Tax Alert – 2013 Changes to PIT Act (EN)



Interest income from bank deposits, paid in advance by the end of 2012: The Act determines that in case of advance payment of the interest income, the income shall be deemed acquired on the deposit maturity date or on the date of deposit termination prior to the maturity date.    It seems to us that this regulation would result in practical problems concerning interest on deposit, paid prior to the date of entering into force of the Act.  For instance, ate present there are limited term deposit agreements, according to which the banks have already paid in advance the interest amount in 2012.   Pursuant to the changes to the Act in case of deposit maturity date in 2013  the income shall be deemed formally acquired and taxable respectively in 2013, and the question which amount  (i.e. taxable base) shall the bank withhold the tax of remains quite unclear.

2. Changes to the Time Limits for Payment of Taxes to the State Budget

The amendments to the Act aim at reducing the administrative burden for the tax payers as regards the submission of declarations and payment of due taxes.

(i) Advance Payment of Employment PIT by the Employers  

The term for payment of the advance installments of the employment income tax by the employers is extended as of 1 January 2013.  The new deadline for payment of the tax shall be 25th of the month following the month in which the tax is withheld or the partial payments of salaries are made.

In addition to the above, some amendments to the deadline for payment of the tax by the employer party to the main employment relationship is obliged to pay the tax due under employment agreements for additional work.  The new deadline is 25th of February of the following year (instead of 31st of January of the following year).

(ii) Time Limits for Advance Payment of Tax on Rental Income and Nonemployment 

As of 1 January 2013, the deadline for advance payment of the tax on rental income and nonemployment income (income from other business activities) is one and the same regardless of the status of the payer of the income.  According to the new rules the deadline for payment of the tax shall be by the end of the month, following the quarter of acquisition of the income. This way all persons liable for payment of the tax on income from rental agreements or nonemployment income shall be treated equally.

In addition, it is clarified that for incomes acquired during the last quarter of the tax year the tax payers shall not withhold and make advance payments of the due tax to the State Budget.

(iii) Time Limits for Payment of Withholding Tax by the Payer of the Income   

Another important change reflects the time limits for payment of withholding tax (WHT) due on incomes derived by foreign individuals from Bulgarian source, as well s the incomes form dividends and liquidation shares received by foreign and Bulgarian tax resident individuals.