Bulgaria: Taxation of credit card services | KPMG | GLOBAL
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Bulgaria: Taxation of credit card services, provided to financial institutions

Bulgaria: Taxation of credit card services

The tax treatment of services provided by international card operators to Bulgarian financial institutions raises two questions:


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  • Is tax to be withheld at source (i.e., are the payments deemed to be royalties or fees for technical services paid to the foreign card companies)?
  • Is value added tax (VAT) to be self-assessed on the credit card services, or are the services VAT-exempt financial services (e.g., transactions related to payment accounts, payment services, payments and transfers)?

A review of administrative and judicial authorities reveals that the general position of the tax authority, on both issues, is to seek to taxation because of a view that fees for the use of licensed, brand-protected cards qualify as royalties or as payments for technical service under the corporate income tax law.  The Supreme Administrative Court, however, has not always followed this view, and cases from this court could be useful as taxpayers decide on the approach to take in future tax periods.


Read a November 2016 report prepared by the KPMG member firm in Bulgaria: Taxation of the services provided by card operators

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