Amendments to Local Taxes and Fees Act in Bulgaria

Bulgaria/December 2013

Proposals for amendments of the effective Local Taxes and Fees Act in Bulgaria have been published by the Bulgarian Ministry. One of the purposes of the amendments is to harmonise the Act with the existing Law on Energy Efficiency, more specifically in the part of the release from payment of local taxes and fees, tax on buildings, for the owners of buildings that cover requirements for energy effective buildings. The amendments also aim to harmonise the Bulgarian legislation with the existing European legislation by applying tax reliefs for owners of vehicles that are with low standards of noxious gas and tax reliefs for religious properties.

To this date there is a contradiction between the effective Local Taxes and Fees Act and Law on Energy Efficiency. On one hand, Law on Energy Efficiency decrees that Certificates for Power Supply Class B, C and D for buildings could be re-issued if certain requirements are met. On the other hand, the above mentioned important text is not included in the Local Taxes and Fees Act, which is a serious obstacle for applying the tax relief in practice. The amendments make explicit provisions that the relief could be applicable only for a period not exceeding ten years after the execution of the reconstructions of the buildings that lead to the possession of the certificate.

Another amendment is the tax relief for the owners of vehicles in Bulgaria. The relief will depend on the ecological standards regarding the ecological rates of noxious gas. Different rates of tax relief would be applicable, depending on the different categories of the vehicles on one side and the ecological categories on the other. The forecasted rates of the relief from the annual ‘vehicle’ tax are 30% or 50%. This amendment is the first step to the property taxation, based on the standards of noxious gas, which comes to show a harmonisation with the European legislation.

Provisions for tax relief from local taxes and fees are discussed for certain types of properties-such as churches, cloisters and other prayer temples. The reliefs will be applicable not only the buildings, but also the land of these buildings. The only requirement is the above mentioned buildings to be owned by one of the officially registered religions in Bulgaria.

Last, but not least, is the amendment to garbage tax that is effective from 1 January 2015 according to which the ‘garbage tax’ of the properties will not to be calculated and accumulated by the municipalities, based on the valuation of the property or its market price, as it is now which is not fair. There are still discussions about the method that will lead to equitable tax, connected to the real expenses.

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