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Changes in the Personal Income Tax Act

Changes in the Personal Income Tax Act

This section of issue 2 of KPMG’s Tax News for 2018 summarizes the main amendments introduced in the Personal Income Tax Act (PITA) as promulgated in the State Gazette, issue 98 dated 27 November 2018. Part of the changes will affect the taxation and reporting of income received in 2018, while others become effective in relation to income received in 2019.


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Amendments affecting income received in 2018

Tax reliefs

The requirement to provide a written declaration from the other spouse/parent for the purpose of claiming tax relief for young families, children and children with disabilities is abolished. In case of abuse, the relief used by both spouses/parents would be disallowed.

The tax relief for children and children with disabilities may be utilized by both parents in cases where the relief cannot be fully utilized by one of them (i.e. where the amount of relief is higher than the tax base of the parent).

Annual tax return under Article 50 of the PITA

A limitation is introduced that the annual personal income tax return cannot be filed before 10 January of the following year.

A clarification is introduced with regard to the rounding of the tax liability to the nearest Bulgarian lev. As per the provisions in force now, the rounding is applied to the tax liability prior to utilizing the tax discount. This remains valid in cases where no tax discount is applied. However, when the tax discount is applied, it is the final tax liability that will be rounded.

Changes affecting income received after 1 January 2019

Issuance of income statements

The obligation for employers to issue income statements under Article 45 of the PITA is abolished and these will be issued only at the request of the employees.

An equivalent amendment is also made with respect to income statements reporting civil and other income under Article 35 of the PITA. The requirement to issue payment confirmations for income received under civil contracts is maintained.

Reporting under Article 73 and Article 73a of the PITA

The reporting under Article 73 and 73a will be submitted electronically from 1 January 2020 with respect to income paid in 2019.

In addition to the reports for non-employment income paid to individuals, employers are required to prepare a report for the taxable employment income paid during the year as well as the withheld tax and social security. The report must also show the result of the annual reconciliation (if applicable).

The deadline for submission of the report under Article 73 is amended from 15 March to 28 February. The deadline for submission of the report under Article 73a remains unchanged.

Annual tax return under Article 50 of the PITA

The preferential deadline for submitting an annual tax return and for claiming a tax discount (subject to the fulfillment of certain conditions) will be extended from 31 January to 31 March.

The requirement to enclose an income statement under Article 45 of the PITA is abolished.

Self-insured individuals will be required to submit electronically tax returns under Article 50 and Article 55 of the PITA for income received after 1 January 2019.

Taxation of other income

The threshold for classifying a non-monetary award as such of an insignificant value is increased from BGN 30 to 100.

Тhe approach to taxing income received from monetary and non-monetary awards from games and competitions, which are not provided by the employer, is changed. As per current rules, such income is subject to personal income tax and is declared in the annual tax return by its recipient. According to the promulgated amendments, such income will be subject to one-off tax and will be declared by the payer of the income through a declaration under Article 55 of the PITA.

The change will enter into force from 1 January 2019.

© 2021 KPMG Bulgaria OOD, a Bulgarian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

KPMG International Cooperative (“KPMG International”) is a Swiss entity.  Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.



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