 207. (1) The persons liable for the tax referred to in Art. 204, items 1 and 3 shall be the persons subject to taxation with corporate tax.
(2) The persons liable for the tax referred to in Art. 204, item 2 shall be all employers or assignors under management and supervision contracts.


Exemption from taxation of social expenses of contributions and premiums for additional social insurance and life premiums
Art. 208. The social expenses under Art. 204, item 2, letter "а" at the monthly amount of up to BGN 60 per an employed person shall not be taxable in those cases where the taxable persons have no public liabilities enforceable at the time the expenses are made.


Exemption from taxation of social expenses of vouchers for food
Art. 209. (1) (amend. – SG 106/08, in force from 01.01.2009) No tax shall be due on the social expenses referred to in Art. 204, item 2, letter "b" amounting to up to BGN 60 per month, provided in the form of vouchers for food for an employed person, where all of the following conditions are present:
1. (amend. - SG 110/07, in force from 01.01.2008) the person’s negotiated basic monthly remuneration for the month in which the voucher is provided is not lower than the person’s average negotiated monthly basic remuneration for the preceding three months;
2. at the time the vouchers are provided the taxable person has no enforceable public liabilities;
3. the vouchers are provided to the taxable person by a person having permission for carrying out activities as an operator, this permission being given by the Minister of Finance on the grounds of a competition;
4. (revoked – SG 94/10, in force from 01.01.2011)
5. (revoked – SG 94/10, in force from 01.01.2011)
(2) In order for a person to acquire the right to carrying out activities as an operator, he must have obtained permission from the Minister of Finance and must:
1. have fixed (registered) capital of at least BGN 2 million at the time of filing the documents for obtaining permission;
2. be registered under the Value Added Tax Act;
3. not be a party in bankruptcy proceedings and must not have gone into liquidation;
4. have no enforceable public liabilities at the time of filing the documents for obtaining permission;
5. be represented by persons who:
а) have not been sentenced for a wilful crime, except for the cases of exculpation;
b) have not been members of a management body or a supervisory body of a company that was declared bankrupt in the two years preceding the date of the decision on opening bankruptcy proceedings, if there have been unsatisfied creditors.
(3) (amend. – SG 106/08, in force from 01.01.2009) The permission shall be issued by the Minister of Finance on the grounds of a competition and shall be revoked when the operator:
1. (amend. and suppl. – SG 94/10, in force from 01.01.2011) does not fulfil any of the requirement under Para 2, 8 and 9 any more;
2. discontinue the activity;
3. (In force from 01.01.2010; amend. – SG 94/12, in force from 01.01.2013) was not operating during the preceding two years, for which he has received the first individual quota for the year before the previous;
4. (In force from 01.01.2010; amend. – SG 94/10, in force from 01.01.2011) he has issued to employers food vouchers according to a granted individual quota for issuing food vouchers, where their nominal value exceeds that individual quota, or has issued food vouchers without having been granted an individual quota.
(4) The issue of permission, the refusal to issue permission and the revocation of the permission issued shall be performed by way of a written Ordinance of the Minister of Finance.
(5) The refusal to issue permission and the revocation of the permission issued may be challenged in accordance with the procedure set forth in the Administrative Procedure Code.
(6) The procedure for holding the competition, issuing and revoking the permission, printing out the vouchers, as well as the number of the vouchers issued, the conditions of organizing and exercising control over the activity as an operator shall be determined by way of an Ordinance of the Minister of Labour and Social Policy and the Minister of Finance.
(7) (new – SG 94/10, in force from 01.01.2011) The total annual quota for granting food vouchers shall be approved in the Act on the State Budget of the Republic of Bulgaria for the respective year.
(8) (new – SG 94/10, in force from 01.01.2011) The operator shall use the amounts received from the employers for the food vouchers issued to them only for bank payments to the suppliers, who have signed service contracts with the operator, or for reimbursement of the nominal value of the food vouchers demanded by employers, where the permit of the operator has been withdrawn.
(9) (new – SG 94/10, in force from 01.01.2011) The operator shall sign service contracts only with suppliers registered under the Law on the Value-Added Tax.


Exemption from taxation of social expenses of transportation of workers and employees, and the persons employed under management and supervision contracts
Art. 210. (1) The tax referred to in Art. 204, item 2 shall not be due on the social expenses of transportation of workers and employees, and the persons employed under management and supervision contracts from the place of residence to the place of work and backwards.
(2) Para. 1 shall not apply where the transportation is carried out with a car or using additional bus lines.
(3) Para. 1 shall also apply where the workers and employees are transported with a car to a region difficult of access, or a remote region and without the said expense the taxable person shall not be able to exercise his activity.

Chapter twenty nine.
BASIS OF TAXATION
Basis of taxation for the tax on expenses of representation
Art. 211. (amend. – SG 94/12, in force from 01.01.2013) The basis of taxation for determining the tax on the expenses referred to in Art. 204, item 1 shall be the expenses assessed for the calendar year.


Basis of taxation for the tax on social expenses provided in kind
Art. 212. (amend. – SG 94/12, in force from 01.01.2013) The basis of taxation for determining the tax on the expenses referred to in Art. 204, item 2 shall be the assessed social expenses provided in kind decreased by the income relating to the said expenses, for the calendar year.


Basis of taxation for the tax on social expenses of contributions (premiums) for additional social insurance and life premiums
Art. 213. (1) (new – SG 94/12, in force from 01.01.2013) The tax basis for determining the tax on the expenses under Art. 203, Item 2, Letter "a" shall be the sum of the tax bases for the months of the calendar year determined under Para 2 and 3.
(2) (prev. text of Para 01, suppl. – SG 94/12, in force from 01.01.2013) The basis of taxation for determining the tax on the expenses for the calendar month referred to in Art. 204, item 2, letter "а" shall be the excess of these expenses over BGN 60 per month per each employee.
(3) (prev. text of Para 02, suppl. – SG 94/12, in force from 01.01.2013) Where the taxable persons have public liabilities enforceable at the time the expenses are assessed, the basis of taxation for determining the tax on the expenses shall be the whole amount of the assessed expenses for the calendar month.


Basis of taxation for the tax on social expenses of vouchers for food
Art. 214. (1) (new – SG 94/12, in force 01.01.2013) The basis of taxation for determining the tax on the expenses under Art. 204, Item 2, Letter "b" shall be the sum of the tax bases for the months of the calendar year, determined under Para 2 and 3.
(2) (amend. – SG 106/08, in force from 01.01.2009; prev. text of Para 01, suppl. – SG 94/12, in force from 01.01.2013) The basis of taxation for determining the tax on the expenses for the calendar month referred to in Art. 204, item 2, letter "b" shall be the excess of these expenses over BGN 60 per month per each employee.
(3) (prev. text of Para 02, suppl. – SG 94/12, in force from 01.01.2013) Where the conditions for tax exemption referred to in Art. 209 are not fulfilled, the basis of taxation for determining the tax on the expenses shall be the whole amount of the assessed expenses for the calendar month.


Basis of taxation for the tax on the expenses connected with maintenance, repair and operation of transport vehicles
Art. 215. (1) (amend. – SG 94/12, in force 01.01.2013) The basis of taxation for determining the tax on the expenses referred to in Art. 204, item 3 shall be the expenses assessed during the calendar year for the maintenance, repair and operation of transport vehicles decreased by the assessed income from insurance indemnities relating to the transport vehicle, up to the amount of those repair expenses which the indemnity concerns.
(2) Where the transport vehicles are used both for activity by occupation and for managerial activity, when determining the basis of taxation referred to in para. 1:
1. (amend. – SG 94/12, in force 01.01.2013) the operational expenses shall be attributed to the managerial activity on the grounds of the kilometres travelled for this activity in the calendar year;
2. (amend. – SG 94/12, in force 01.01.2013) the expenses of maintenance and repair shall be attributed to the managerial activity on the grounds of the kilometres travelled for this activity versus the total number of kilometres travelled by the respective transport vehicle for the calendar year.
(3) (amend. – SG 94/12, in force 01.01.2013) Where the basis of taxation referred to in para. 1 is a negative value, it shall be deducted gradually from the basis of taxation for the subsequent years.

Chapter thirty .
TAX RATE, STATEMENT AND PAYMENT OF THE TAX ON EXPENSES (TITLE AMEND. - SG 110/07, IN FORCE FROM 01.01.2007)
Tax rate
Art. 216. The tax rate of the tax on expenses referred to in Art. 204 shall be 10 percent.


Tax and paying the tax (Title amend. - SG 110/07, in force from 01.01.2007)
Art. 217. (1) (new - SG 110/07, in force from 01.01.2007) The tax on expenses shall be stated in an annual tax statement, submitted by the taxable person.
(2) (prev. text of Art. 217 - SG 110/07, in force from 01.01.2007; amend. – SG 94/12, in force 01.01.2013) The tax on expenses shall be payable until 31 March of the following year.

Part five.
ALTERNATIVE TAXES
Chapter thirty one.
GENERAL PROVISIONS
Alternative tax
Art. 218. (1) The taxable persons specified in this Part shall be liable for alternative tax on the activities specified herein, instead of corporate tax.
(2) Except for the State-budget enterprises, the persons referred to in para. 1 shall be liable for corporate tax on all the other activities.

Chapter thirty two.
TAX ON GAMBLING ACTIVITIES
Section I.
General Provisions
Accounting
Art. 219. (amend. – SG 94/12, in force 01.01.2013) (1) The taxable persons under this Chapter shall have to keep detailed accountancy and store information that is sufficient for establishing their obligations under this Act by the income authorities of the National Revenue Agency.
(2) The taxable persons shall be obliged to keep daily and monthly accounts of the sums received and paid for participation in gambling games, these being accounts of a standard form approved by the Minister of Finance.
(3) Para. 2 shall not apply:
1. to the gambling activity referred to in Section V;
2. to the gambling games in which the bet is the price of a telephone or another electronic communication service;
3. to gambling games, which, according to the Gambling Act, are supported by a central computer system approved by the State Commission on the Gambling, including a system for online submission of information for the accrual and allocation of the winnings, enabling the transfer of information to a server of the National Revenue Agency, which shall enable mandatory registration of each transaction to the system of the National Revenue Agency.
(4) (new – SG 15/13, in force from 01.01.2013) Taxes on support and ancillary activities within the meaning of the Gambling Act shall be declared by an annual tax return in a form, which shall be submitted by March 31 of the following year at the respective territorial directorate of the National Revenue Agency at the place of registration of the taxable person.
(5) (new – SG 15/13, in force from 01.01.2013) The taxable persons under this Chapter shall submit an annual activity report by March 31 of the following year at the respective territorial directorate of the National Revenue Agency at the place of registration of the taxable person.

Section II.
Tax on Gambling Activity of Toto and Lotto, Betting Games on Results of Sports Competitions and Horse and Dog Racing, Betting Games on Chance Events and Bets related to Guessing Facts, including such Organised from Distance (Title amend. – SG 94/12, in force from 01.01.2013)
General provisions
Art. 220. (amend. – SG 94/12, in force from 01.01.2013) The gambling activities of toto and lotto games, betting games on results of sports competitions and horse and dog races, betting games on chance events and fact guessing bets, shall be taxed with a tax on gambling activity, and the said tax shall be final.


Taxable persons
Art. 221. (amend. – SG 94/12, in force from 01.01.2013) The taxable persons under this Section shall be the organizers of the toto and lotto games, betting games on results of sports competitions and horse and dog races, betting games on chance events and fact guessing bets.


Basis of taxation
Art. 222. (amend. – SG 94/12, in force from 01.01.2013) The basis of taxation for determining the tax on gambling activity of the toto and lotto games, betting games on results of sports competitions and horse and dog races, betting games on chance events and fact guessing bets, including the games under this Section organised from distance, shall be the value of the bets made for each game.


Tax rate
Art. 223. (amend. - SG 95/09, in force from 01.01.2010; amend. – SG 94/12, in force from 01.01.2013) The tax rate of the tax on gambling activity under this Section, including the games organised from distance, shall be 15 percent.


Declaring the tax
Art. 224. (amend. – SG 94/12, in force from 01.01.2013) (1) The taxable persons shall declare the tax under this Section by filing a tax statement in a form within 7 days from determining the results of the game.
(2) The tax statement under Para 1 shall be filed electronically signed by qualified electronic signature with the territorial directorate of the National Revenue Agency at the place of registration of the person.


Paying the tax
Art. 225. (amend. – SG 94/12, in force from 01.01.2013) The tax on gambling activity under this Section shall be payable within the time limit for its declaring.


Receipts from auxiliary and subsidiary activities
Art. 226. (1) (amend. - SG 95/09, in force from 01.01.2010) The receipts from auxiliary and subsidiary activities within the meaning of the Gambling Act shall be taxed with alternative tax at the amount of 12 percent of the value thereof.
(2) (amend. – SG 94/12, in force from 01.01.2013) The tax shall be payable until the 31 March of the following calendar year.

Section III.
Tax on Gambling Activity of Lotteries, Rattles, and Bingo and Keno Lottery Games with Numbers, Including such Organised from Distance (Title amend. – SG 94/12, in force from 01.01.2013)
General provisions
Art. 227. The gambling activity of lotteries, rattles, and Bingo and Keno lottery games with numbers shall be taxed with a tax on gambling activity, and the said tax shall be final.


Taxable persons
Art. 228. Taxable persons under this Section shall be the organizers of the gambling games - lotteries, rattles, and Bingo and Keno lottery games with numbers.


Basis of taxation
Art. 229. (amend. – SG 94/12, in force from 01.01.2013) The basis of taxation for determining the tax on gambling activity under this Section shall be the nominal value of the bet specified in tickets, talons, or other certification signs for participation in gambling.
(2) The tax basis of the lottery games – traditional lottery and Bingo and Keno number lotteries organised from distance through the internet shall be 15 percent.


Tax rate
Art. 230. (amend. - SG 95/09, in force from 01.01.2010) The tax rate of the tax on gambling activity under this Section shall be 15 percent.


Declaring the tax
Art. 231. (amend. – SG 94/12, in force from 01.01.2013) The taxable persons shall declare the tax under this Section by filing a tax statement in a form by the 10th of the month, following the month of receipt of the certification signs for participation in gambling, and for gambling organised from distance through the internet – by the 10th of the month, following the month, when the game ends.


Paying the tax
Art. 232. (amend. – SG 94/12, in force from 01.01.2013) (1) The tax on gambling activity under this Section shall be payable prior to receiving the certification signs for participation or importing them.
(2) The certification signs for participation shall be provided to the taxable persons only after submission of documents evidencing that the tax has been paid.
(3) The tax on the gambling for games under this Section, organised from distance through the internet shall be paid by the 10th of the month following the month of the end of the game.


Recovery of the tax
Art. 233. (1) (amend. – SG 94/12, in force from 01.01.2013) The tax paid on certification signs for participation which have not been used shall be recovered by the territorial directorate of the National Revenue Agency by registration of the person:
1. after completion of each part (drawing) of the lottery games, or
2. where the license of the organizer is suspended on the grounds of Art. 35, Para 1, Item 4 of the Gambling Act.
(2) The tax under Para 1 shall be recovered upon a request for recovery under Art. 129, Para 1 of the Tax Insurance Procedure Code.
(3) The request under Para 2 shall be accompanied by the unused certification signs for participation, and the decision of the State Commission on Gambling on suspension of the license in the cases referred to in para. 1, item 2.


Receipts from auxiliary and subsidiary activities
Art. 234. (1) The receipts from auxiliary and subsidiary activities within the meaning of the Gambling Act shall be taxed with an alternative tax at the amount of 12 percent of the value thereof.
(2) (amend. – SG 94/12, in force from 01.01.2013) The tax shall be payable by 31 March of the following calendar year.

Section IV.
Tax on Gambling Activity of Games, Organised from Distance, in Which the Bet for Participation Is through the Price of a Telephone or Another Electronic Communication Service (Title amend. – SG 94/12, in force from 01.01.2013)
General provisions
Art. 235. (amend. – SG 94/12, in force from 01.01.2013) The gambling activity of games, organised from distance, in which the bet for participation is through the price of a telephone or another electronic communication service shall be taxed with a tax on gambling activity, and the said tax shall be final.


Taxable persons
Art. 236. (amend. – SG 94/12, in force from 01.01.2013) Taxable persons under this Section shall be the organizers of those gambling games, organised from distance, in which the bet for participation is through the price of a telephone or another electronic communication service.


Basis of taxation
Art. 237. (amend. – SG 94/12, in force from 01.01.2013) The basis of taxation for determining the tax under this Section shall be the increase in the price of the telephone or other electronic communication service.


Tax rate
Art. 238. (amend. - SG 95/09, in force from 01.01.2010) The tax rate of the tax under this Section shall be 15 percent.


Declaring the bets made and the tax
Art. 239. (amend. – SG 94/12, in force from 01.01.2013) (1) The organizer of the gambling game shall declare the bets made and the tax under this Section at the territorial directorate of the National Revenue Agency by his registration until the 10th day of the month following the month in which the games are held, by way of a tax return of a standard form.
(2) The telephone or other electronic communication service operator shall declare the bets made and the tax under this Section at the territorial directorate of the National Revenue Agency by his registration until the 10th day of the month following the month in which the games are held, by way of a tax return of a standard form.


Paying the tax
Art. 240. (amend. – SG 94/12, in force from 01.01.2013) (1) The tax on the gambling activity under this Section shall be withheld and paid by telephone or other electronic communication service operator until the 10th day of the month following the month in which the games are held.
(2) The telephone or other electronic communication service operator shall have to make sure that the organizer of the gambling game has obtained permission from the State Commission on Gambling and shall have to submit with the territorial directorate of the National Revenue Agency the contract on the grounds of which he accepts the bets, the said contract containing a clause regarding the increase in the price of the telephone or other electronic communication service.


Receipts from auxiliary and subsidiary activities
Art. 241. (1) The receipts from auxiliary and subsidiary activities within the meaning of the Gambling Act shall be taxed with an alternative tax at the amount of 12 percent of the value thereof.
(2) (amend. – SG 94/12, in force from 01.01.2013) The tax shall be paid by the organizer of the gambling game by 31 March of the following calendar year.

Section V.
Tax on Gambling Activity from Slot Machine Games and Casino Games, including such Organised from Distance (Title amend. – SG 94/12, in force fro 01.01.2013)
General provisions
Art. 242. (amend. – SG 94/12, in force from 01.01.2013) The gambling activity with slot machine games, casino games, including such organised from distance shall be taxed with a tax on gambling activity, and this tax shall be final.


Taxable persons
Art. 243. (amend. – SG 94/12, in force from 01.01.2013) Taxable persons under this Section shall be the organizers of gambling games under Art. 242.


Determining the tax
Art. 244. (amend. – SG 94/12, in force from 01.01.2013; suppl. – SG 23/13, in force from 08.03.2013) The tax on the gambling activity under this Section shall be assessed in respect of the devices entered in the certificate of granted licence and in operation:
1. slot machines and/or virtual slot machines in a gambling hall, and each gaming seat thereof, respectively;
2. gambling tables and/or virtual gambling tables and slot machines and/or virtual slot machines in a casino, respectively each gambling seat thereto.


Amount of the tax
Art. 245. (amend. - SG 95/09, in force from 01.01.2010; amend. – SG 94/12, in force from 01.01.2013) (1) The tax on gambling activity under this Section shall amount to as follows:
1. per slot machine and/or virtual slot machine in a gambling hall or casino, per gaming seat thereof, respectively – BGN 500 per quarter;
2. for roulette and/or virtual roulette with a maximum number of 10 simultaneous gaming sessions in a casino per gaming table – BGN 22,000 per quarter per each gambling table;
3. for other gambling device and/or other virtual gambling device with a maximum number of up to 7 simultaneous game sessions in a casino – BGN 5,000 per quarter per each gambling device;
4. for games in a casino involving collection of fees and commissions for participation – 15 percent of collected fees and commissions for the respective quarter.
(2) (amend. – SG 23/13, in force from 08.03.2013) No tax under Para 1, Items 1 to 3 shall be due for the quarters prior to the issue of the license for organizing gambling games with the respective gambling device or for the quarters after the revocation thereof.
(3) (amend. – SG 23/13, in force from 08.03.2013) The full amount of the tax under Para 1, Items 1 to 3 shall be due for the quarter in which the license for organizing gambling games with the respective device is issued as well as for the quarter in which it is revoked.
(4) In the cases under Art. 40 of the Gambling Act the tax under Para 1, Item 1 – 3 shall be due in full amount for the quarter of suspending or resuming the activity.


Declaring the tax
Art. 246. (amend. – SG 94/12, in force from 01.01.2013) (1) The taxable persons shall declare the tax under this Section by filing of a tax statement in a form until the 15th day of the month following the respective quarter.
(2) The tax statement under Para 1 shall be filed with the territorial directorate of the National Revenue Agency at the place of registration of the person.


Paying the tax
Art. 247. (amend. – SG 94/12, in force from 01.01.2013) The tax on the gambling activity under this Section shall be payable within the time limits for declaring it.

Chapter thirty three.
TAX ON THE RECEIPTS OF STATE-BUDGET ENTERPRISES
General provisions
Art. 248. The receipts of the State-budget enterprises from transactions referred to in Art. 1 of the Commerce Act, and the receipts from leasing movable and immovable property shall be taxed with a tax on receipts in accordance with the procedure set forth in this Chapter.


Basis of taxation
Art. 249. (amend. – SG 94/12, in force from 01.01.2013) The basis of taxation for determining the tax on the receipts shall be the receipts of the State-budget enterprise from transactions referred to in Art. 1 of the Commerce Act and the receipts from leasing movable and immovable property which are assessed in the respective year.


Tax rate
Art. 250. (1) The tax rate of the tax on receipts shall be 3 percent.
(2) The tax rate of the tax on the receipts of the municipalities shall be 2 percent.


Tax assignment
Art. 251. (1) There shall be assigned 50 percent of the tax on the receipts of the scientific research State-budget enterprises, the State higher schools, the State and municipal schools of the public education system for their economic activity which is either directly connected with or helpful to the performance of their basic activity.
(2) The assigned tax shall be recorded as a written-off liability to the State.


Declaring the tax
Art. 252. (1) (prev. Art. 252 - SG 95/09, in force from 01.01.2010) In those cases where they are subject to tax on the receipts in the respective year, the State-budget enterprises shall submit an annual tax return of a standard form until 31 March of the subsequent year.
(2) (new - SG 95/09, in force from 01.01.2010) An annual business report shall be submitted together with the annual tax return.


Paying the tax
Art. 253. (amend. – SG 94/12, in force from 01.01.2013) The tax on receipts shall be paid by 31 March of the following year.

Chapter thirty four.
TAX ON THE ACTIVITY OF OPERATION OF VESSELS
General provisions
Art. 254. (1) The taxable persons under this Chapter shall be entitled to choose that their activity of operation of vessels be taxed with a tax on the activity of operation of vessels.
(2) The taxable persons that have chosen to be taxed with the tax referred to in para. 1 shall be taxed with this tax for a period of at least 5 years.


Taxable persons
Art. 255. (1) (prev. text of Art. 255 – SG 94/10, in force from 01.01.2011) Taxable persons under this Chapter shall be the persons performing maritime commercial navigation, providing that all of the following conditions are present:
1. (amend. – SG 106/08, in force from 01.01.2009) they are companies registered under the Commerce Act or business activity establishments of a company located for tax purposes either in another Member State of the European Union or in a Member State of the European Economic Area, and are not regarded as located in another State outside the European Union or the European Economic Area under the respective tax legislation or under a treaty on avoidance of double taxation with a third State;
2. (amend. – SG 94/10, in force from 01.01.2011) they operate vessels of their own or chartered ones, as well as charter vessels;
3. they do not refuse to train probationers on board, with the exception of those cases in which the number of probationers within a year is more than one per 15 officers on board;
4. (amend. – SG 106/08, in force from 01.01.2009) their crews are recruited from Bulgarian citizens or citizens of other Member States of the European Union or the European Economic Area;
5. (amend. – SG 106/08, in force from 01.01.2009; amend. – SG 94/10, in force from 01.01.2011) at least 60 percent of the net tonnage of the operated vessels is of vessels flying the Bulgarian flag or the flag of another Member State of the European Union or the European Economic Area.
6. (new – SG 94/10, in force from 01.01.2011) carry out their activities in compliance with the requirements of the international conventions and the European Union law related to the safety and security of shipping, protection of the environment from pollution from ships and the living and labour conditions on-board of ships.
(2) (new – SG 94/10, in force from 01.01.2011) Taxable persons under this Chapter shall be also the persons carrying out sea merchant shipping managing ships pursuant to management contracts and meeting all of the following requirements:
1. comply with the requirements under Para 1, Items 1, 5 and 6;
2. more than the half of the administrative coastal staff or the crew consists of Bulgarian nationals or nationals of other Member States of the European Union or of the European Economic Area;
3. at least three-thirds of the tonnage of the managed ships is managed by companies qualifying as local persons for tax purposes of a Member State of the European Union or another contracting party to the Agreement on the European Economic Area.


Limitations on the scope of the tax
Art. 256. The taxable persons shall not be entitled to apply the procedure for taxation under this Chapter to:
1. sea vessels the net tonnage of which is below 100 tons;
2. fishing vessels;
3. vessels for trips, with the exception of passenger ships;
4. vessels which the taxable persons have granted under management contracts or under bare-boat charters, except for the cases in which the vessels are granted to the State;
5. installations for extraction of ores and minerals, oil platforms, dredgers and vessels performing towage.


Basis of taxation
Art. 257. (1) The basis of taxation per vessel per day in operation shall be determined as follows:
1. per vessel the net tonnage of which is up to 1,000 tons – BGN 3.50 per each 100 tons commenced;
2. per vessel the net tonnage of which is from 1,001 up to 10,000 tons – BGN 35 plus BGN 3.00 per each 100 tons commenced above 1,000 tons;
3. per vessel the net tonnage of which is from 10,001 up to 25,000 tons – BGN 305 plus BGN 2.50 per each 100 tons commenced above 10,000 tons;
4. per vessel the net tonnage of which is above 25,001 tons – BGN 680 plus BGN 1.00 per each 100 tons commenced above 25,000 tons.
(2) (amend. – SG 94/12, in force from 01.01.2013) The basis of taxation of a vessel for a calendar year shall be determined by multiplying the basis of taxation of the respective vessel per one day of operation, the said basis of taxation being determined under para. 1, by the number of days of operation of the respective vessel for the calendar year.
(3) The basis of taxation for determining the tax under this Chapter shall be the aggregate of the bases of taxation of all vessels determined under para. 2.


Tax rate
Art. 258. The tax rate of the tax under this Chapter shall be 10 percent.


Declaring the tax
Art. 259. (1) The taxable persons shall exercise their right to choose taxation with the tax under this Chapter by way of submitting a tax return of a standard form not later than 31 December of the preceding year.
(2) The taxable persons shall submit an annual tax return of a standard form for the tax due under this Chapter not later than 31 March of the subsequent year.
(3) (new - SG 95/09, in force from 01.01.2010) An annual business report shall be submitted together with the annual tax return.


Paying the tax
Art. 260. (amend. – SG 94/12, in force from 01.01.2013) The taxable persons shall pay monthly the tax due under this Chapter by 31 March of the following year.

Part six.
ADMINISTRATIVE SANCTIONS PROVISIONS
Chapter thirty five.
ADMINISTRATIVE VIOLATIONS AND SANCTIONS
Art. 261. (1) A taxable person that fails to submit the tax return referred to in this Act, or fails to submit it in due time, or fails to state data or circumstances, or states false data or circumstances, this bringing about either a lower amount of the tax or ungrounded abatement, or assignment, or exemption from tax, shall be punished with a pecuniary sanction at the amount of BGN 500 to BGN 3,000.
(2) In the cases of a repeated violation the pecuniary sanction referred to in para. 1 shall be at the amount of BGN 1,000 to BGN 6,000.


Art. 262. (1) A taxable person that fails to submit a supplement to the annual tax return, or states false data or circumstances therein shall be punished with a pecuniary sanction at the amount of BGN 100 to BGN 1,000.
(2) In the cases of a repeated violation the pecuniary sanction referred to in para. 1 shall be at the amount of BGN 200 to BGN 2,000.


Art. 263. (1) A taxable person that reports a business operation in violation of its accounting policy and this brings about improper determination of its accounting financial result shall be punished with a pecuniary sanction at the amount of BGN 100 to BGN 1,000 per each violation.
(2) In the cases of a repeated violation the pecuniary sanction referred to in para. 1 shall be at the amount of BGN 200 to BGN 2,000 per each violation.


Art. 264. (1) A manager, a liquidator/trustee in bankruptcy or a person who has held the position of a liquidator/trustee in bankruptcy who has committed a violation through action or omission, this being a violation under Arts. 261, 262 or 263 shall be punished with a pecuniary sanction or a fine at the amount of BGN 200 to BGN 1,000.
(2) In the cases of a repeated violation the pecuniary sanction or fine referred to in para. 1 shall be at the amount of BGN 400 to BGN 2,000 per each violation.


Art. 265. (amend. - SG 110/07, in force from 01.01.2008) A taxable person that fails to issue a primary accounting document in order to account for receipts shall be imposed a sanction under Art. 182 of the Value Added Tax Act, unless the person is subject to a more severe punishment.


Art. 266. (amend. - SG 110/07, in force from 01.01.2008) A taxable person that fails to perform its duty under Art. 10, Para 4 shall be imposed a sanction under Art. 185 of the Value Added Tax Act.


Art. 267. (amend. - SG 110/07, in force from 01.01.2008) A taxable person that makes a concealed distribution of profit shall be punished with a pecuniary sanction at the amount of 20 percent of the assessed expense constituting concealed distribution of profit.


Art. 268. (1) An organizer of gambling games that fails to perform the obligation to keep daily and monthly accounts referred to in Art. 219 shall be punished with a pecuniary sanction at the amount of BGN 2,000 to BGN 10,000.
(2) In the cases of a repeated violation the pecuniary sanction referred to in para. 1 shall be at the amount of BGN 4,000 to BGN 20,000.


Art. 269. (1) Where an enterprise under Art. 232 which prints out or imports documents for participation provides the documents for participation without having the document of paid tax submitted thereto shall be punished with a pecuniary sanction at the amount of the unpaid tax.
(2) In the cases of a repeated violation the pecuniary sanction referred to in para. 1 shall be equal to the double amount of the unpaid tax and the Minister of Finance shall deprive the enterprise from the right to print out or import the documents for participation in the games under Chapter Thirty-Two, Section III for a period of up to 6 months.


Art. 270. (1) An organizer of gambling games under Art. 228 holding such games without having paid the full amount of the tax due shall be punished with a pecuniary sanction of the double amount of the tax due, this sanction being not less than BGN 2,000.
(2) The pecuniary sanction under para. 1 shall also be imposed on an organizer of gambling games under Art. 228 that offers, sells or provides to a participant in the gambling game a document for participation which does not comply with the requirements set forth in the statutory instruments regarding the printing out, form, type and cost value thereof, or sells the said document for participation at a price higher than the nominal one printed on it. No sanction shall be imposed where the reappraisal of the nominal value of the documents for participation has been entered in a record certified by a representative of the Ministry of Finance, a representative of the enterprise printing the documents and the revenue body of the respective territorial directorate of the National Revenue Agency by registration of the organizer.
(3) In the cases of a repeated violation the pecuniary sanction referred to in paras. 1 and 2 shall be equal to the double amount of the tax due, this sanction being not less than:
1. BGN 4,000 and deprivation of the right to exercising activity under Art. 272, where the repeated violation concerns para. 1;
2. BGN 6,000 and deprivation of the right to exercising activity under Art. 272, where the repeated violation concerns para. 2.


Art. 271. The pecuniary sanctions under Arts. 269 and 270 shall be imposed regardless of the sanctions provided for in other laws, and the control bodies under the Gambling Act shall be notified of the established violations.


Art. 272. (1) The administrative sanction of deprivation of the right to exercising activity shall be imposed for a period of 1 to 6 months.
(2) In the cases referred to in Art. 270, para. 2 the revenue bodies shall seize and destroy those documents for participation which do not comply with the requirements set forth in the statutory instruments regarding the printing out, form, type and cost value, or are sold at a price that is higher than the nominal one printed on the respective document for participation. The expenses shall be borne by the taxable person.
(3) In the cases of imposing the administrative sanction of deprivation of the right to exercising activity, the compulsory administrative measure of sealing the site and forbidding the access thereto shall be applied as well.


Art. 273. (1) The execution of the administrative sanction of deprivation of the right to exercising activity shall be suspended by the body which has imposed it, at the request of the taxable person that has been sanctioned, and after the latter has evidenced to have paid the whole amount of the pecuniary sanction imposed.
(2) In the cases referred to in para. 1 the revenue body shall also order the unsealing of the site which shall be carried out under the taxable person’s obligation to render assistance.


Art. 274. The part of the penalty warrants which concerns the administrative sanction of deprivation of the right to exercising activity and the compulsory administrative measure of sealing the site and forbidding the access thereto, as well as the penalty warrants under Art. 273 shall be subject to preliminary execution, except where the court rules otherwise.


Art. 275. (revoked – SG 94/10, in force from 01.01.2011)


Art. 276. (amend. - SG 95/09, in force from 01.01.2010; suppl. – SG 99/11, in force from 01.01.2012) A taxable person failing to perform the obligation under Art. 92, par. 3, Art. 160, Para 3, Art. 162, Para 6, Art. 219, par. 4, Art. 252, par. 2 or Art. 259, par. 3 shall be punished with a pecuniary sanction at the amount of BGN 500 to BGN 2,000 and in the cases of a repeated violation the pecuniary sanction shall be at the amount of BGN 1,500 to BGN 5,000.


Art. 277. (1) The taxable persons that have applied the procedure for taxation under Chapter Thirty-Four but do not fulfil the conditions which give them the right of choosing shall be punished with a pecuniary sanction at the amount of BGN 20,000 to BGN 30,000 and in the cases of a repeated violation the pecuniary sanction shall be at the amount of BGN 40,000 to BGN 60,000.
(2) The persons referred to in para. 1 shall not be entitled to apply the procedure for taxation of the activity of operation of vessels for a period of 5 years.


Art. 277a. (new – SG 106/08, in force from 01.01.2009; amend. – SG 94/10, in force from 01.01.2011) (1) Any person who according to an individual quota allocated to him has issued to employers food vouchers, which nominal value exceeds the said individual quota, shall be imposed a property sanction amounting to the surplus to the nominal value of the food vouchers issued to employers under the allocated individual quota exceeding the said individual quota, but no less than BGN 2000.
(2) Any person who issues to employers food vouchers without being allocated an individual quota shall be imposed a property sanction amounting to the nominal value of the food vouchers issued to employers, but no less than BGN 2000.
(3) (new – SG 94/12, in force from 01.01.2013) Any person providing food vouchers to employers that do not meet the conditions and order for printing food vouchers specified in the ordinance under Art. 209, Para 6 shall be imposed a property sanction amounting to the nominal value of the provided food vouchers, but no less than BGN 2000.


Art. 277b. (new – SG 106/08, in force from 01.01.2009) Any operator of food vouchers who fails to provide a reference for the made available and paid (cashed) vouchers shall be imposed a property sanction in amount from BGN 1000 to 1500 and in case of repeated offence - in amount from BGN 2000 to 2500.


Art. 277c. (new – SG 94/10, in force from 01.01.2011) Any food voucher operator who fails to meet the requirements of Art. 209, Para 8 for payments related to issued food vouchers shall be imposed a property sanction in amount from BGN 10000 to 15000, and in cases of repeated offence – from BGN 20000 to 30000.


Art. 278. (1) The records establishing the violations shall be drawn by the bodies of the National Revenue Agency, while the penalty warrants shall be issued either by the Executive Director of the National Revenue Agency or by an official authorized by him/her.
(2) The establishment of violations, and the issue, appeal and enforcement of penalty warrants shall be carried out in accordance with the procedure set forth in the Administrative Violations and Penalties Act.