CbC reporting was implemented in the Bulgarian Legislation via its introduction in the Act to Amend and Supplement the Tax and Social Security Procedure Code (TSSPC), published in issue 63 of the State Gazette on 04.08.2017.
Bulgarian tax authorities are trying to implement stricter rules to combat tax avoidance. Through the introduction of the CbC report in the Bulgarian legislation via the Act to Amend and Supplement the Tax and Social Security Procedure Code adopted on 20 July 2017, the tax authorities are working on further harmonization of the local legislation with the 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 EUR 51 million (BGN 100 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 EUR 750mil (approximately BGN 1.467mil)
The CbC Report will include information for each entity of the MNE Group including the nature of the main business activities as well as some aggregated financial data.
In case the CbC Report is completed by the ultimate parent company, it shall be submitted to the TA 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 above mentioned 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 is to be prepared for the Group’s fiscal year commencing in 2017.
The TA shall 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;
- By a Bulgarian resident entity of the MNE Group (excluding the above cases), describing which is the reporting entity to submit 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) shall be provided to the TA no later than 31 December 2017.
The penalties for infringements include:
- In case of failure to fulfill the obligation for the notification of the TA, the penalty ranges from BGN 50,000 to BGN 100,000 for the first violation and from BGN 100,000 to BGN 200,000 for subsequent violations;
- In case of not filing or delayed filing of the CbC Report, penalties range between BGN 100,000 and BGN 200,000. When a repeated infringement is observed, the penalty may reach the amount of BGN 300,000;
- Incomplete or incorrect filing of the CbC Report leads to a penalty ranging between BGN 50,000 and BGN 150,000. For repeated infringement the penalty may range between BGN 100,000 and BGN 200,000.