In this section of issue 2 of KPMG’s Tax News for 2018 we summarize the more significant changes implemented in the Local Taxes and Fees Act (LTFA) promulgated in issue 98 of the State Gazette of 27 November 2018. The changes come into force as of 1 January 2019.
Real estate tax
The individuals and legal entities will not be obliged to submit tax returns for declaring newly-constructed buildings which are put into operation (commissioned) in accordance with the Spatial Development Act (SDA), as well as for real estate/limited property rights over real estate acquired against consideration or gratuitously.
The required information for the calculation of the tax for newly-constructed buildings will be provided ex officio by the authority which has issued the certificate for putting into operation (commissioning) or has granted the use permit under the provisions of the SDA and the Cadastre and Property Register Act. It is further provided that real estate tax will become due if within two years of the finalization of the rough construction of the building, respectively within one year of the issuance of the respective protocol under the SDA, the building has not been put into operation or authorized for use (the latter change becomes effective 1 January 2020).
Information necessary for the calculation of the tax on real estate and limited rights over real estate items acquired against consideration or gratuitously will be provided by notaries within 7 days of deal finalization. Based on this information as well as on information provided by the registry offices, the municipal authorities will notify the tax liable persons on their real estate tax liabilities within one-month period.
The enterprises will have to submit information on the accounting book value of their non-residential real estate property as well as on other circumstances which are relevant for real estate tax calculation.
Heirs of real estate property may not submit real estate tax return since the tax liability can be determined ex officio based on information in the tax return for inheritance submitted in accordance with Article 32 of the LTFA.
Real estate tax will be due at a full rate in case a tax liable person has declared more than one real estate property as the main residence.
New provisions for determining the tax on real estates, for properties located within the territories of resorts have been introduced. These provisions have been appealed in terms of their compliance with the Bulgarian Constitution before the Constitutional Court. Regardless of this, they will be applicable from the moment of their entry into force until the entry into force of a judgement of the Constitutional Court declaring these provisions unconstitutional.
Under the new vehicle tax concept, the tax amount will be determined based on two components: property and ecological.
The property component depends on the engine power of the vehicle and a correction factor for the year of its production.
The ecological component is based on the ecological category of the vehicle and is within lowest range for vehicles with category Euro 6 and EEV and highest for vehicles without an ecological category or with ecological category Euro 1 and Euro 2.
Each municipality is entitled to determine the variable property component and the ecological component adhering to ranges provided for in the law.
Vehicle tax at reduced amount is due with respect to mopeds and motorcycles with up to certain engine power as well as on buses and cargo trucks with a mass over 3.5 tons, whenever the latter vehicles are with a certain ecological category.
With regard to the transfer of ownership over vehicles, there are changes in the Tax and Social Security Procedure Code. In such cases, the Ministry of Finance and the municipalities will enable verification of the vehicle tax liabilities electronically. When no regular data exchange occurred, the verification can be made based on a paper document issued by the respective municipality.
Garbage collection fee
Changes with respect to garbage collection fee determination are postponed to 2022.
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