Български English


The enterprises in Republic of Bulgaria should apply the requirements of the procedural and material tax laws.

This issue is quite dynamic and is changed and updated every year and/or several times a year. The principal aim of the fiscal authorities is that the profits, the income, the turnover and other similar sources of taxable entities are taxed by the respective direct or indirect taxes. The taxable entities provide the required resources to the state budget for the purposes of the normal functioning of the state.

In contrast to the other European countries, the active principle in our legislation is “Guilty until proven innocent” which means that in the event of tax audit, the representative of tax administration may assert various incorrect statements and to enter them in their tax assessment report. In this case the burden of proving the falseness of such statements in the tax assessment report fall on the shoulders of the taxable person.

Knowing the tax legislation and its professional application, despite the above, could help to avoid future troubles in the communication with the tax administration representatives.

It is exceptionally reasonable for the managers to make the respective consultations with the relevant experts prior to realizing specific transactions, events and/or intentions concerning the business activity of the enterprise managed by them. This practice of prevention always costs less even with “expensive” consulting fees.

In the event that a tax shelter is required to protect from illegal and unsubstantiated claims of the tax administration in tax assessment reports and/or penalty enactments, the services of external advisors with a considerable professional experience should be used. The advantage is that, unlike the experts of the enterprise, they have a diverse experience based on the extraordinary variety of the cases solved by them.

Special attention should be paid to the interpretation of tax legislation regarding probable attempts to avoid taxation.

Related party transactions

In cases when related parties develop their commercial and financial relationships under conditions that influence the amount of the assessable income, differentiating from the conditions of non-related parties, the assessable income is determined and taxed under the conditions which are likely to occur in relation to non-related persons.

Tax evasion

When a single or more transactions, including between non-related parties, have been made under conditions, the implementation of which results in tax evasion, the assessable income is determined without taking those transaction, some of their conditions or their legal form into account. Instead, the assessable income that might be obtained in the accomplishment of a regular transaction of the same type under market prices and directed towards obtaining the same financial result is taken into account, but which does not result in tax evasion.

Tax evasion is considered to be:

  1. excessive input of raw materials in production, and other manufacturing costs beyond the regular ones, related to the business activity performed by the entity, when the excessive amount is not due to objective reasons;
  2. the loan for use contracts or other gratuitous submission of tangible or intangible possessions;
  3. obtaining or providing loans with an interest rate differentiating from the market interest rate at the moment of making the transaction, including the cases of interest-free loans or other grants, as well as any loan forgiveness or repayment of loans not related to the business activity of the entity;
  4. payment of remuneration or indemnification for services not being actually performed.

In cases when a transaction is concealed by a colorable transaction, tax liability is determined under the conditions of concealed one.