Also in the news...
How AI Is Fueling Creative Innovation for Startups Abroad
When most people think about starting a business overseas, their minds immediately jump to logistics: registering the company, navigating local laws, and finding office space. But one of the most exciting (and often overlooked) aspects of expanding internationally is tapping into the global pool of innovation especially in the realm of artificial intelligence (AI).
Support for UK businesses helping to rebuild Ukraine
Department for Business and Trade (DBT) initiatives to support UK businesses helping to rebuild critical infrastructure in Ukraine.
Now is the time to generate growth together with India
£400m of trade and investment wins from UK-India Economic and Financial Dialogue set to boost the British economy.
Government cuts price of everyday items and summer essentials
The Government has cut prices on the imports of everyday essentials like spices and juices to boost economic growth.
UK Government statement on denial of UK MP to enter Hong Kong
The UK Government has issued a response after a UK MP was refused entry to Hong Kong.
Dividend tax in Bulgaria
Working as professional tax lawyers in Bulgaria, many clients asked us how much is the dividend tax rate in Bulgaria.
We have a great expirience as tax lawyers in Bulgaria so we do inform our clients that dividends are payments made by a corporate legal entity to its shareholders, which are usually distribution of profits. A corporation may choose to reinvest either the profit or any surplus, to use retained earnings or distribute the profit to shareholders. Dividends are payable in cash or as new shares, i.e. treasury shares.
List of compensations considered as an income in Bulgaria
Divident tax in Bulgaria
Any type of compensation, financial or in kind, is considered as an income and so it is a subject to a personal income tax domestically. Dividends remain within the list of sources of a taxable income. Other items on this list can be: salary, bonuses, income from interest, income from other economic activities, capital gains or rental income. However, reinvested dividends are tax-exempt in Bulgaria.
Corporate Income Tax Act governs taxation of dividends
As tax lawyers in Bulgaria, we advise our clients that according to the Corporate Income Tax Act in Bulgaria, withholding tax shall be payable as regards to dividends at a rate of 5%, if it is distributed to private individuals. These include non-residents, if the residents are citizens of an EU or EEA member state. In case of Special Purpose Investment Vehicles or if foreign legal entities outside an EU/EEA member state foreign entities distribute dividends, then dividends distributed to legal entities of residents of Bulgaria shall not be included in these legal entities’ taxable income. For capital gains deriving from holding shares in subsidiaries, the the flat corporate income tax shall apply at a rate of 10%, or at the level of a Bulgarian company.
The tax lawyers in Bulgaria
In Bulgaria withholding tax may not be necessary to be paid, if shareholders in the Bulgarian legal companies are tax residents of an EU country and they are not residents of a third state on the grounds of a double tax treaty. Moreover, if the shareholders are payers of corporate income tax in their resident state and they are not entitled to any tax exemptions, then they are not a subject to withholding tax. It also applies to non-residents that hold at least 15 % (percent) of the shares in the Bulgarian company that distributes the dividends for at least two years.
Tax responsibilities of the recipient?
In our legal praxis as tax lawyers in Bulgaria, we see that after receiving a dividend payment from a Bulgarian-registered legal entity, withholding tax is paid, so the recipient shall not have to report on it and shall not owe any personal income tax on that amount. Should the dividends be received from a non-Bulgarian legal entity, however, it shall be included in the tax return and shall be taxable as a personal income tax. If you are interested in getting more information for divident taxes for your investment in Bulgaria, our tax lawyers will be happy to provide you with all information you require and will assist you in all legal procedures. Please click here