Bulgaria: Sale-leaseback agreements, transposition of EU directive, other corporate income tax measures

Changes to the corporate income tax

Changes to the corporate income tax

Changes to the corporate income tax include provisions concerning:

  • The tax treatment of sale-leaseback agreements classified as operating leases under the International Accounting Standards (IAS)—the changes are intended to allow for equal tax treatment of sale-leaseback agreements classified as operating leases. The “right to use” assets under these agreements will not be recognized as tax depreciable assets. The new provisions also address how lessees are to recognize income, expenses, and profits and losses.
  • Measures transposing EU anti-tax avoidance rules (ATAD II) into Bulgarian domestic tax law—the measures provide that certain hybrid entities registered or established in Bulgaria that, to date, have been outside the scope of tax liability, will be regarded as legal entities for corporate income tax purposes (the reverse hybrid mismatch rule). Other measures address the treatment of collective investment schemes and entities under the controlled foreign company (CFC) rules.
  • The tax rate for the one-off tax on expenses—effective 1 January 2022, the tax rate for one-off tax on expenses in-kind related to the private use of company assets is reduced to 3% (from 10%).
  • Amendments related to the tax treatment of food vouchers provided to employees.

Read a March 2022 report [PDF 327 KB] prepared by the KPMG member firm in Bulgaria


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