The case:
The questions cаme from an organization, which is a part of an international concern, established from companies which are separate legal entities. For the purpose of exporting the German production in Bulgaria, an Italian citizen with a form A1 has been sent to the Bulgarian company, who has an active labor contract with one of the concern companies in Germany. Your company signed a tripartite contract with the German company and the employee. The remuneration, which you pay to the foreign person you re-invoice to the German company and for the paid income you pay tax and you submit declaration. The questions are the following: Should we register the tripartite contract as a labor contract in the National Revenue Agency? Should we calculate and pay tax, provided that the remunerations, which we pay are reimbursed by the German company?

In the certain case the Italian citizen, who works in the Bulgarian organization with remuneration, has a form A1 for a period of two years. With this form the competent Institution of the certain Member-State certifies that the legislation in this country is applicable to this person. Therefore, for the mentioned period in the document he is not a subject of the Bulgarian insurance legislation.
“Determination of the applicable legislation” is one of the main principles, defined by a regulation. According to this principle, people, to whom the Regulation is applicable, are subordinate to the legislation only of one Member-State. The applicable legislation is defined by the provisions of Title II from a certain Regulation in condition that a cross-border situation is provided. The main consequence of determining the applicable legislation is that the Member-State is determined, in which the obligatory insurance payments are due, according to the legislation of this country, including for the activities and incomes from other Member States. With this regard, if the Bulgarian company has signed a labor contract with the foreign citizen and the employment relationship between the parties is regulated by the requirements of the Labor code, the conducted labor contract has to be registered in the National Revenue Agency, regardless of the circumstance, that this person is subordinate of the insurance legislation of another Member-State. In a three days term from the conclusion or amendment of the labor contract and in a seven days term from its termination, the employer or an authorized person is obliged to send a notification to the respective territorial directorate of the National Revenue Agency. Taxpayers are the following: local and foreign individuals, who are obliged to pay taxes according to this law; local and foreign people, required to deduct and pay tax under this Law. The local individuals have tax obligations for incomes of sources in Bulgaria and from a foreign country. The incomes from all sources are taxable, acquired by the taxpayer during the tax year, with the exception of incomes which are tax exempted by law. Regardless how the already mentioned person from the question above will define himself as a local or foreign person, he is obliged to pay tax of his income for the certain work, which he exercise at the territory of Republic of Bulgaria.