Country-by-country reporting (CbCR) was implemented in Bulgarian legislation via the Act to Amend and Supplement the Tax and Social Security Procedure Code (TSSPC), which was published in issue 63 of the State Gazette on August 4 2017.
Through the introduction of CbCR, the tax authorities trying to implement stricter rules to combat tax avoidance and working on further harmonising local laws with OECD guidelines.
MNE groups will be obliged to submit the CbC report in Bulgaria in the following cases:
- An ultimate parent entity of the MNE group is resident in Bulgaria and the total consolidated turnover of the group is in excess of BGN 100 million ($60 million); or
- A constituent entity of the MNE group is resident in Bulgaria, whereas the ultimate parent company is not, and the consolidated turnover exceeds €750 million ($881 million).
The CbC report must include information for each entity of the MNE group, including the nature of the main business activities and some aggregated financial data.
In case the CbC report is completed by the ultimate parent company, it must be submitted to the tax authority electronically within 12 months of the last day of the group's reporting fiscal year. Otherwise, it must be submitted within 15 months of the abovementioned period. If the CbC report is submitted by the ultimate parent company, it should be prepared for the group's fiscal year commencing in 2016. If it concerns a constituent entity of the group, the report must be prepared for the group's fiscal year commencing in 2017.
To meet the above criteria, the tax authority must be notified:
- By the ultimate parent Bulgarian resident entity of an MNE group, no later than the last day of the reporting fiscal year of the group; or
- By a Bulgarian resident entity of the MNE group (excluding the above cases), describing which is the reporting entity submitting the CbC report and its jurisdiction of residence. The relative deadline is no later than the last day of the group's reporting fiscal year.
The notification for the first reporting period (2016) must be provided to the tax authority no later than December 31 2017.
The penalties for infringements include:
- Failure to notify the tax authority will result in penalties ranging from BGN 50,000 to BGN 100,000 for the first violation, and from BGN 100,000 to BGN 200,000 for subsequent violations;
- For not filing or delayed filing of the CbC report, penalties range between BGN 100,000 and BGN 200,000. When a repeated infringement occurs, the penalty may reach BGN 300,000; and
- Incomplete or incorrect filing of the CbC report will lead to a penalty ranging between BGN 50,000 and BGN 150,000. For repeated infringements, the penalty may range between BGN 100,000 and BGN 200,000.