Taxation of a foreign person for income or expenses from interests

The aspect of taxation of interests as a form of income or expense is treated in three tax acts - ITNPA, VATA and CITA.
A) Under the Income Taxes on Natural Persons Act (ITNPA)
The income from interests of the natural persons and sole proprietors is taxable under ITNPA. The taxation of paid-up interests by a local person to a foreign natural person is regulated in Art. 8, paragraph 6, item 4, Art. 13, paragraph 1, item 8 - 10, Art. 35, item 3, Art. 37, paragraph 1, item 3 of ITNPA.
B) Under the Value Added Tax Act (Art. 46, paragraph 1, item 1 of VATA):
The negotiation, the granting and the management of credit for a consideration (interest) by the person granting it, including the granting, negotiation and management of credit upon supply of goods pursuant to a lease contract shall be exempt from Value Added Tax.
C) Under the Corporate Income Taxation Act (following Art. 9, Art. 12, paragraph 5, item 1, Art. 26, item 6, Art. 27, paragraph 1, item 3, Art. 43, Art. 94, paragraph 2, Art. 120).
The tax rate the tax on the income from interest, any copyright and licence royalties is 5 percent where the following conditions are simultaneously fulfilled:
- an actual possessor of the income is a foreign legal person from a state - member of the European Union, or place of business in a country - member of the European Union, of foreign legal person from a state - member of the European Union;
- local legal person - payer of income, or the person whose place of business in the Republic of Bulgaria is a payer of income is a person connected with the foreign legal person - holder of income or a person whose place of business is the beneficial owner.
When the income, taxable to the tax is levied at a higher rate, the income recipient is entitled to be reimbursed the tax. Reimbursement shall be effected under the terms and procedure of the Administrative Procedure Code, but not later than one year of filing the request for reimbursement - Art. 200a of the CITA.