Bulgaria-China Double Tax Treaty

Bulgaria-China Double Tax Treaty

Updated on Thursday 09th February 2017

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SME-Initiative-EUR-600-Million-in-Loans-for-Bulgarian-Small-Businesses.jpgBulgaria and China first signed a double taxation treaty for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital in 1989. The treaty was subsequently amended in 2003. In recent years, Bulgaria has revised some of the existing international treaties and continuous negotiations with other countries on double tax treaties are underway.  Our attorneys in Bulgaria will be able to advise you on the latest position (provisions) under the Bulgaria-China double tax treaty as well as other tax treaties.

Avoidance of doubt taxation in Bulgaria and China

The taxes referred to in the double tax treaty between Bulgaria and China are:

•in the People's Republic of China: (I) the individual income tax; (II) the income tax concerning joint ventures with Chinese and foreign investment; (III) the income tax concerning foreign enterprises; (IV) the local income tax;
•in the People's Republic of Bulgaria: (I) the tax on total income; (II) the tax on income of single males and females, widowers, divorced persons and spouses without children; (III) the tax on profits; (IV) the tax on buildings.

Our law firm in Bulgaria is committed to providing proper services to meet every business need and can help you on any tax issues in the country.

Reduction of withholding tax in Bulgaria

According to the Bulgaria-China double tax treaty, withholding tax on interest and royalties paid to a Chinese company by a Bulgarian company could be reduced and in some cases be exempt. For example, a reduced rate of 7% is available for royalties for the use of (or right to use) industrial, commercial, or scientific equipment.

Full withholding tax of 10% may be levied on capital gains from the disposal of shares in companies, the main assets of which are in real estate situated in Bulgaria, but gains on the sale of shares listed on the Bulgarian and EU stock exchanges are exempt.  The application of the tax treaty could be a daunting task for a foreign investor. Our Bulgarian lawyers are well versed with tax law in the local and international arenas and will be able to assist you on any issues regarding withholding tax.

For more information on the Bulgaria-China double tax treaty and other taxation matters in Bulgaria, please feel free to contact our law firm in Bulgaria.