General information - types of securities, deadlines, other market specifics - Bulgaria
Types of securities
The eligible securities issued in Bulgaria are as follows:
- Corporate bonds
- Mortgage bonds
- Municipal bonds
- Government securities (T-bills and government bonds)
- Equities
- Investment funds (closed-end only).
Withholding tax
1. Listed1 corporate bonds, listed mortgage bonds, listed municipal bonds
According to the Corporate Income Tax Act (CITA), interests from listed corporate bonds, mortgage bonds, municipal bonds are not subject to Bulgarian withholding tax. Therefore, both resident and non-resident beneficial owners will receive by default interests from such securities gross, with no action required from them.
2. Non-listed corporate bonds, non-listed mortgage bonds, non-listed municipal bonds
The standard tax rate on interests from non-listed corporate bonds, non-listed mortgage bonds, non-listed municipal bonds (collectively “non-listed bonds”) is 10%.
Relief at source | Quick refund | Standard refund | |
Holding restriction: No Withholding tax rate: 10% | |||
Residents of Double Taxation Treaty (DTT) countries | Yes | No | Yes |
3. Listed government bonds
According to the CITA, interests from listed government bonds are not subject to Bulgarian withholding tax. Therefore, both resident and non-resident beneficial owners will receive by default interests from such securities gross, with no action required from them.
4. Equities
The standard tax rate on dividends from equities is 5%.
Relief at source | Quick refund | Standard refund | |
Holding restriction: No Withholding tax rate: 5% | |||
European Union / European Economic Area (EU/EEA) residents | Yes(a) | No | Yes |
Residents of Double Taxation Treaty (DTT) countries | No | No | Yes |
(a) Clearstream Banking informs clients that it is fully dependent on the information provided by its depository with regard to the tax relief at source procedure. Due to current uncertainty on the deadlines for relief at source set up by the depository, the relief at source service is provided on a “best efforts” basis only until Clearstream Banking’s depository provides clear and unequivocal deadlines. Should clients miss the deadline to apply for relief at source, Clearstream Banking recommends that they initiate their tax reclaim as soon as possible after the taxable income payment date.
Capital gains tax
There is no capital gains tax withheld through Clearstream Banking on securities held in Clearstream Banking. Capital gains tax may however be payable on specific gains. Clearstream Banking does not assist in this regard. Please consult your tax advisor for further information.
Stamp duty
There is no stamp duty withheld through Clearstream Banking on securities held in Clearstream Banking. Stamp duty may however be payable on specific transactions. Clearstream Banking does not assist in this regard. Please consult your tax advisor for further information.
Deadlines
Relief at source deadlines
In order to benefit from tax relief at source on Bulgarian securities, eligible beneficial owners will need to ensure that Clearstream Banking receives the accurate documentation by the deadlines specified below.
1. Non-listed bonds
Deadline | |
Relief at source(a) | |
One Time Certificate | 11 BD before the PD, 10:00 CET |
Certificate of residence | 11 BD before the PD, 10:00 CET |
List of Beneficial Owners (LBO) | 11 BD before the PD, 10:00 CET |
(a) For interests from Bulgarian non-listed bonds, tax relief at source is only available as of the second interest payment of the calendar year. The first interest payment of the calendar year will always be processed net, with a possibility to reclaim the tax withheld via the standard reclaim procedure (if applicable conditions are met).
2. Equities
Equities | Deadline |
Relief at source(a) | |
One Time Certificate | 7 BD after the RD, 10;00 CET |
Certificate of Residence | 7 BD after the RD, 10;00 CET |
List of Beneficial Owners (LBO) | 7 BD after the RD, 10;00 CET |
Declaration of the beneficiary | 7 BD after the RD, 10;00 CET |
Cover letter | 7 BD after the RD, 10;00 CET |
(a) Clearstream Banking informs clients that it is fully dependent on the information provided by its depository with regard to the tax relief at source procedure. Due to current uncertainty on the deadlines for relief at source set up by the depository, the relief at source service is provided on a “best efforts” basis only until Clearstream Banking’s depository provides clear and unequivocal deadlines. Should clients miss the deadline to apply for relief at source, Clearstream Banking recommends that they initiate their tax reclaim as soon as possible after the taxable income payment date.
Statutory deadline for reclaiming withholding tax
Unless otherwise stipulated in the tax treaty, the statutory deadline for reclaiming withholding tax is five years after the relevant income payment for which the tax reclaim is made.
Standard refund deadline
The deadline by which Clearstream Banking must receive the documentation for a standard refund application is at the latest two months before the statutory deadline.
All reclaim applications received after this deadline will be processed by Clearstream Banking on a “best efforts” basis. However, in such cases, Clearstream Banking will apply an extra charge and accepts no responsibility for forms that have not reached the Bulgarian Tax Authorities by the date considered to be the statute of limitations deadline.
When are refunds received?
The estimated time for receiving a refund is on average 2 months from the date on which the standard refund documentation was received by Clearstream Banking. This timeframe can vary depending on when the application was filed and the complexity of the information supplied in the reclaim form.
Notes on tax reclaims
Clients warrant the completeness and accuracy of the information they supply to Clearstream Banking.
It is the client's responsibility to determine any entitlement to a refund of tax withheld, to calculate the amount due and to correctly complete the required forms in due time. Clearstream Banking is under no obligation to carry out any investigation in respect of such information.
With respect to tax reclaims in general, clients are reminded that Clearstream Banking accepts no responsibility for their acceptance or non-acceptance by the tax authorities of the respective country.
Market specifics
Relief at source on non-listed bonds
For interests from Bulgarian non-listed bonds, tax relief at source is only available as of the second interest payment of the calendar year. The first interest payment of the calendar year will always be processed net, with a possibility to reclaim the tax withheld at source via the standard reclaim procedure (if applicable conditions are met).
-----------------
1. A listed security refers to a security that is admitted to trading on a regulated market in Bulgaria or in an EU/EEA member state