Local Taxes & Fees
The biggest share of the tax burden in Bulgaria is centrally imposed, i.e. the municipality has no authority in most of the taxes and fees. However, there is a tendency for somewhat fiscal decentralization, meaning that in the long run the municipality might gain more power with respect to the taxes and fees.
With respect to nationally adopted tax rates, Bulgaria has one of the lowest corporate and personal income tax rates in Europe (10%). Corporate income from production activities in high unemployment regions is tax exempt. Costs of fixed intangible assets created through research and development are also deductible. In addition, Bulgaria applies EU customs legislation and has signed double tax treaties with 68 countries. Income tax rates are noticeably higher in other CEE countries. For example, in Romania personal income is taxed at 16%, while Central European countries such as Poland, Hungary and Czech Republic apply tax rates which vary from 15 to 18%. With respect to local taxes, currently there are two important rates that are decided by the municipality and affect business across the board – one is property tax, and the other is waste fee. A blink on those two gives idea on the locally imposed tax burden as well as to the municipal policy intentions in the long run.
The tax on property is annually 0.18% of the tax valuation of the property. The rate has not been changed for the past eight years. The tax valuation of the property is the other component in the estimation of the nominal tax. It is subject to general rules that also do not tend to change frequently. The tax valuation of production facilities in Plovdiv may vary according to location and type of buildings, however it would not exceed 193 EUR/sq. m. That means that a premises of 4500 sq. m. would be estimated to be worth up to EUR 868,500 for tax purposes. The annual property tax for such property would be approximately EUR 1563.
The other administrative burden that affect every business in the municipality is the waste fee (or tax). Business pay such fee regardless of the fact if they are producers or service providers, as long as they have a physical presence (office, warehouse, etc.) in the city. So the waste fee is entirely different from the industrial waste management costs, and applies to every building and property of households and businesses.
Businesses have two options to deal with the municipal waste fee. The first option is to pay according to quantities of waste by contracting one of the waste-container options with the municipality.
A bigger container would imply a fee of EUR 1366 per year, and the smaller container would cost EUR 425 per year. The number of containers depends on the quantity of waste. In addition, the company pays a fee of 0.3% of the tax valuation of the property.
The second option is to pay according to the tax valuation of the property (which is the default regime, i.e. that one applies in the company has not applied to a number and type of containers). The tax valuation of the property is here applied as well. The waste fee is currently 0.53% of the tax valuation of the property. Thus for a property of 4500 sq. m. for which the tax valuation is up to EUR 868,500 the waste fee would be up to some EUR 4600.
THE WASTE FEE IS CURRENTLY 0.53% OF THE TAX VALUATION OF THE PROPERTY.
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