In Bulgaria double tax treaties (DTTs) are not applied automatically. The procedure for the application of the tax treaties in force is regulated by Articles 135-142 of the Bulgarian Tax and Social Security Procedure Code (TSSPC). To apply a relief under a DTT, foreign persons should meet certain conditions that need to be certified before the National Revenue Agency (NRA). Those conditions are as follows:
In order to apply a DTT, foreign person or their authorised representatives must file a request with the NRA supported by evidence to demonstrate that the grounds for applying the DTT are met, namely:
In cases of tax examination, the term for issuing a statement for the application of the relevant DTT is 60 days following the filing of the request.
Filing of the request
The request for application of a DTT and the supporting documents shall be filed with the territorial directorate of the NRA where the payer of the income is registered at or is subject to registration.
If the payer is not subject to registration, the request and the supporting documents shall be filed with the Sofia Territorial Directorate.
Where a payer charges to a foreign person income from sources in Bulgaria that is below BGN 500 000 per year in total (irrespective of the fact that the income may be derived under one or more contracts or is of the same or different type), a formal request with the NRA shall not be filed. The grounds for application of the relevant DTT in these cases shall be demonstrated only before the payer of the income.
Where the simplified procedure is used the payer of income shall report by March 31 of the following year the amount of the income paid and the tax relief provided. The reporting shall be carried out by filing a tax return (according to Article 142, para 5 of TSSPC) with the territorial directorate, where the payer of the income is registered at or is subject to registration.
In cases of long-term contracts (i.e. contracts that have effect over a period longer than one year) or where the income is realized by one and the same person on the same grounds, a request for application of a DTT shall be filed only once.
Applying tax relief under a DTT after the tax is paid
After paying the withholding tax under the provisions of the domestic legislation, the grounds for application of a DTT regarding the income already taxed could be demonstrated in a tax refund procedure under Article 129 of the TSSPC. The procedure starts with filing of a request for refund with the NRA. The documents listed above certifying that the grounds for applying a DTT have been met should also be filed with the request. The statement for refund shall be issued within 30 days following receipt of the request except in cases where within the same term an audit has been assigned.