Dimov&Tashev Law Firm

January 01, 2012 | Recent changes in Tax Legislation


In the end of 2011, there have been adopted amendments in the major tax acts regulating direct and indirect taxes, excise duties, as well as the taxation regime procedure, which could be summarized in the following groups:



Changes in the Value Added Tax Act (VATA)


One of the most important amendments in the Value Added Tax Act is the change in temporal aspect of the VAT taxation regime of supplies related to land and buildings, namely: establishment or transfer of right of construction. According to the previous wording of Article 45, Para 2 of the VATA, establishment or transfer of construction right has been considered a VAT exempt supply until reaching the stage of "rough construction" of the building subject to establishment or transfer of such right. Pursuant to the latest amendments of the VATA, this very moment has been pushed at an earlier point, therefore, at present establishment or transfer of right of construction is considered a VAT exempt supply until issuance of a construction permit for the building subject to establishment or transfer of such right - i.e. upon issuance of a construction permit for a given building, any acts related to transfer of title of the construction right in this respect shall be subject to VAT.


Further, significant changes have been adopted with respect to the regulation of specific cases for determining the tax base: the scope of Article 27, Para 1 of the VAT - introducing the requirement for a minimum amount of the tax base which cannot be lower than the tax base of the supply at acquisition or supply's own value, and in case of import - than the tax base at import thereof - has been narrowed, whereas the following cases have been taken out from the scope of application of the aforementioned paragraph: (1) land representing regulated land plot within the meaning of the Territory Organization Act, except for terrain adjacent to buildings that are not new, and (2) new buildings or parts thereof and the terrain adjacent thereto. Thus, the rule under Article 27, Para 1 of the VATA shall apply only with respect to delivery of goods under Article 6, Para 3 and Article 7, Para 4 of the VATA.



Changes in Tax-Insurance Procedure Code (TIPC)


By virtue of the changes in the Tax-Insurance Procedure Code, amendments in Chapter 27 "a" thereof are envisaged with respect to administrative cooperation between EU member states in the area of taxes and fees collection, whereby Directive 2008/55/EC is transposed. Cooperation shall be represented in the right of a requesting member-state (in the events and under the terms envisaged in the Directive), to make a request for information, notification, collection and securing of receivables, as well as the obligation of the member state being requested, to perform all actions required in this regard.


Owing to these changes, the scope of application of the mutual assistance is extended with regard to collection of public receivables from taxes and fees, as well as the target person in relation whereof the mutual assistance is performed - all natural persons and legal entities, as well as all legal forms of cooperation, established in the territory of the European Union.



Changes in the Law on Excises and Tax Warehouses (LETW)


The major changes in the Law on Excises and Tax Warehouses are related to the following:


  • Increase of the excise rates over the gas oil and kerosene, as well as introduction of a positive excise rate over natural gas;
  • Introduction of definitions for "customs regime with deferred payment or customs direction" and "import of excise goods", which aims to harmonize the terminology introduced by Directive 2008/118/ЕС regarding common regime of levying with excise duties.



Changes in the Law on taxes on the income of natural persons (LTINP)


The main changes in the LTINP are aimed at clarifying matters on application thereof, filling some existing gaps, updating terminology and facilitating the taxable persons:


  • Introduction of a new regulation on taxation of income emanating from lease of property under condominium regime with a form of management - "General Meeting of the Owners", in case when the income payers are enterprises, as well as self-employed persons;
  • Implementation of legal regulation of the obligation for declaring non-taxable income stemming from disposal of financial instruments which exceeds BGN 5000 on an annual basis;
  • Exemption from obligation for filing an annual tax return of the persons acquiring income only from employment relations, who do not owe additional taxes or are not entitled to tax reliefs;
  • Introduction of the rule for rounding of the tax obligation according to a complete lev (BGN);
  • Further clarification of the rules and terms applicable in the events when the employer is obligated to issue official notes regarding incomes from employment relations, whereas certain penalties are also envisaged for noncompliant employers.