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Bulgaria-Norway

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Update - New Tax Treaty between Bulgaria and Norway Signed

On 22 July 2014, officials from Bulgaria and Norway signed a new income tax treaty. Once in force and effective, the treaty will replace the 1988 tax treaty between the two countries.

Taxes Covered

The treaty covers Bulgarian personal income tax, corporate income tax and patent tax, and covers to the following Norwegian taxes:

  • National tax on income
  • Municipal tax on income
  • County municipal tax on income
  • National tax relating to income from the exploration for and the exploitation of submarine petroleum resources and activities and related work, including pipeline transport of petroleum produced
  • National tax on remuneration to non-resident artistes

Residence

When a person, other than an individual, is a considered resident of both Contracting States, the competent authorities of both States will determine its residence for treaty purposes through mutual agreement. If no agreement is reached, the person will not be considered a resident of either State for the purpose of claiming any benefits provided by the treaty.

Service PE

A service PE will be deemed constituted when an enterprise from one Contracting State furnishes services in the other State through one or more individuals present in that other State for the same or connected project for an aggregate period of 183 days or more in any 12 month period.

Withholding Tax Rates

  • Dividends - 5% if the beneficial owner is a company directly holding at least 10% of the paying company's capital, otherwise 15%
  • Interest - 0% if on a loan granted, insured or guaranteed by a governmental institution for the purposes of promoting exports; in connection with the sale on credit of any industrial, commercial or scientific equipment; or on any loan granted by a bank; otherwise 5%
  • Royalties - 5%

Double Taxation Relief

Both countries apply the credit method for the elimination of double taxation.

Entry into Force and Effect

The tax treaty will enter into force once the ratification instruments are exchanged, and will generally apply from 1 January of the year following its entry into force. However, Article 26 Assistance in Collection will not apply until written confirmation is provided that Bulgaria is able to provide such assistance.

Once in force and effective, the treaty will replace the 1988 income and capital tax treaty between the two countries, which currently applies.

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