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Bulgaria - United Kingdom — Orbitax Withholding Tax Rates

Capital Gains

  • Best Rates0%
  • Domestic Rates 10%
  • Treaty Rates0%
  • EU Rates-

Domestic

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

Treaty

0%. Generally exempt, except for gains from the alienation immovable property, gains from the alienation of movable property forming part of the business property of a permanent establishment, and gains from the alienation of shares or comparable interests deriving more than 50% of their value directly or indirectly from immovable property situated in the other State (exemption for shares regularly traded on a stock exchange).

Dividend

  • Best Rates0%
  • Domestic Rates 5%
  • Treaty Rates0%
  • EU Rates-

Domestic

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.

Treaty

0%:5%:15%. 0% if the beneficial owner is a company (other than dividends paid by an investment vehicle), or a pension scheme; otherwise 5%. A 15% rate applies for dividends paid out of income (including gains) derived directly or indirectly from certain immovable property by an investment vehicle which distributes most of this income annually and whose income from such immovable property is exempted from tax.

EU

Brexit Impact: With the expiry of the Brexit transitional period on 31 December 2020, the UK has formally become a third country vis-à-vis the EU. Consequently, dividends paid out by EU subsidiaries to their UK parent companies are no longer eligible for an exemption from dividend withholding tax pursuant to the Parent-Subsidiary Directive. Instead, the applicable withholding tax is henceforth governed by either the domestic law of the relevant EU Member State of source or the provisions of the bilateral tax treaty between the UK and that Member State. 

Interest

  • Best Rates5%
  • Domestic Rates 10%
  • Treaty Rates5%
  • EU Rates-

Domestic

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

Treaty

0%:5%. 0% for interest paid in connection with credit sales of equipment, merchandise or services; on any loan granted by a financial institution; to a pension scheme; or between companies where one directly holds at least 10% of the other's capital for at least one year prior to the payment of interest, or a third company directly holds at least 10% of the capital of both companies for at least a year; otherwise 5%.

EU

Brexit Impact: With the expiry of the Brexit transitional period on 31 December 2020, the UK has formally become a third country vis-à-vis the EU. Consequently, UK companies in receipt of interest from affiliated EU payers are no longer eligible for the exemption from withholding tax pursuant to the EU Interest and Royalties Directive. Instead, the applicable withholding tax is henceforth governed by either the domestic law of the relevant EU Member State of source or the bilateral tax treaty between the UK and that Member State.

Royalty - Copyright

  • Best Rates5%
  • Domestic Rates 10%
  • Treaty Rates5%
  • EU Rates-

Domestic

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.

Treaty

5%

EU

Brexit Impact: With the expiry of the Brexit transitional period on 31 December 2020, the UK has formally become a third country vis-à-vis the EU. Consequently, UK companies in receipt of royalties from affiliated EU payers are no longer eligible for the exemption from withholding tax pursuant to the EU Interest and Royalties Directive. Instead, the applicable withholding tax is henceforth governed by either the domestic law of the relevant EU Member State of source or the bilateral tax treaty between the UK and that Member State.

Royalty - Patent

  • Best Rates5%
  • Domestic Rates 10%
  • Treaty Rates5%
  • EU Rates-

Domestic

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.

Treaty

5%

EU

Brexit Impact: With the expiry of the Brexit transitional period on 31 December 2020, the UK has formally become a third country vis-à-vis the EU. Consequently, UK companies in receipt of royalties from affiliated EU payers are no longer eligible for the exemption from withholding tax pursuant to the EU Interest and Royalties Directive. Instead, the applicable withholding tax is henceforth governed by either the domestic law of the relevant EU Member State of source or the bilateral tax treaty between the UK and that Member State.

Royalty - Trademark

  • Best Rates5%
  • Domestic Rates 10%
  • Treaty Rates5%
  • EU Rates-

Domestic

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.

Treaty

5%

EU

Brexit Impact: With the expiry of the Brexit transitional period on 31 December 2020, the UK has formally become a third country vis-à-vis the EU. Consequently, UK companies in receipt of royalties from affiliated EU payers are no longer eligible for the exemption from withholding tax pursuant to the EU Interest and Royalties Directive. Instead, the applicable withholding tax is henceforth governed by either the domestic law of the relevant EU Member State of source or the bilateral tax treaty between the UK and that Member State.

Sales

  • Best Rates0%
  • Domestic Rates 0%
  • Treaty Rates0%
  • EU Rates-

Service - Management

  • Best Rates0%
  • Domestic Rates 10%
  • Treaty Rates0%
  • EU Rates-

Domestic

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.

Treaty

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.

Service - Technical

  • Best Rates0%
  • Domestic Rates 10%
  • Treaty Rates0%
  • EU Rates-

Domestic

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.

Treaty

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.

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