“Interest” means income from any kind of debt claim, whether guaranteed by a mortgage or a clause for participation in the debtor’s profits, including interest on bank deposits and income/premiums from bills and bonds (§1, Item 7 of the Additional Provisions of the Income Taxes on Natural Persons Act /ITNPA/, also known as ITNPA).
Interest on loans to cooperatives
Income from interest acquired by a member of a cooperative on loans granted to the cooperative shall be subject to a final tax of 10 % (Article 38, Para 11 and Article 46, Para 1 of ITNPA).
As a natural person - recipient of the income, you have no obligation to declare to the National Revenue Agency, as the tax is final.
The obligation to deduct and pay the tax lies with the cooperative paying the income, which, by the end of the month following the quarter of the acquisition of the income by the natural person, shall pay it to the state (central) budget into the account of the territorial directorate of NRA at the place of its registration (Article 65, Para 7 of ITNPA). Within the same time limit, the cooperative shall submit electronically a tax return under Article 55, Para 1 of ITNPA using the approved form for the taxes due. The date of acquisition of the income shall be determined in accordance with the rules of Article 11 of ITNPA.
The cooperative shall submit electronically, by 28 February of the following year, information under Article 73, Para 1 of ITNPA, in which it shall list by name each natural person to whom it has paid income from interest, its amount, and the tax deducted.
As an individual granting a loan, you have an obligation to declare it in your annual tax return if you meet the necessary conditions.
See Loans.
Interest on bank accounts
Income from interest acquired by resident natural persons from bank accounts shall be subject to a final tax of 8 % (Article 38, Para 13 and Article 46, Para 4 of ITNPA).
As a natural person - recipient of the income, you have no obligation to declare to the National Revenue Agency, as the tax is final.
The tax shall be deducted and paid by the banks by the end of the month following the month in which the income was paid (Article 65, Para 9 of ITNPA).
The banks, as payers of the income, shall submit electronically a declaration under Article 55 of ITNPA within the deadline for payment of the tax – by the end of the month following the month in which the income was acquired.
The date of acquisition of the income shall be determined in accordance with the rules of Article 11 of ITNPA, and an exception to the general principle has been introduced. In case of advance payment of interest on deposit accounts subject to final tax under Article 38, Para 13 of ITNPA, the income shall be deemed to have been acquired on the maturity date of the deposit or on the date of its early termination. “Deposit accounts” within the meaning of Section 1, Item 58 of the Supplementary Provisions of ITNPA shall be bank accounts for safekeeping of money for a fixed period for remuneration (interest).
Commercial banks and branches of foreign banks in the country shall submit electronically, by 28 February of the following year, information for the total amount of income from interest paid, and the tax deducted.
Interest on bank accounts abroad
Income from interest acquired by resident natural persons from bank accounts abroad shall be subject to a final tax of 8 % (Article 38, Para 13 and Article 46, Para 4 of ITNPA).
You declare the income and pay the tax by 30 April of the year following the year of acquisition of the income.
You shall declare in Annex No 8 to the annual tax return under Article 50 of ITNPA (Article 67, Para 4 in conjunction with Article 50, Para 1, Item 3 of ITNPA). See Declaring the Income of Natural Persons.
If tax is deducted in the State of the source of the income, in accordance with its domestic law and in as per the rules of the respective Double Taxation Convention (DTC), you are entitled to apply the method of avoidance of double taxation stipulated in the Convention. If there is no DTC signed, you can use a tax credit in accordance with Article 76 of ITNPA. See Double Taxation Conventions (DTCs).
You shall attach to the tax return proof of the amount of taxes paid abroad. Where the applicable Convention stipulates the application of the “exemption with progression” method for avoidance of double taxation, you may not provide proof of the amount of tax paid.
For payment, see Payment.
Interest from Bulgaria for foreigners
Non-resident natural persons are liable to tax on income from sources in Bulgaria. See Resident and Non-Resident Persons.
The income from interest, including under a leasing agreement, when accrued/paid by residents, commercial agencies, as well as from a permanent establishment or a fixed base is income from a source in the country (Articles 7 and 8, Para 6, Item 4 of ITNPA).
Where those incomes are not realised via a fixed base, they are subject to a final tax of 10 %.
Other incomes from interest subject to annual tax
Interest, which is not exempt from taxation, other than interest on bank accounts, shall be taxed on the total annual tax base (Article 35, Item 3 of ITNPA), including interest included in the lease payments acquired during the tax year. The tax rate is 10 %.
The monetary income from interest referred to in Article 35 of ITNPA shall be taxed in advance in accordance with Article 44a of ITNPA, when the payer is a company or a self-employed person. The advance tax shall be assessed, deducted, paid and declared by the payer of the income – the company or the self-employed person. For the last quarter, no advance tax shall be paid unless the natural person requests this in writing from the company - payer by means of a written declaration.
Where the payer of the income is a company or a self-employed person who has an obligation to deduct and pay the final tax, you shall certify the circumstances for exceptions to them by means of a document issued by the tax administration of the country in which you are established for tax purposes, and by means of a declaration from you that the circumstances referred to in Article 13 of ITNPA are present (Article 37, Para 8 of ITNPA).
Non-taxable income from interest
(Art. 13 of ITNPA)
- Interest and discounts on Bulgarian state, municipal, and corporate bonds, as well as on similar bonds issued under the legislation of another EU Member State or of a State party to the Agreement on the European Economic Area, acquired by resident natural persons and non-resident natural persons who are residents for tax purposes in an EU Member State or an EEA country (Article 13, Para 1, Item 9 of ITNPA);
- Interest on bonds or other debt securities issued by the State or municipalities and admitted to trading on a regulated market and growth market in the period from 01.01.2021 to 31.12.2025 in the country or in a Member State of the European Union or in another State party to the Agreement on the European Economic Area, acquired by non-resident natural persons.
- Interest on non-taxable judicially established claims (Article 13, Para 1, Item 10 of ITNPA).
DTCs
It is possible that the applicable double taxation convention for income and capital between Bulgaria and the State whose resident you are may stipulate a different tax regime. See Double Taxation Conventions (DTCs).
The procedure for applying the conventions as regards non-resident natural persons is laid down in Chapter Sixteenth, Section III, Article 135-242 of the Tax and Social Security Procedure Code (TSSPC) and shall be applied at your own initiative as regards the person - recipient of the income.
Declaration and payment
The final tax on income from interest on bank accounts of resident natural persons shall be declared with the tax return under in Article 55 of ITNPA, and shall be paid by the banks by the end of the month following the month in which the income was acquired. You have no obligation to declare this income in the annual tax return.
You shall declare and pay by the end of the month following the quarter of the accrual or acquisition of the income from interest.
Where the payer of the income from interest to non-resident natural persons is a company or a self-employed person within the meaning of the Social Security Code (SSC), the payer shall deduct and pay the tax within the end of the month following the quarter of the accrual of the income by the company or the payment of the income by the self-employed person to the state (central) budget into the account of the TD of NRA at the place of registration of the payer of the income (Article 65, Para 7 of ITNPA). The tax return under in Article 55 of ITNPA shall be submitted electronically within the deadline for payment of the tax.
Where the payer of interest income is not a company or a self-employed person, you as the recipient of the income shall pay the tax to the state (central) budget, into an account of the TD of NRA competent for:
- your permanent address;
- the permanent address of the proxy when you have received income through a proxy with a permanent address in the country;
- in Sofia city for all other cases.
In these cases, you shall also submit the tax return under in Article 55 of ITNPA.
Given that the tax is final, you as a non-resident natural person – recipient of the income shall not submit an annual tax return, except in cases where the circumstances for recalculating the final tax are present (Article 37a of ITNPA).
You shall declare the final tax on interest on bank accounts abroad in Appendix No 8 to the annual tax return under Article 50 of ITNPA, where you also calculate the tax due.
Income from interest taxable under Article 35 of ITNPA, regardless of whether or not it is subject to advance tax, shall be declared in Appendix No 6 to the annual tax return under Article 50 of ITNPA of the natural persons who have acquired it. The tax return shall be submitted to the territorial directorate of the National Revenue Agency competent for their permanent address by 30 April of the year following the year in which the income was acquired.
For payment, see Payment.
Information under Art. 73 of ITNPA
The payers of income from interest shall submit electronically, as per the place of their registration, by 28 February of the following year, information as per a template on the income paid during the year and the tax deducted during the year (Article 73, Para 1 of ITNPA).
The information does not include income from interest subject to declaration under Article 142, Para 5 of the Tax and Social Security Procedure Code.
In case of deletion/termination of a company, the information under Article 73 of ITNPA (as well as the tax return under Article 55 of ITNPA) shall be submitted within the set deadlines and in accordance with the procedure for submitting the tax return under Article 126 of the Corporate Income Tax Act (CITA).
Certificate of tax paid
A certificate of tax paid, as per a template, under ITNPA by a non-resident shall be issued at the request of the person. The request shall be submitted to the territorial directorate of the National Revenue Agency, where a tax return under Article 50 or Article 55 of ITNPA has been submitted or is subject to submission (Article 58, Para 1 of ITNPA).
Refund
Overpaid tax or unduly paid amounts of taxes on income acquired by non-resident natural persons shall be refunded by the territorial directorate of the National Revenue Agency, where the income tax is subject to payment (Article 66, Para 2 and Article 68, Para 4 of ITNPA). See Refund of overpaid amounts.
Sanctions
For you as a recipient of income:
- If you declare false data that result in a lower tax for you or to non-payment of tax, the penalty shall be a fine of up to BGN 1000 if you are not subject to a heavier penalty. In case of a repeated infringement, the fine shall be up to BGN 2000.
- If you do not submit a tax return within the set deadlines, the penalty shall be a fine of up to BGN 500 if you are not subject to a more severe penalty. In case of a repeated infringement, the fine shall be up to BGN 1000 (Article 80 of ITNPA).
For payers of income:
- If they do not submit a tax return within the set deadlines, the penalty shall be a fine of up to BGN 500 if they are not subject to a heavier penalty. In case of a repeated infringement, the fine shall be up to BGN 1000 (Article 80 of ITNPA).
- If they do not deduct or do not pay tax within the set deadlines, they shall be punished by a fine or penalty payment of up to BGN 1000 if they are not subject to a heavier penalty. In case of a repeated infringement, the fine shall be up to BGN 2000 (Article 81 of ITNPA).
- If they do not submit at all, or do not submit in due time, a statement of the income paid during the year and the tax deducted during the year, and if they provide false or incomplete data, they shall be punished by a fine or penalty payment of up to BGN 250 if they are not subject to a heavier penalty. In case of a repeated infringement, the fine shall be up to BGN 500. The fine or penalty payment shall be imposed separately for each natural person for whom an infringement has been committed (Article 82 of ITNPA).