Final Tax
The assessment and the payment of the tax are regulated by the Personal Income Tax Act (PITA).
What types of income are levied with final tax?
І. Final tax is levied on – part I:
1. Taxable income from dividends for the benefit of a sole proprietor.
2. Taxable income from dividends and liquidation shares for the benefit of:
- local or foreign natural person from a source in Bulgaria;
- local natural person from a source outside Bulgaria.
3. Income acquired by natural persons upon sale or exchange of movable property, when said property has been transferred to persons authorized to collect, transport, utilize or dispose of waste pursuant to the Waste Management Act.
4. Taxable income from interest on loans to a co-operative society, acquired by a member of the said co-operative society.
5. Income from rent or other supply for consideration of property under condominium ownership managed by the general meeting of the owners, charged/paid by companies and self-insuring persons.
6. Income from interest on deposit accounts in commercial banks, acquired by local natural persons.
7. Taxable income acquired from exchange of stocks and shares in relation to transformation of companies pursuant to Chapter 19, Section II of the Corporate Income Tax Act (CITA):
- by local natural persons upon exchange of stocks and shares of local commercial companies for stocks and shares of local commercial companies or of commercial companies abroad;
- by local natural persons upon exchange of stocks and shares of commercial companies abroad for stocks and shares of commercial companies abroad or of local commercial companies;
- by foreign natural persons upon exchange of stocks and shares of local commercial companies for stocks and shares of local commercial companies or of commercial companies abroad.
8. Taxable income from supplementary voluntary insurance, from voluntary health insurance, and from life insurance, acquired on the date of:
- getting back the sums paid for life insurance;
- getting back the sums paid for voluntary health insurance, except for the cases of reimbursement of healthcare costs and provision of healthcare services and goods to the insured person upon occurrence of the cases listed in the healthcare insurance contracts;
- getting the sums paid for supplementary voluntary insurance before acquiring the right to an additional pension;
- transfer of sums from personal account to a third person’s account;
- amendment of an insurance contract, for which a relief has been used in contract, for which the said relief cannot be used;
- spending of the sums under an insurance contract for loan repayment, when life insurance is used for collateralization of a debt of the natural person.
Final tax is levied on – part ІІ:
ІІ. Final tax is also levied on other types of income from a source in Bulgaria, charged/paid for the benefit of foreign natural persons, when the income has not been realized via a fixed establishment on the territory of the country.
1. Compensations for loss of earnings and penalties of such nature.
2. Grants for studying home and abroad.
3. Interest, including interest contained in the leasing instalments.
4. Income from rent or other supply for consideration of movable or immovable property, including instalments under a leasing contract, which does not explicitly provide for a transfer of ownership.
5. Remuneration under franchising and factoring contracts.
6. Royalties.
7. Remuneration for technical services.
8. Awards and remunerations for activities carried out on the territory of the country by foreign natural persons – public figures, scientists, artists, cultural and sporting figures, including when the income has been paid/charged via a third person, such as an impresario agency, a production company, and other intermediaries.
9. Income from management and supervision, from participation in managing and supervisory bodies of companies.
10. Income from sale, exchange and other transfer for consideration of immovable property.
11. Instalments under a leasing contract, which explicitly provides for a transfer of the right to ownership of immovable property.
12. Income from sale, exchange and other transfer for consideration of stocks, shares, compensatory instruments, investment bonds and other financial assets, except for income from exchange of stocks and shares in relation to transformation of companies.
13. Penalties and compensations of any nature (except for compensations under insurance contracts, charged by local legal persons, local sole proprietors, or foreign legal persons and sole proprietors via fixed establishments in the country) for the benefit of foreign natural persons established in jurisdictions with a preferential tax regime.
In case that any of the types of income under Item II falls within the scope of the non-taxable income as per Article 13 of PITA, and it has been charged/paid to the benefit of a foreign natural person established for tax purposes in a EU member state or another country, which is a member of the European Economic Area Agreement, this income shall not be levied with final tax. In such case the person who has acquired the income shall present to the payer of the income a document issued by the tax administration of the state where the person is established for tax purposes, as well as a declaration that the circumstances under Article 13 of PITA are present.