Introduction of Mandatory Transfer Pricing Rules in Bulgaria

A new law was introduced in the Bulgarian Tax and Social Security Procedure Code in issue 64/13.08.2019 of The State Gazette. The new law – which concerns the implementation of mandatory transfer pricing documentation requirements – will enter into force on 01.01.2020 and will apply to intragroup transactions that will take place from that date onwards.

Scope of the new Law

The new law stipulates that Bulgarian entities (including Bulgarian non-residents with Bulgarian permanent establishment) will be obliged to prepare a local file.

The local file must be prepared in case the intragroup transactions exceed the below limits:

• BGN 400,000 for transactions related to sales of goods;
• BGN 200,000 for other type of transactions;
• In case of a loan, BGN 1 million concerning capital or BGN 500,000 concerning interest expense/income.

However, a taxpayer will not be obliged to prepare such a file in case at least two of the below threshold amounts are not exceeded:

• net book value of assets: BGN 38 million (approximately EUR 19 million);
• net sales revenue: BGN 76 million (approximately EUR 39 million); and
• average number of employees for the reporting period: 250.

There are also some cases in which a taxpayer is exempted from the obligation of TP file preparation, irrespective of the above thresholds:

• The taxpayer enters into domestic related party transactions;
• The transactions are performed with individuals, except from sole traders;
• The taxpayer is exempted from Corporate Tax under Part Two, Chapter Twenty Two, Section II of the CITA; or
• The taxpayer is subject to an alternative tax under Part Five of the CITA.


The deadline for the preparation of the local file is March 31 of the following year, the same date as deadline for filling the corporate income tax return, whereas the master file must be prepared by March 31 of the year following the one of the local file preparation.

The local file is submitted to the Tax Authorities upon request, within 14 days of request, in the course of a tax audit.


In case of failure to submit the TP file by a taxpayer to the tax authorities, a penalty of 0.5% of the total amount of transactions that should have been documented may be imposed.

If a taxpayer fails to submit the master file, a penalty between BGN 5,000 and BGN 10,000 may be imposed. Finally, in case of the submission of incomplete or incorrect data, the penalty ranges from BGN 1,500 to BGN 5,000.

Our TP advisors’ team is always willing to offer its knowledge and expertise to assist clients with their TP Policy.

Nikolaos Archangelidis
Transfer Pricing Advisor