Bulgaria: Clarifications published on dividends paid between Bulgaria and Moldova

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Bulgaria: Clarifications published on dividends paid between Bulgaria and Moldova

intl-updates-small.jpg
diallinas.jpg

Panayiotis Diallinas

Moldova has recently clarified certain requirements relating to the taxation of dividends distributed during the period 2008-15 to residents of Bulgaria, in the context of the applicable double tax treaty concluded between the two countries in 1998.

According to the treaty, Bulgarian residents who hold at least 51% of the capital of a dividend-distributing Moldavian company are subject to a 5% withholding tax rate on those dividends, whereas all other Bulgarian dividend-recipients (who do not fulfil the capital ownership criteria) are subject to a 15% withholding tax rate.

The rates of taxation of dividends provided in the double tax treaty between Bulgaria and Moldova are significantly lower in comparison with those prescribed in the Tax Code of Moldova. However, as is typically the case, the tax treaty is deemed to prevail over the domestic legislation of Moldova and this has been confirmed by the Moldavian State Tax Service.

Despite being given priority in the application of tax treaties over domestic legislation, a resident of Bulgaria is obligated to provide to the payer, before the date of payment of income, a certificate of Bulgarian residence in order for the treaty provisions to apply. As a result of omitting this step, the income of a resident of Bulgaria will be subject to withholding tax in accordance with the dispositions of the Tax Code, which is charged at a rate of 15% (if related to profits earned between 2008 and 2011) or 6% (if related to profits earned between 2012 and 2015).

Additionally, the Bulgarian beneficial owner is required to ask the Moldavian dividend-payer to claim back the overpaid income tax on dividends if the Bulgarian residence certificate is submitted in the same tax year, even after the payment of income. In such cases, previously filed income tax forms will need to be retroactively corrected.

Panayiotis Diallinas (panayiotis.diallinas@eurofast.eu)

Eurofast Bulgaria Office

Tel: +359 2 988 69 75

Website: www.eurofast.eu

more across site & shared bottom lb ros

More from across our site

It should be easy for advisers to be transparent about costs, Brown Rudnick partner Matthew Sharp said in response to exclusive ITR in-house data
The sprawling legislation phases out Joe Biden-era green tax incentives for businesses; in other news, the UK will reportedly maintain its DST despite US pressure
New French legislation should create a more consistent legal environment for taxing gains from management packages, say Bruno Knadjian and Sylvain Piémont of Herbert Smith Freehills Kramer
The South Africa vs SC ruling may embolden the tax authority to take a more aggressive approach to TP assessments, an adviser tells ITR
Indirect tax professionals now rate compliance as a bigger obstacle than technology and automation; in other news, Italy approved a VAT cut on art sales
AI-powered tax agents are likely to be the next big development in tax technology, says Russell Gammon of Tax Systems
FTI Consulting’s EMEA head of employment tax and reward tells ITR about celebrating diversity in the profession, his love of musicals, and what makes tax cool
Canadian Prime Minister Mark Carney and US President Donald Trump have agreed that the countries will look to conclude a deal by July 21, 2025
The firm’s lack of transparency regarding its tax leaks scandal should see the ban extended beyond June 30, senators Deborah O’Neill and Barbara Pocock tell ITR
Despite posing significant administrative hurdles, digital services taxes remain ‘the best way forward’ for emerging economies, says Neil Kelley, COO of Ascoria
Gift this article