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Bulgaria: Exchange of tax and financial information in Bulgaria

Varbanov

Petar Varbanov

On February 12 2016, Bulgaria ratified the Convention on Mutual Administrative Assistance in Tax Matters, as amended by the 2010 protocol, by way of Decree No 21 published in the Official Gazette No 14 of 19 February 2016 as well as the OECD Automatic Exchange of Information Agreement (2014), by way of Decree No 22 published in the same issue of the Official Gazette.

Exchange of tax information

In accordance with the Convention, the parties have a general obligation to exchange any information considered relevant for the administration or enforcement of the domestic laws relating to the taxes covered by the Convention. Only tax-relevant information can be exchanged. The Convention covers a wide variety of taxes including income tax, corporation tax, capital gains tax, net wealth tax, estate tax, inheritance tax, gift tax, immovable property tax, VAT and other sales taxes, excise taxes, taxes on the use or ownership of motor vehicles, taxes on the use or ownership of movable property and social insurance tax.

The Convention prescribes strict rules to protect the confidentiality of the information exchanged which is to be treated as secret and protected in the receiving country in the same manner as information obtained under domestic laws. In the event that personal data is provided, the country receiving the information is obliged to treat it in a manner compliant with its own domestic law but also safeguarding against breaches of the domestic law of the country supplying the information.

Exchange of financial information

Pursuant to the provisions of Articles 6 and 22 of the Convention and subject to the applicable reporting and due diligence rules consistent with the Common Reporting Standard, each competent authority will perform automatic information exchange with the other competent authorities on an annual basis. The information to be exchanged will include the name, address, TIN(s) and date and place of birth (in the case of an individual) of each reportable person which is an account holder of the account and, in the case of an entity account holder which is identified as having one or more controlling persons who are reportable person: the name, address, and TIN(s) of the entity and the name, address, TIN(s) and date and place of birth of each reportable person; the account number; the name and identifying number (if any) of the reporting financial institution; the account balance or value as of the end of the relevant calendar year or other appropriate reporting period or, if the account was closed, the date of closure of the account.

Impact on multinational companies

The signing of this multilateral automatic exchange agreement as well as the Convention is an important step towards ending bank secrecy. With more than €37 billion ($41 billion) already collected by two dozen countries under voluntary compliance initiatives launched, the automatic exchange should be considered a key moment in preventing tax evasion.

Petar Varbanov (petar.varbanov@eurofast.eu)

Eurofast Bulgaria Office

Direct tel: +359 2 988 69 75

Website: www.eurofast.eu

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