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The registration of a new company takes 1 to 4 days – this includes preparing the necessary documents for submission to the Commercial Register.
VAT registration is a free service like yours documents can be submitted online.
The deadline for registration of VAT company takes 14 working days from the date of the application for registration.
Deadline for submission of monthly VAT return – submission of monthly VAT return is 14 th including the month following the tax period to which it relates.
Publication of Annual Financial Statements
The financial statements should be filed to the Bulgarian Trade Registry also and this is obligatory to all companies.
The deadline for this is:
1. for sole traders – 31 May;
2. for limited liability companies – 30 June;
3. and all other traders within the meaning of the Commerce Act – within 31st July.
It is important that these expenses should be connected to the popularization of the activity of the company.
The tax rate of these expenses is 10% of their value. The sum should be paid and declared once after the end of the financial year.
The payment of taxes ( how is it paid and how )
The corporate tax is paid once at the end of the financial year which is March 31st. The rate of the corporate tax is 10% charged on the amount of your annual profit. About how the payment of the taxes happens – almost all of our customers provide us passive access to their online banking. This means that we receive special user name and password for accounting needs so that we could upload the payment orders in the online banking and the customers just to approve them.
Insurance ( for the people involved in the company )
There is no limit according to the Bulgarian legislation about the number of the employees that a company must have. For example you could work only by yourself as manager of the company or you could either have 10 or more employees – it depends on you. As for the insurances rate – in Bulgaria each job position that you want to assign staff to, have a minimum wage. This amount is individual for each job position and it is linked to the activity of your company and your vision for the amount of the employees’ salaries. On the amount of the employees’ salaries you owe insurances. Their rate is 17.8 % on the behalf of the employer. The minimum wage in Bulgaria for 2016 is 420 BGN. The insurances are paid the same way as taxes.
The first stage of this process is the dissolution of the company which could be initiated by passing a resolution by the shareholders for closing the company down. For the purpose of dissolving the company, it is also necessary for the manager of the company to notify the Tax Office of the dissolution process. The Tax office then issues a certificate under art.77 of the Tax Code certifying that the company does not have tax obligations towards the State. The above Certificate should be sent directly by the Tax Office to the Trade Register. It is also necessary for the General Assembly of the shareholders to appoint a liquidator and to determine the deadline for liquidation which could not be less then 6 months. All documents related to the above actions should be presented before the Trade Register. If they are correctly prepared, the Trade Register should change the status of the company from “active company” to a ‘company in process of liquidation”. In the case where there are missing documents or incorrectly prepared documents there is a possibility that the Trade Register will refuse publishing the above circumstance.
As at the time of starting the dissolution process, the company would still be in business relations with third parties and such relations could not be terminated immediately, for the duration of this process the company would still exists as a legal entity. Its commercial activity however could be stopped. Whether the company will be active during the process of its liquidation depends on the decision made by the shareholders (The General Assembly) on the General Meeting. If the shareholders decide so, during the process of its liquidation, the company would not be allowed to participate in any commercial transactions or to sign any commercial contracts. However, they could decide instead that the company shall participate in the commercial transactions. In any event this decision of the General Assembly should be published in the Trade Register.
The dissolution process should be finished within a specified deadline –a minimum of 6 months. In every individual case this deadline is specified by the shareholders in the General Assembly but it is always at least 6 months. The main goal of this time period is for the existing business relations between the company and third parties to be concluded and for the assets and shares to be divided between the shareholders.
After this deadline expires, the second stage of the liquidation process commences, The General Assembly is summoned again and the relevant legal documents for the final liquidation and deleting the company from the Trade Register are prepared. Along with the respective Protocol from the General Assembly’s meeting, the company should present before the Trade register a Certificate from the National Insurance Institute, notifying that the company has no obligations towards the National Insurance Institute ( it actually means that the national insurance of the employees has been paid by the company). The company is also obliged to present before the Trade Registry the specified in the Commercial Code accountancy documents.
Upon receipt of all documents and a satisfactory check, the Trade register would erase the company’s entry from its records.
According to Art. 38, para. 4 of PITA (Law On the Taxation Income of Physical Persons) withholding tax on the income from liquidation shares is determined on the positive difference between the liquidation value of the share and the documented cost of the share in the company – 10 %.
According to VAT car is a car in which the number of seats the driver does not exceed 5.
The fuel expenses for a car classified as maintenance costs repair and operation. These costs are treated differently depending on what kind of activity is the fuel used:
1. When the fuel is used for the performance of the main activity of the company, it is recognized for tax purposes and not subject to to income tax on costs. Activities that fall into this category – security, transport or taxi services.
2. When the fuel is used for the management activities of the company, the costs are not subject to VAT pursuant to Art. 70, paragraph 1, item. 3 VAT and taxed 10% according to Art. 204 tons. 3 CITA.
3. When the fuel is used for main and management activities of the company tax base costs are based on mileage for the activity for the calendar year.
4. When the cost of exploitation, repair and maintenance of passenger cars used for representation expenses such as business meetings, or other entertainment events are subject to 10% tax under CITA.
Companies which accounted representative expenses are subject to tax 10%.
Representative expenses are considered:
- Costs associated with the activity of the company for example: organizing business events, buying food and drinks, corporate event, buying flowers and gifts, and more.
- Social costs for the staff and persons employed on contract management and control for example additional voluntary insurance, food vouchers and more.
- Costs related to the exploitation of vehicles for carrying out management activities.
According to Corporate Income Tax Act representative expenses are taxed at 10% on the total value of such tax shall be declared and paid in each financial year of the company.
It is important to note that the organization of congresses, conferences and other events of this type do not fall under the tax rules.
Value Added Tax
1.1.The tax rate is 20 percent for:
- taxable supplies, unless expressly specified as being subject to a zero-tax rate
- import of goods on the Bulgarian territory
- taxable intra-Community acquisitions
1.2.The tax rate applicable to accommodation provided at hotels and similar establishments, including providing vacation accommodation and letting out places for camping sites and caravan sites, is 9 percent (9%).
1.3.The tax rate is 0 percent (0%) in the cases provided for by the VAT Act – Chapter III of the VAT Act.
1.4.. Exempt supplies:
- Supply linked to health care;
- Supply linked to welfare and social security work;
- Supply linked to education, sports or physical education;
- Supply linked to culture;
- Supply linked to religious denominations;
- Supply of a non-profit-making nature;
- Supply linked to land and buildings;
- Supply of financial services;
- Supply linked to insurance services;
- Supply of postage stamps and postal services;
- Supply of goods or services for which credit for input tax has not been used
Minimum social security income
- minimum monthly social security income of self-employed according to their 2012 taxable income as self-employed:
- up to BGN 5,400.00 – BGN 420.00;
- from BGN 5,400.01 to BGN 6,500.00 – BGN 450.00;
- from 6,500.01 to BGN 7,500.00 – BGN 500.00;
- over BGN 7,500.00 – BGN 550.00;
- minimum monthly social security income of registered agricultural producers and tobacco producers – BGN 240.00;
- the minimum social security income of individuals employed under employment contracts is fixed as per groups of professions and according to the Classification of Economic Activities (CEA) (2008).
The income for which social security contributions must be paid includes all remunerations and other earnings from employment; the social security income also includes the gross monthly remunerations accrued but not paid.
The minimum salary for the country for 2014 is BGN 340.00.
Maximum monthly social security income
- maximum monthly social security income – BGN 2400.00;
Corporate Income Tax Act
The corporate tax rate is 10 percent (10%).
The corporate tax period is the calendar year.
For newly incorporated companies, which are taxable persons, the tax period commences on the date of incorporation and ends at the end of the year.
Tax rates for income earned from dividends and liquidation dividends and non-resident income tax withheld
- A tax of 5 percent (5%) withheld at source is charged on dividends and liquidation dividends allocated by resident legal entities;
- Income of a non-resident entity from a source in Bulgaria /as provided for by Article 12 (2.3), (2.5) and (2.8) of the Corporate Income Tax Act/ not earned through a place of business in Bulgaria is subject to a tax of 10 percent (10%) withheld at source, which shall be final.
On the annual base the following costs are subject to a 10% tax:
- Representation costs;
- Social costs, in-kind;
- Social costs for contributions /premiums/ for additional social security and life insurance;
- Social costs for food coupons in the cases provided for by the law;
- Costs related to maintenance, repairs and use of vehicles when used for administration purposes;
Individual Income Tax Act
- Uniform individual income tax rate of 10 percent (10%);
- Uniform sole proprietorship income tax rate: 15 percent (15%);
Tax rates of final tax:
- 5 percent (5%);
- 10 percent (10%);
- 7 percent (7%);