On 31 July 2019, Bulgaria’s parliament adopted new transfer pricing rules in line with recommendations of the OECD.

The new rules set out obligations for Bulgarian companies, Bulgarian permanent establishments of non-resident foreign companies and locally registered sole trades to maintain mandatory transfer pricing documentation evidencing the arm’s length basis of their transactions with related parties.

Exemptions exist, and are relevant to the following taxpayer categories:

  • Persons exempt from Bulgarian corporate income tax (certain collective investment schemes, national investment funds and alternative investment funds as well as SPVs under the Bulgarian Special Purpose Investment Companies Act);
  • Persons subject to alternative taxes (the gambling or shipping industries);
  • Persons not exceeding the following thresholds as of 31 December of the previous calendar year: a) balance sheet value of the assets BGN 38 million (19.4m euro); b) net sales revenue BGN 76 million (38.8m euro); and c) an average of 250 personnel; and
  • Persons carrying out transactions with related parties only in Bulgaria itself.

Business subject to this requirement must prepare and maintain transfer pricing documentation, and must keep records of any related party transactions exceeding the following annual thresholds or the previous year (excluding VAT and excise duties):

  • Transactions for the sale of goods BGN 400,000 (200k euro);
  • Loan transactions BGN 1 million (500k euro) regarding the loan principal or BGN 50,000 (25k euro) for the accrued interest or other revenues and expenses related to the loan; and
  • All other transactions BGN 200,000 (100k euro).

No transfer pricing documentation is required for transactions with related individuals within Bulgaria.