Capital gains from the sale of shares in a private resident company by non residents are taxed at the rate of 10%. Tax exempt if performed through the stock exchange

The following capital gains derived by a resident of one Contracting State may be taxed by the other State:

• Gains from the alienation of immovable property situated in the other State;
• Gains from the alienation of movable property forming part of the business property of a permanent establishment in the other State; and

Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State.

Tax is withheld at the rate of 5% from gross dividends and liquidation proceeds distributed to non-residents. As of 1 January 2009, dividends paid to companies and other legal entities resident in an EU/EEA country are exempt from withholding taxes pursuant to the Parent-Subsidiary Directive (PSD). However, the exemption does not apply to hidden profit distributions.

5%

Dividend distributions by resident subsidiaries to non-resident EEA parent companies are exempt from any withholding tax.

Tax is withheld at the rate of 10% from gross interest paid to non-residents.

2%

Interest paid by resident subsidiaries to their non-resident EU parent companies or their permanent establishments are subject to a 5% withholding tax between 1 January 2011 and 31 December 2014.

Tax is withheld at the rate of 10% from gross royalties paid to non-residents. As of January 1, 2010, EEA residents may, subject to conditions, opt to calculate the withholding tax due based on the net income realized from Bulgarian sources.

5%

Royalties paid by resident subsidiaries to their non-resident EU parent companies or their permanent establishments are subject to 5% withholding tax between 1 January 2011 and 31 December 2014).

Tax is withheld at the rate of 10% from gross royalties paid to non-residents. As of January 1, 2010, EEA residents may, subject to conditions, opt to calculate the withholding tax due based on the net income realized from Bulgarian sources.

5%

Royalties paid by resident subsidiaries to their non-resident EU parent companies or their permanent establishments are subject to a 5% withholding tax between 1 January 2011 and 31 December 2014.

Tax is withheld at the rate of 10% from gross royalties paid to non-residents. As of January 1, 2010, EEA residents may, subject to conditions, opt to calculate the withholding tax due based on the net income realized from Bulgarian sources.

5%

Royalties paid by resident subsidiaries to their non-resident EU parent companies or their permanent establishments are subject to 5% withholding tax between 1 January 2011 and 31 December 2014.

Tax is withheld at the rate of 10% on payments made by a Bulgarian resident for management services performed outside of Bulgaria by a non resident without a Bulgarian permanent establishment.

The treaty does not specifically deal with technical, management and similar service fees. In line with the OECD Model, this means that said services do not fall under the royalty article and do not attract the royalty withholding tax provided for under the treaty unless the services represent a minor part of a commingled transaction imparting in essence know-how. In that case, the services would follow the qualification of the principal component of the transaction, and may then attract the royalty withholding tax under the treaty. Otherwise, said services may be taxed in the source country only if the recipient has therein a (services) PE and the fees are attributable to that PE. Note, however, that not all countries would adhere to the OECD standpoint. ORBITAX has by default opted for the OECD position and the withholding tax rate is by default set to zero where the treaty does not specifically deal with technical, management and similar service fees. Where the relevant country has a developed policy regarding the treatment of technical, management and similar service fees and the correlation between those and royalties, ORBITAX has sought to cover this in Sec. 5.6. of the country chapters (Qualification of Specific Income Categories for Tax Purposes). For a technical analysis of the issue of services Vs. royalties, ##HowToReadTreatyLink##. For a quick reference as to whether any of a selection of some 350 widely-used tax treaties specifically addresses technical service fees, ORBITAX has developed a proprietary Treaty Analysis allowing you to quickly and easily capture the most salient features of the relevant treaty. In order to access the Treaty Analysis of a particular bilateral tax treaty, select the pair of countries under the Treaties Tab.

Tax is withheld at the rate of 10% on payments made by a Bulgarian resident for technical services performed outside of Bulgaria by a non resident without a Bulgarian permanent establishment.

The treaty does not specifically deal with technical, management and similar service fees. In line with the OECD Model, this means that said services do not fall under the royalty article and do not attract the royalty withholding tax provided for under the treaty unless the services represent a minor part of a commingled transaction imparting in essence know-how. In that case, the services would follow the qualification of the principal component of the transaction, and may then attract the royalty withholding tax under the treaty. Otherwise, said services may be taxed in the source country only if the recipient has therein a (services) PE and the fees are attributable to that PE. Note, however, that not all countries would adhere to the OECD standpoint. ORBITAX has by default opted for the OECD position and the withholding tax rate is by default set to zero where the treaty does not specifically deal with technical, management and similar service fees. Where the relevant country has a developed policy regarding the treatment of technical, management and similar service fees and the correlation between those and royalties, ORBITAX has sought to cover this in Sec. 5.6. of the country chapters (Qualification of Specific Income Categories for Tax Purposes). For a technical analysis of the issue of services Vs. royalties, ##HowToReadTreatyLink##. For a quick reference as to whether any of a selection of some 350 widely-used tax treaties specifically addresses technical service fees, ORBITAX has developed a proprietary Treaty Analysis allowing you to quickly and easily capture the most salient features of the relevant treaty. In order to access the Treaty Analysis of a particular bilateral tax treaty, select the pair of countries under the Treaties Tab.