BULGARIA: INCOME TAX TREATY WITH UK

A new income tax treaty between the Bulgaria and the United Kingdom was signed in March 2015. The treaty, once it is ratified and enters into force, will replace the existing income tax treaty (1987). The new income tax treaty includes measures that differ from the provisions under the current treaty. For example, the treaty includes new unified requirements for determining who is a “resident” with respect to the treaty-partner countries.

The treaty also would revoke a withholding tax exemption for payments of interest and royalties, and allow withholding tax at a rate not to exceed 5% if the beneficial owner of the interest or royalty payment is a resident of one of the treaty-partner countries. Provisions under the new treaty would amend the treatment of gains from the transfer of shares.