The first issue in 2016 comments on the latest amendments to the Tax and Social Security Procedure Code that came into effect on 1 January 2016.
The Act to Amend the Tax and Social Security Procedure Code (TSSPC) was promulgated in issue 94 of the State Gazette dated 4 December 2015. The newly adopted amendments to the TSSPC came into effect as of 1 January 2016. A summary of the key changes concerning the procedural rules as well as the automatic exchange of financial information between countries is presented below.
Changes in the procedural rules
The main amendments to the procedural rules are as follows:
Automatic exchange of financial information between states
A new Section in the TSSPC is created (Section III “a” “Automatic exchange of financial information in the field of taxation”) which introduces the requirements of:
The automatic exchange of financial information represents the systematic communication by the participating jurisdiction of financial information in the field of taxation on residents of the respective participating jurisdiction. The information is communicated without a prior request from the respective jurisdiction at pre-established regular intervals.
The persons obliged to collect and provide information are the qualifying reporting financial institutions (custodial institutions, depositary institutions, investment entities and some specified insurance companies). In practice, the main group of persons that are encompassed by the automatic exchange of information are banks, certain insurance companies, investment intermediaries, collective investment schemes and the companies managing them. This concerns Bulgarian financial institutions as well as branches of foreign financial institutions established in Bulgaria.
The qualifying reporting financial institutions are to provide the NRA with the information as determined in the TSSPC with regard to the respective financial accounts held with them. These accounts are defined in such a way as to limit the possibility for the account holders to avoid providing information through the transfer of assets to financial institutions or through investing in financial products which fall outside the scope of Directive 2014/107/ЕС, the FATCA Agreement and the CRS.
Pursuant to the amendments to the TSSPC, the NRA has already published lists of (i) the accounts which are considered excluded, and (ii) the participating jurisdictions.
The following deadlines for provision of information are introduced:
Deadlines have been established to perform the necessary review of the accounts by the reporting financial institutions.
Certain sanctions are introduced for not performing the obligations related to the automatic exchange of financial information in the field of taxation by the reporting financial institutions and the account holders.
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