Bulgaria: Tax on benefits in-kind, VAT and company assets

Bulgaria: Tax on benefits in-kind, VAT

Changes to the corporate income tax and individual (personal) income tax in Bulgaria introduce new rules on the taxation of expenses for benefits in-kind related to company assets provided to employees for personal use and related expenses.

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Employers will have the option either to assess a 10% “one-off” tax on the expenses for benefits in-kind under the corporate income tax law or to include the expenses as personal income in accordance with the individual income tax measures. The election must be declared with the employer’s annual corporate income tax return for the respective year, and this is required for 2016 through submission of the annual tax return to be made by 31 March 2017. 

VAT and personal use of company assets

Earlier in September 2016, the Bulgarian Ministry of Finance published a bill to amend the VAT law, with the proposed amendments partly related to employees’ personal use of company assets. The bill must be submitted to the National Assembly yet.

The proposed VAT changes concerning the personal use of company assets would introduce a proportional input VAT deduction for acquisitions of immovable property with mixed use (company use and private use by employees). Taxpayers would have to determine the proportion of business-to-private use of the properties, and deduct an amount of input VAT credit based on the expected business use.

 

Read an October 2016 report [PDF 183 KB] prepared by the KPMG member firm in Bulgaria

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