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 Personal tax declarations and residency type

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expatinchina
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PostSubject: Personal tax declarations and residency type   Thu May 02, 2013 1:12 pm

From my reading of the Bulgarian income tax code vis a vis residency, it would appear that you can be classified as a resident for tax purposes or a non tax resident. However, there appears conflicting information surrounding the issue of domicile which is normally what determines residency for tax purposes in that you can be domiciled and resident in Bulgaria (spend more than 1/2 the year there and own property/have a job/be self supporting), however, if the authorities determine that you fulfil the same criteria but have not made Bulgaria your home (have family there/have a company/invested there), you are a resident but not for tax purposes. The difference being taxed on all income and assets worldwide versus only taxed on acivities within Bulgaria.

Can anyone shed any light on this? If I go through with my move, I would of course seek residence and certainly be domiciled there as I would be full time, however as the tax regime of my place of permanent residence (which is not the country of my nationality) is more favourable and will therefore remain the place where I run my finances from, I would of course prefer to be a non-taxable resident in Bulgaria.

I have trawled all forums I can find, but there is very little discussion of personal tax filing. Does anyone know their own status and if so, how is it made apparant to you? Does no-one file a personal tax return due to previous property regulation requiring them to set up a company? Is there no concern over cross country disclosure of investment dividends/payouts from private pensions etc?

All input much appreciated.

Thanks
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chrissybg
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PostSubject: Re: Personal tax declarations and residency type   Thu May 02, 2013 1:59 pm

Hi The first question we asked was the one about tax. We were told that every one pays tax when they sell a house/property so that was fine and then asked about our investment in England which we use the interest off to live here and we told NO tax. Just a normal residancy Lichna Carta for residancy so the imigration know we are here and that's that.
If we were to run a business or do work for profit then that would go through the tax system.
hope this helps you
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expatinchina
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PostSubject: Re: Personal tax declarations and residency type   Thu May 02, 2013 3:20 pm

I suspect you may have been told no tax because there is a double taxation treaty between BG and UK and because its all Europe so the withholding taxes have already been done. No such agreement here. Hmmm. I have even tried getting clarification from big consultants and whilst KPMG says one thing, Deloittes says another.

As an aside re the cap gains on profit from sales of immovable property, there was a provision in the tax legislation for no tax to be paid if the property had been held in the same hands for 3 years minimum from the date of purchase to the date of sale.. the rules are different for movable and immovable property dependant on whether you are resident for tax purposes or not.. so it has quite widespread implications. My immediate concern however is simply the worldwide tax on dividends, capital gains on sales of equities/bonds and private pension payouts... tax on such for those held in Bulgaria will not be an issue as I wont be buying there - and I have no objection to paying 10% of interest earned on bank account funds held there because the interest rate is significantly higher than here!

Can I ask you Chrissybg whether you maintain a property in the UK as well as BG?

Also - does anyone know if the residency forms are available anywhere online so I could perhaps get a feel of the questions asked? I am clear on what docs I need to submit, but just not what they feel appropriate to enquire about.

Many thanks!
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chrissybg
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PostSubject: Re: Personal tax declarations and residency type   Thu May 02, 2013 4:56 pm

hello again No we don't have any property in any other country. We pay tax through our English bank on investments but it is not duplicated here in BG We sold a house last year in BG and paid tax on it.
I don't know if the forms for residancy are on line.
The questions we were asked when we did ours years ago and then again when they ran out were
Name DOB address in BG parents names childrens names our education and qualifications. I am sure that was it and we renewed for the third time last year. They take a photo of you at the office and you pay and collect the cards when you say you want them as you can pay extra and get them with in a few days or wait a week
The police in our town say that's all we have to carry but i know other english people in other areas have been told they have to carry their passport all the time too. We are the only English in our town but i shouldn't think that has any thing to do with that.
The one thing that does annoy us is that the same rules are not adhered to through out Bulgaria.

The police here have always been very helpful on all subjects and the imigration police left their telephone number incase we needed to ask them any thing as they spoke perfect English Hope this helps and i hope if any one else has more up to date information on the residancy cards they will give it to you.
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expatinchina
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PostSubject: Re: Personal tax declarations and residency type   Thu May 02, 2013 5:09 pm

Thank you for your help Chrissybg! Its reassuring to hear real life examples!

I am still going to attempt to seek clarifiction whilst I move onto the next issue - the comprehensive healthcare... I just got quotes and for 1 year, its going to cost me nearly 3,000 Euro :shocked1:Sadly no links back to the UK to get one of those pesky blue cards!

Thanks again to you ..and to anyone else who feels they might like to chime in :)
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chrissybg
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PostSubject: Re: Personal tax declarations and residency type   Thu May 02, 2013 6:08 pm

The health service here has been good for us. We have an english speaking doctor fanastic heart hospital 20 minutes away it is all new just a few years old and so that takes care of any thing my husband needs and we both have to have blood tests regularly one for hubbies heart and mine as i have leukaemia.
Medication here has been better then that in the UK no appointments to make any where so see the doctor the lab for tests and the hospital when you need them and all very little cost The dentist is great too. People come to Bulgaria from other countries including GB for cosmetic surgery and dental work sorry this has gone off subject just answering your question Hope this helps you and you can pay NI here if you are a pentioner you can get a form from england and fill that in and register it here in BG and your health care is free
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expatinchina
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PostSubject: Re: Personal tax declarations and residency type   Thu May 02, 2013 8:34 pm

Thanks Chrissybg. You have confirmed what I have heard about healthcare over there in that it can be very good.

I would plan on paying local contributions to be able to use public health over there (am I correct that you pay a small amount monthly and after 5 years you are entitled?). The issue is that proof of cover is required for initial residency applications. Quite happy to pay privately as needed which is what I do here because I am so rarely at the docs (touch wood).

...and I am 25 years off being a pensioner g hahaha
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chrissybg
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PostSubject: Re: Personal tax declarations and residency type   Thu May 02, 2013 9:07 pm

when we came we had to pay for three years back pay so we could use the health service imediately. That may have changed as it was a good few years ago Then we pay monthly It is a small amount and then when we visit the doctor it is the tax to pay a few lev the bulgarians pay this too.2 or 3 lev. The blood tests are all differant prices but for a full check that i have it is about 7lev and my husbands to check the thickness of his blood because he has a metal valve in his heart is 1 lev 50 hospital which we have not stayed in is the price of 3 nights was about 10lev when my neighbour was in there a couple of years ago It is necessary to have a family member or friend to bring in food though and to help you through the day.
If some one has experience of hospital stay you are best advised to listen to them though and not me on that.
I am pleased to hear you have 25 years until retirement The way the pension age keeps changing in GB i think we might all be 25 years off.
Other friends do not pay the NI contributions and the doctor charges about 5 or 6 lev if they visit him. We do pay for the prescriptions but do not have to get repeat prescriptions so that cuts out a visit to the doctors. We are still using the first prescription ever written for us The pharmacy give them back with the medications. We don't concider the meds to be expencive.
Flu jabs are also available here end of september begining of October. A prescription from the doctor you collect it from the pharmacy go back to the doctor and he injects you. Dentist is really cheap and good. When we first went to the dentist for a check up they didn't know what to charge as people didn't have check ups then [You must be registered and logged in to see this image.] We paid 2 lev there were 3.75 lev to the pound then. Your welcome to any information we can give to you Hope it has helped you and any one else reading this
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expatinchina
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PostSubject: Re: Personal tax declarations and residency type   Thu May 02, 2013 9:49 pm

Super helpful indeed Chrissybg - really getting into the nity gritty that I haven't been able to find thus far.

I appreciate all input from long timers and whilst I recognise I'm not asking anything new and how tiresome newbies can be (I am a seasoned expat in my own market so I well understand), I have found that lots of forums tend to have the bulk of their info from 2007-2009 and not much thereafter when of course, rules and regs have changed quite significantly since and continue to change.

So apologies all - but you can be sure I have done a thorough search before I pose a question.

T
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expatinchina
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PostSubject: Re: Personal tax declarations and residency type   Fri May 03, 2013 7:58 am

[You must be registered and logged in to see this link.] wrote:
hello again No we don't have any property in any other country. We pay tax through our English bank on investments but it is not duplicated here in BG We sold a house last year in BG and paid tax on it.

OK - I just learned that if your property is held as an individual, you can sell one house a year and not pay tax. If your ownership stays as a company, you pay tax on the sale. ...interesting.
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chrissybg
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PostSubject: Re: Personal tax declarations and residency type   Fri May 03, 2013 8:11 am

you pay tax on any property sale. The bulgarians pay tax when they sell a house too. That's what our neighbour told us when they sold their mothers house last year and they do not have a business. It's not a lot some thing like 300 lev upto 10k and percentage there of.
We sold ours used a translator not an estate agent they charge a fortune and it is in my opinion the best way to buy and sell. You have to have a translaor any way and they can take you to all the necessary places to get the different documents and registration etc A few hundred lev tops and the solicitors bill plus a little here and there for a new skitza when selling etc and the whole job done for minimum expence and no problems.
Same when buying find that perfect place put in an offer take translator with you and get the property transfered into your name open a bank account change water electric and municipality tax over into your name.
A skitza shows the property and the lay out of land ie what your selling or buying.
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expatinchina
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PostSubject: Re: Personal tax declarations and residency type   Fri May 03, 2013 8:41 am

Hmm - taken from PITA:

Non-Taxable Income
Art. 13. (Last Amendment – SG No. 94/2012 in force as of 01.01.2013) (1) Taxability shall not apply to:
1. any income acquired during the tax year from the sale or exchange of:
(a) (Last Amendment - SG No. 95/2009, in force as of 01.01.2010) one residential immovable property, if between the date of acquisition and the date of sale or exchange more than three years have elapsed;


It goes on to say that tax is due when property aquired by succession or restitution is sold so that may account for why locals pay it.

I'm still very confused about the determination of an individuals 'centre of vital interests' and how you know if you are deemed a non resident or resident natural person as you can seemingly still be a domiciled resident but classed as non resident for tax purposes which is what I want in view of the lack of tax treaty between where my assets are and BG. PITA is very clear about the difference in tax obligations according to status, but there is little clarity in the determination of that status!

Are there any EU Nationals on here that were perm res outside the EU before moving to BG and who have no other connection to any EU member state? ... There is scant info online about repatriation issues.

What a headache!
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justbazz1
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PostSubject: Re: Personal tax declarations and residency type   Fri May 03, 2013 6:50 pm

I think your headache is coming from the hole you are digging..my personal advice would be to pop over here, find something you desire and get some solid advice . I honestly think that sitting and 'googling' up thousands of pages of info (which may, or may not be years out of date) will only add to the confusion.

Don't get me wrong..I'm just saying that things are not always done here in a way that one would expect after all the research. If you have read any of my posts you will see that I don't come from another EU state, I don't have all these EU entitlements, I've had to do 'the hard yard' all by myself and I'm not finding it especially difficult.

Help and advice will always be here if you need it.

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expatinchina
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PostSubject: Re: Personal tax declarations and residency type   Fri May 03, 2013 7:16 pm

bgbazz wrote:
I think your headache is coming from the hole you are digging..my personal advice would be to pop over here, find something you desire and get some solid advice . I honestly think that sitting and 'googling' up thousands of pages of info (which may, or may not be years out of date) will only add to the confusion.

Don't get me wrong..I'm just saying that things are not always done here in a way that one would expect after all the research. If you have read any of my posts you will see that I don't come from another EU state, I don't have all these EU entitlements, I've had to do 'the hard yard' all by myself and I'm not finding it especially difficult.

Help and advice will always be here if you need it.


I hear what you are saying but all my googling has turned up little information that is beyond Brits coming directly from the UK and having been there since you needed a company to buy land... regulations have changed and are changing (as you can see my above info came into effect on Jan 1 2013 so is current) and combined with my straddling both worlds in terms of being non resident EU National I am just not prepared to spend 3,000 euro to ''pop over'' on a visit without being fully armed with all the info I need to feel comfortable with my decision upfront. I realise that whether it is applied on the ground in the way it is stated in law is another matter but I am just not prepared to wing it when my personal assets are potentially at stake. I didn't bust a gut for the last decade to earn the right to reside in a tax haven for no good reason.

But back on topic ... having done the hard yards yourself bgbazz, it would be great if you could share what you have unearthed/experienced with regards to taxation on worldwide assets... does your home country have a double taxation agreement with Bulgaria or are you claiming foreign tax credit?

Looking forward to your input
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Scanspeak
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PostSubject: Re: Personal tax declarations and residency type   Thu Dec 11, 2014 5:03 pm

Just seeing this thread but have not been around for a while. Sale of assets is tax exempt for as long as you have held the asset for at least 3 full years. Equity income &
capital gains are tax exempt, fixed interest usually too with the exception of bank deposits which are subject to income tax of 8% ( this might go back to 10% ).
Bulgaria and the UK have a DTA, the only tax applied would be the difference between the two. A quick example: you are still considered a UK resident for tax purposes, you own equity in Bulgaria which you sell and realise a gain. The tax imposed would be the difference between the rate in the UK ( 18%, for the purpose of this post I consider you a basic rate ) and Bulgaria ( 0% ) so assuming you have no allowance left, you`d have to pay 18% - 0% = 18%. If you hold the same equity in the UK and you are not considered a UK resident for tax purposes, you`d still need to pay the full taxable amount and no allowance will be in effect as you`re not a UK tax resident ( this is why many people that leave the UK indefinitely transfer their private pensions to a QROPS provider in a more favourable tax regime ).
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