Bulgaria: Clarifications published on dividends paid between Bulgaria and Moldova

International Tax Review is part of Legal Benchmarking Limited, 4 Bouverie Street, London, EC4Y 8AX

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

The cuts disproportionately affected staff in certain positions, the report also found; in other news, MHA announced the €24 million acquisition of Baker Tilly South East Europe
The plan aims to improve the efficiency, transparency, and effectiveness of direct tax administration in India
Meanwhile, South Africa’s finance minister has accepted a court decision on suspending a VAT increase and US President Donald Trump mulls a 100% tariff on foreign films
Jaime Carey speaks about the benefits of his tax background, DEI values, the use of AI for a smarter legal practice, and other priorities that will define his presidency
Historically low levels of attrition over consecutive years made a ‘difficult decision’ necessary, PwC has reportedly said
WTS Global is also vetting new potential member firms in Algeria, Cote D’Ivoire and Benin, Kelly Mgbor tells ITR in an exclusive interview
The scope of qualifying pillar two tax credits could reportedly be broadened; in other news, hundreds of IRS appeals staff are to resign
For many taxpayers, the prospect of long-term certainty that a bilateral APA offers can override concerns about time, cost and confidentiality
Levine, who served under the Joe Biden administration, led the US’s negotiations on the OECD’s two-pillar solution
The deal to acquire ITR's parent company is expected to complete by the end of May 2025
Gift this article