Bulgarian tax legislation requires that transactions between related entities are carried out in line with the market principle and conditions (i.e. as if the parties involved were not related and market conditions applied). In view of the above all transactions between related parties (supply of goods and services, financing, etc.) should be substantiated with reasonable documents evidencing their market nature (i.e. contracts, invoices, performance reports, protocols, evidences of similar transactions involving unrelated entities, etc.).

Availability of a formal Market relation’s policy of the Bulgarian company’s shareholder, which clearly defines and reasonably substantiates the allocation keys and methods used in the intra-group transactions, would be useful for evidencing the market compliance of such recharges before the authorities of the National Revenue Agency.