Bulgaria - Special considerations for short-term assignments

Bulgaria - Special considerations for short-term...

Taxation of international executives

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For the purposes of this publication, a short-term assignment is defined as an assignment that lasts for less than one year.

Residency rules

Are there special residency considerations for short-term assignments?

For short-term inbound assignments, it is unlikely that local tax residence status will be lost on grounds of the short term assignment.

For outbound expatriates, it should be vice versa, in order to mitigate the risk from tax exposure in the other country the residence status in Bulgaria should be preserved. For this purpose, again the center of vital interests would be of importance, that is, it should remain in Bulgaria. However, as in this case the individual would be sent on an assignment by a Bulgarian entity, the residence status would automatically be preserved for the whole duration of the assignment. The foreign country tax implications should also be analyzed.

Payroll considerations

Are there special payroll considerations for short-term assignments?

For inbound expatriates, a shadow payroll may have to be kept for Bulgarian tax purposes depending on the nature of the contractual relations concluded between the sending and receiving entities and governing the specifics of the engagement.

Outbound expatriates remain on the payroll of the Bulgarian entity with all respective withholding obligations. However, a shadow payroll may have to be kept in the host entity if a withholding obligation also arises there.

Taxable income

Are there special payroll considerations for short-term assignments?

For inbound expatriates under the Bulgarian legislation, all income related to the particular assignment will be subject to personal income tax.

For outbound expatriates all income will be taxed in Bulgaria. However, if any part of it is with a foreign source (and/or subject to tax abroad) a method for avoiding double taxation would be applied in Bulgaria.

© 2016 KPMG Bulgaria OOD, a Bulgarian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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