Bulgaria: Double tax treaty between Bulgaria and Norway

Petar Varbanov

On July 8 2015, the Bulgarian Parliament ratified the convention for the avoidance of double taxation concluded with the Kingdom of Norway. The convention will apply to persons who are residents of one or both of the contracting states and to any substantially similar taxes that are imposed after the date of signature of the convention in addition to, or in place of, the existing taxes. The existing taxes to which the convention will apply are taxes on income, municipal tax on income, tax relating to submarine petroleum income, pipeline transport of petroleum, national tax on remuneration to non-resident artistes, corporate income tax and patent tax.

Taxation of income

Income derived by a resident of a contracting state from immovable property (including income from agriculture or forestry) situated in the other contracting state may be taxed in that other state. Also, business profits of an enterprise of a contracting state will be taxable only in that state unless the enterprise carries on business in the other contracting state through a permanent establishment (PE) situated therein. Profits of an enterprise of a contracting state from the operation of ships, aircraft, and railway or road transport vehicles in international transport shall be taxable only in that state.

Withholding taxes

According to the convention, dividends shall be taxed with 5% of the gross amount of the dividends if the beneficial owner is a company (other than a partnership) which holds directly at least 10% of the capital of the company paying the dividends. A tax rate of 15% of the gross amount of the dividends will be applicable in all other cases. Interest arising in a contracting state and paid to a resident of the other contracting state may be taxed in that other state. Such interest may also be taxed in the state in which it arises and according to the laws of that state, but if the beneficial owner of the interest is a resident of the other state, the tax charged will not exceed 5%. Royalty withholding tax charges will not exceed 5% of the gross amount of the royalties paid.

The convention will enter into force on the date of a ratification notification by Norway, which is now pending.

Petar Varbanov (petar.varbanov@eurofast.eu)
Eurofast
Tel: +359 2 988 69 75
Website: www.eurofast.eu

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