Bulgaria: Changes to personal income tax effective from January 2013

Changes to the Personal Income Taxes Act were published in the State Gazette issue No 94 of 30 November 2012 and are set to come into force from 1 January 2013.

The most significant changes are set out below.

Interest on bank deposits

Interest on fixed term deposit accounts belonging to EU/EEA citizens opened in EU/EEA commercial banks and branches shall no longer be exempt. This includes Bulgarian citizens, banks and branches.

Interest on deposits in local banks/branches shall be subject to 10% final tax on the gross amount of the interest. The tax must be withheld and paid by the relevant bank by the end of the month after the month in which the interest is received (the maturity/termination date).

Interest on deposit in foreign EU/EEA banks shall be included in the annual personal income tax return. If the interest is due from a local bank, it does not need to be declared in annual tax returns.

Declaring and payment of withholding/final tax on income of non-residents

Payers of income of non-resident individuals that is subject to withholding/final tax are obliged to declare on a quarterly basis the withholding tax due (not only paid) until the end of the month following the respective quarter. The declaration for the withholding tax due but not paid up to 31 December 2012 shall be submitted until 31 July 2013. The withholding tax withheld and paid up to 31 December 2012 shall be declared under the previous regime.

Any withholding tax withheld and paid up to 31 December 2012 must be declared under the previous rules.

Withholding tax /final tax paid to non-residents must be paid:

• by the end of the month after the quarter in which a resolution was adopted to distribute dividends/liquidation quota;
• by the end of the month after the quarter in which the income accrued - for the other kinds of income.

Terms of payment of personal income tax on employment income

The period for payment of personal income tax on employment income has been extended:

• until the 25th day of the following month for employment income;
• until 25 February of the following year where due after an annual recalculation by the main employer.

Statements of income paid to individuals

In order to facilitate the document turnover, a limitation is introduced to statements for paid incomes to natural persons – only a limited number of incomes must be stated to the tax authorities by the payers of the incomes. Some of these incomes must be stated only if they exceed BGN 5 000. Where incomes are paid to more than 5 individuals, the statements must be filed electronically only (no paperwork needed).

Payslips

Payslips must be issued to individuals on request by no later than 15 April of the following year.