Q: Our company is a leading trading firm registered in Bulgaria and operating in several markets in EU. We wish to stimulate our employees by awarding them with different types of non-pecuniary bonuses like TV’s, computers, cars and etc. So can you please advise if this would be deemed as taxable benefit and if there are any other payroll implications for both employee and employer. Also:
1. Can you please advise is the non-pecuniary bonus a benefit in kind?
2. Would the monetary value have to be processed through the payroll?
3. Does it need to be processed through the payroll at all?
Yes it is, as the award is non-wage and non-pecuniary compensation provided to an employee in addition to his normal salary. The value of non-pecuniary income shall be calculated in BGN as at the date of receiving the income, that value being the market price of the non-pecuniary income. “Market price” shall be the sum, without the value added tax and the excise duties, which shall be paid at the same conditions for an identical or similar commodity or service upon a transaction between persons which are not related.
Yes it has to be. In compliance with the Bulgarian Personal Income Tax Act /art.24, para 1/: The taxable income originating from employment relationships shall be the labour remuneration and all other payments in cash and/or in kind made by the employer or at the expense of the employer, with the exception of some exempted income which does not cover the motivation awards given by employer.
Yes it does, as the benefits in kind are involved in determining the taxable basis and respectively the advance tax on income originating from employment relationships which shall be determined monthly by the employer on the grounds of monthly basis of taxation.