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Novelties in the Personal Income Tax Act

27 December 2018

Amendments to the Personal Income Tax Act (PITA) are to come into force as of 1st January 2019. These amendments could be classified in several major groups:

1. Amendments concerning tax reliefs for young families, children and children with disabilities

  • The other parent is no longer required to submit a written declaration for the purpose of claiming the respective tax relief

In this regard, it is stipulated that in cases where more than one person can benefit from/use the tax relief, each person shall owe the portion of the tax corresponding to the amount of the relief used.

  • A possibility has been introduced allowing the two parents to share the tax reliefs for children and children with disabilitiesin the cases where the tax relief exceeds the annual tax base of one of the parents  

​This possibility is a deviation from the general arrangements providing that the tax relief is used up to the amount of the annual tax bases and as long as the other parent will not benefit from the reduction for the respective tax year. In order for the provision to be applicable, the amount of the tax relief for children or children with disabilities needs to be higher than the amount of the annual tax bases of one of the parents. In this case, the difference may be used by the other parent.

  • The period within which thetaxable person shall have no public obligations subject to enforcement has been extended

According to the new regulations, any person who wishes to benefit from a tax relief, shall have no public obligations subject to enforcement not only as of the date of the annual tax return submission, but also upon the submission of the corrective declaration until 30th September.

Please note that the new provisions relating to the use of the above tax reliefs shall apply to tax reliefs for 2018 as well.

2. Monetary and non-monetary prizes are now treated differently taxwise

As of 1st January, 2019, all monetary and non-monetary prizes with a market price of more than/exceeding BGN 100 leva shall be subject to a final tax in the amount of 10%. Only object winnings of an insignificant value with a market price of less than/not exceeding BGN 100 shall remain non-taxable.

In addition, a final tax in the amount of 10% shall be levied on the gross amount of the taxable income received/earned by natural persons not registered as farmers, obtained in the form of a state aid, subsidies and other support from the European Agricultural Guarantee Fund, the European Fund for Rural Development and the State Budget.

3. Issuance of documents for paid income and withholding tax as well as attaching such documents to the annual tax return is no longer required. 

Such official notes shall be issued only upon request and the tax administration shall ex officio monitor whether the taxable persons have properly and correctly declared their income.

These amendments shall apply to income paid after 31st December 2018, respectively, for the tax returns for which the obligation to submit arises after 31st December 2019.

4. Reduction of the tax only if tax return has been submitted electronically
 
An initial deadline for submitting tax returns has been introduced – 10th January of each calendar year.

The deadline for receiving a reduction in the amount of 5 % of the income tax has been extended from  31st January to 31st March in the event that the tax return is submitted electronically. The taxable person will not be able to receive the 5% reduction in case the tax return has not been submitted electronically, even when submitted within the prescribed time period.

It has been expressly provided that the self-insured persons shall submit annual tax return only electronically.

The new time limit for receiving a reduction as well as the requirement for submitting tax returns only electronically shall apply to tax returns for which the obligation to submit arises as of 1st January 2020.

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