site.bta "Weekend Tax" on In-kind Corporate Income Passed Conclusively

"Weekend Tax" on In-kind Corporate Income Passed Conclusively

Sofia, September 15 (BTA) - Bulgaria's Parliament Thursday passed conclusively amendments to the Corporate Income Tax Act, under which the income in kind accruing to company employees or managers from the use of own, leased or allocated assets (company cars, telephones and real estate) will be taxed at a flat rate of 10 per cent.

Taxable persons, however, will have an option to retain the hitherto effective arrangements, according to which company owners, managers and employees pay taxes and social security contributions on the income in kind under the Income Taxes on Natural Persons Act.

The revisions set asset-specific thresholds for determining the proportion in which the use is presumed to be for personal and for company needs. Taxable persons will themselves determine the extent to which company cars are used for personal needs depending on the distance travelled. Alternatively, the use may be fixed at 50 per cent for personal and 50 per cent for company use.

Expenditures incurred in connection with the operation of vehicles used for both company and personal needs will be recognized for tax purposes where properly documented.

Where the expenditures in kind incurred in connection with immovable property cannot be split in measurable terms, the total amount of such expenditures will be multiplied either by the ratio of the surface area for personal use to the total area of the property or by the ratio of the time for personal use to the total time.

For the expenditures in kind incurred in connection with assets other than vehicles and immovable property, the taxable amount will be 20 per cent of the total amount of all such expenditures, unless the taxable person produces documents supporting another taxable amount.

According to other amendments, non-resident legal persons carrying out an activity in Bulgaria through a permanent establishment will be required to state in their tax returns identification data of the owners, shareholders or partners in the non-resident legal person and the amount of their participating interest where in excess of 10 per cent.