We will continue our previous post about the tax on expenses in Bulgaria. If you have missed the first part please read it here first…

The expenses which are exempt from taxation are:

1) social expenses for contributions and premiums for additional social security and life insurance – up to the amount of BGN 60 per month per each employed person, when the taxable persons have no public liabilities subject to enforced collection as of the time of incurrence of the expenses.

2) social expenses on food vouchers (Article 204, item 2, letter “b” from CITA) up to the amount of BGN 40 per month per each employed person, when the following conditions are simultaneously fulfilled:

– the basic monthly remuneration of the person in the month of provision of the vouchers is not less than the average monthly basic remuneration of the said person for the preceding three months;
– the taxable person has no public liabilities subject to enforced collection at the time of provision of the vouchers;
– the vouchers are provided to the taxable person by a person who has obtained a license  for operator activity from the Minister of Finance on the basis of a tender procedure;
– the amounts under the provided vouchers, paid by the taxable person to the operator, may be used solely for settlement via banks with the persons who have concluded a contract for provision of services with the operator, or for refunding to the taxable person, up to the amount of the vouchers’ nominal value, in the cases where the said vouchers have not been used;
– the persons, with whom the operator has concluded a contract for provision of services to the hired persons, are registered under the VATA.

3) social expenses for transportation of workers and employees and the persons hired under a management and control contract from their place of residence to the place of work and back.
4) exemption does not cover expenses for transportation carried out by passenger car or by extra bus services except in cases where such transportation is carried out by passenger car to difficult to reach and remote areas, and where without incurrence of the expense the taxable person  cannot secure the execution of its activity.

The tax on expenses for entertaining (protocol expenses) and the tax on expenses related to operation of means of transport where used to service management operations are paid by the persons subject to levying with corporate tax.

Taxable persons in terms of the tax on social expenses provided in kind pursuant to Article 204, item 2 are all employers or persons assigning management and control contracts.

The tax on expenses is regulated by the CITA. Social expenses, which are not provided in kind and constitute income of a natural person, are taxed under the terms and procedures of the new PITA.