Bulgaria: local rules

Bulgaria has two arm's length rules. Art. 15 of the Corporate Income Taxation Act (ZKPO) says that when related persons trade on terms that differ from those between unrelated persons and this affects the tax base, the base is set on the terms unrelated persons would have used. Art. 16 ZKPO is a wider anti-avoidance rule that can also reach deals between unrelated parties. The Tax and Social Insurance Procedure Code (DOPK) defines market price, transfer pricing and the list of methods (Additional Provisions § 1 points 8 to 10) and holds the documentation rules in Chapter Eight "a" (art. 71а to 71ж). Ordinance N-9 of 2006, which many guides still cite for the methods, was repealed from 1 January 2026 by Ordinance N-3 of 7 November 2025 (State Gazette 96/2025).

Documentation has two parts, a local file and a master file (art. 71а DOPK). A local file is due from local companies, foreign companies with a place of business in Bulgaria, and some sole traders that have controlled transactions (art. 71б(1)). The duty does not apply to companies that do not exceed at least two of EUR 20m assets, EUR 40m net sales and 250 staff on 31 December of the previous year, to deals only within Bulgaria, to tax-exempt and alternative-tax activities, or to deals with individuals who are not sole traders (art. 71б(2) and (4)). A transaction needs a local file when its value, without VAT and excise, is over BGN 400,000 for goods or BGN 200,000 for everything else (about EUR 204,517 and EUR 102,258), or when a loan is over BGN 1,000,000 or its interest and related items are over BGN 50,000 (art. 71б(5)). Similar deals can be pooled. The local file must be ready by 30 June of the year after the year it covers (art. 71д(1)). A group member must also have the group master file, which must exist within 12 months after that date (art. 71д(3)). Both files are prepared each year and are not filed. The tax office can ask for them during an audit (art. 71е). Bulgaria has no separate annual TP form.

DOPK Additional Provisions § 1 point 10 lists the methods: comparable uncontrolled price, resale price, cost plus, transactional net margin, transactional profit split, and another method the taxpayer may use under the ordinance. The way to apply them is set by a Ministry of Finance ordinance. That is now Ordinance N-3 of 7 November 2025, in force from 1 January 2026, which replaced N-9 of 2006. The text of N-3 could not be read for this file, so the detailed rules (comparability factors, ranges, hierarchy) are not described here. Market price means the price independent persons would agree on comparable terms in comparable circumstances (§ 1 point 8). The documentation must show how comparables were found. The search is refreshed at least every three years when nothing important changes, and the financial data every year (art. 71е(3)).

A missing local file costs up to 0.5% of the total value of the transactions that should have been documented. A local file counts as missing if it is not handed over by the date the tax office sets (art. 278а(5) DOPK). A missing master file costs BGN 5,000 to 10,000 (about EUR 2,556 to 5,113). False or incomplete data in the documentation costs BGN 1,500 to 5,000 (about EUR 767 to 2,556). A repeat breach doubles the sanction (art. 278а(6) to (8)). A late or missing CbC report costs BGN 100,000 to 200,000 (about EUR 51,129 to 102,258), and a missing CbC notification costs BGN 50,000 to 150,000 (art. 278а(1) and (4)). A late or missing corporate tax return costs BGN 500 to 3,000 (art. 261 ZKPO). The laws still state these amounts in leva. Bulgaria joined the euro on 1 January 2026 and the leva amounts are read at the fixed rate of 1.95583.

Bulgaria has enacted Pillar Two in Part Five "a" of the ZKPO (Chapters 34а to 34л, art. 260а to 260я35). The Part took effect on 1 January 2024 (SG 106/2023) and has the primary top-up tax (IIR, art. 260е), a national top-up tax (QDMTT, Chapter 34л, art. 260я25 to 260я29) and the secondary top-up tax (UTPR, art. 260к and 260л, from 1 January 2025). It covers groups with revenue of at least EUR 750m in two of the four previous periods, and also large domestic groups (art. 260а(2)). The tax period follows the group's consolidated accounts (art. 260б). Each Bulgarian entity files the information return (GIR) with the NRA electronically, or names the entity that files it (notification), and files a top-up tax return and pays the tax by the same date (art. 260я23). That date is 15 months after the last day of the tax period, and 18 months for the group's transitional period, which is its first tax period in scope for Bulgaria (art. 260я16 and 260я19). The national top-up tax return follows the same dates (art. 260я28 and 260я29). Fines are BGN 100,000 to 200,000 for a missing return and BGN 50,000 to 150,000 for wrong data (art. 279 ZKPO), with relief for reasonable efforts on information returns for periods that start on or before 31 December 2026 and end on or before 30 June 2028 (art. 279(5)).

Groups with consolidated revenue above EUR 750m must file a country-by-country report with the NRA within 12 months after the end of the group's reporting year if the ultimate parent is a Bulgarian tax resident, or if a Bulgarian entity must step in (art. 143у(3), 143х, 143ц and 143ф DOPK). Every Bulgarian group member must tell the NRA by the last day of the reporting year whether it is the parent, a surrogate parent or none of these, and name the reporting entity (art. 143ш). The corporate tax return is filed from 1 March to 30 June of the year after the tax year, and the tax is paid by 30 June (art. 92 and 93 ZKPO). The tax year is the calendar year (art. 21 ZKPO) and the rate is 10% (art. 20). The law gives no standing extension. DOPK art. 22(7) moves a time limit that ends on a non-attendance day to the next attendance day, and art. 22(4) says a limit counted in months ends on the same day number of the last month, or on its last day.