Q & A

1. Q: I returned a certain good on the first day of the month and credit notes for this good were issued on the 15th day of the same month. When does the interest for the delayed owner’s payment start to take effect?
A: We assume that the answer of this question depends on the terms set in the contract, signed by the two parties. These two options are feasible:
a) If the contract foresees sanctions (like interest, penalty for breaking a contract) for not fulfilling the terms of this contract regarding the delivery, then the sanction should come into action at the day the delivery should have been made, but in fact it wasn’t, because there was a claim for this good and it was returned, meaning there was no delivery.
b) If the contract foresees a sanction (interest) for a delayed payment, then the interest should be formed from the date on you paid the amount to the date it was returned to you.
In this case the regulations from articles 79 and the following, from the Obligations and Contracts act, should come into action. Regarding the actual applying of these regulations a law assistance should be called and your relations with the supplier arranged in compliance with the contract and the law.

2. Q: Should a company with no activity publish its financial statements in the Register Agency?
A: Every company in Bulgaria, regardless of the fact whether it has or currently doesn’t have any activity, should publish its financial statements in the Register Agency. The fact that a certain company is currently not operating does not mean that it doesn’t have assets and/or liabilities.

3. Q: When are the deadlines for submitting annual tax return and for publishing the financial statements in Bulgaria?
A: The deadlines applicable for Bulgaria are as follows:
- For the tax return statements: 31st of March into the National Revenue Agency;
- For the financial statements: 30th of June into the Trade Register of the Registry Agency.

4. Q: When is the fiscal year considered to start and end in Bulgaria?
A: The fiscal year in Bulgaria matches the calendar year – from 1st of January until 31st of December.

5. Q: How often am I obliged to submit VAT returns in Bulgaria?
A: In Bulgaria, unlike other European countries, every legal entity is obliged to submit its VAT return every single month, regardless of the fact whether it has or doesn’t have any activity.

6. Q: Do I need to hire an accounting specialist to do my taxes for my start-up in Bulgaria?
A: As a start-up, it is important that you avail the services of a CPA, in order that you will be enlightened with all the vital financial issues that you will encounter in each phase of your business cycle. However finding the appropriate CPA is one of the most delicate issues faced by entrepreneurs. In hiring a CPA for your business, it is advisable that you look for a CPA that is well adept at informing you on the issues at hand, assists you in formulating business strategies and finds ways to take advantage of your firm’s available resources, flexible with fees and blends in with your business objectives, as well as appetite for risks.

7. Q: I am living in Bulgaria but am employed in the United Kingdom so my salary is paid from a UK accountant into my UK bank account on a monthly basis. I am not sure if I should be paying tax within Bulgaria now as I am not employed by a Bulgarian company. Could you please give me some advice?
A: The object of taxation under the Bulgarian Personal Income Tax Act shall be the income of local and foreign natural persons. Regardless of the citizenship thereof, a local natural person shall be a person:-

- whose permanent place of residence is in Bulgaria, or

- who spends inside the territory of Bulgaria more than 183 days in each period of 12 consecutive months, or

- who has his center of vital interests in Bulgaria. Vital interests in Bulgaria means: “the interests of the person are closely connected with the country. In the course of determining those interests, the following may be taken into consideration: the family, the property, the place in which the person carries out his/her employment, professional or business activity, and the place from which he/she manages his/her property”.

Local natural persons shall be bearers of the obligation to pay taxes on income originating from sources located either within the Republic of Bulgaria or abroad. Therefore taking into consideration that you are living in Bulgaria, your status for tax purposes would be a local natural person and you would bear obligation to pay taxes on income originating from sources located abroad, namely from the UK. For that purpose at the end of 2011 you need to request from your UK employer an Annual Income certificate /for the period 1.1.2011 – 31.12.2011/ and in a term until 30th of April 2012 to submit your Annual Tax Return to the Bulgarian National Revenue Agency as well as to pay the Personal Income Tax due to the Bulgarian budget.

8. Should general partnership pay taxes on the territory of Bulgaria?
A: In compliance with the Bulgarian CIT act taxable on the territory of Bulgaria shall be:
- the local legal entities including the general partnerships;
- the foreign legal entities which carry out business activities within the Republic of Bulgaria through a location of business activity;
- the foreign legal entities which carry out administration of property in such a location of business activity;
- the foreign legal entities which receive income from a source within the Republic of Bulgaria.

9. Are there any requirements to perform business activity on the territory of Bulgaria?
A: Any activity which is not forbidden by the law could be carried out in Bulgaria. For some activities such as banks, tourism, retail and wholesale of electricity, staff leasing and etc. additional licensing will be needed, after the company is incorporated.

10. What is the minimum share capital for a limited liability company?
A:The minimum share capital for establishing a LLC is BGN 2 /EUR 1/.