Tax Alerts

On 22d December 2021 the European Commission (EC) issued two legislative proposals for Directives following the EU initiatives for fair taxation and the global tax reform agreed recently. The EC described the new rules in its official communication as “seismic” and “resetting” the international tax system. The first Directive is envisaged to ensure a global minimum level of taxation for multinational groups resulting from the work of the OECD and the Inclusive Framework with respect to the Global Anti-Base Erosion rules (“GloBE” rules) under Pillar 2 of BEPS 2.0. as a common approach to be implemented in due course. In like manner, the second proposal is setting forth rules to prevent the misuse of shell entities for tax purposes (referred to UNSHELL or ATAD 3) being a continuation of the EU Anti-Tax Avoidance Directive.

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Changes in four tax laws have been adopted recently. The amendments aim to implement the requirements of a number of European directives, the provisions of which our country has to transpose by the end of 2021, as well as to bring it in line with the case law of the Court of Justice of the European Union (CJEU), established on Bulgarian preliminary rulings.

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On 4 March 2022, the State Gazette No. 18 promulgated the State Budget Act of the Republic of Bulgaria for 2022[i], which introduced changes to food vouchers under the Corporate Income Tax Act.

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A number of changes in tax and social security legislation have been made in the last couple of months. The increase of the maximum income subject to social security contributions to BGN 3,400 from April 1 2022 created even greater challenges for employers in the management of labor costs, especially with the already approved budgets for 2022. Combined with talent shortages in almost all sectors, these challenges call for urgent rethinking of remuneration and benefits policies. Having this in mind, there are changes that open up opportunities, but also require increased attention to compliance with legal requirements.

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The deadline for filing a tax return under the Tax and Social Security Procedure Code (TSIPC) for tax relief applied in 2021 under a Double Tax Treaty (DTT) in the event of income accrued in favor of foreign individuals or legal entities is 31 March 2022.

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Changes to the State Budget Law for 2022 were adopted which amend a number of provisions of tax laws. 

Read the full alert here.