Has your company recently sold a house in BG?

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goldenfish
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Has your company recently sold a house in BG?

Postby goldenfish » Thu Oct 01, 2015 8:36 pm

My company sold the villa it had owned in Balchik since 2002, in March 2015.

I initiated the dissolution of my Company in full knowledge that I would require to incur a tax liability of 10% of any profits less any expenses I had claimed.

My solicitors wrote to me this morning informing me of the 10% tax liability. I am currently querying the amount that they are advising.

My main query however is that my wife and I are being charged a further 5%.My solicitors quote"The corporate tax of the owners of the company-because the owners receive the amount after liquidation of the company. 5%"
Anyone have any experience of this tax?

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Mat
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Postby Mat » Mon Oct 05, 2015 8:19 am

n/a
Last edited by Mat on Wed Oct 07, 2015 9:46 am, edited 1 time in total.

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mike4727
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Postby mike4727 » Mon Oct 05, 2015 8:23 pm

What you are being advised of is " dividend tax " on the amount of money the company is paying out to you as it is being dissolved, this will be 5% on the amount paid to you. Nothing you can do to mitigate this tax at this stage I'm afraid, if the company accounts were originally incorporated with a directors loan element to cover the monies used for property and other permissible purchases then that amount could now be repaid to you without dividend tax being applied. Hope this helps.

Mike

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goldenfish
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Postby goldenfish » Tue Oct 06, 2015 10:15 am

You may be right Mike. Unfortunately I cann ot get a reply from my solicitors regarding this 5% tax.
When I purchased the villa , there was no loan element.
The accountants working on behalf of thr solicitor inform me that I MAY be able to recover this tax from HM Customs and Revenue!! as a form of Double Taxation Relief.

What really annoys me is the fact that my solicitors made absolutely no mention of this tax when they courted for the dissolution of my company.

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mike4727
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Postby mike4727 » Tue Oct 06, 2015 11:29 am

I'm afraid you are yet another member of the " mushroom club " kept in the dark and fed sh*te !

Get best advice from accountant in UK before you go down the double taxation treaty route, you could be laying yourself open to taxation on the notional " profit " on your sale ( less the amount paid in BG tax ) by UK authorities. Take care and good luck with it.

Mike

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mike4727
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Postby mike4727 » Tue Oct 06, 2015 2:24 pm

I'm afraid you are yet another member of the " mushroom club " kept in the dark and fed sh*te !

Get best advice from accountant in UK before you go down the double taxation treaty route, you could be laying yourself open to taxation on the notional " profit " on your sale ( less the amount paid in BG tax ) by UK authorities. Take care and good luck with it.

Mike

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Mat
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Postby Mat » Wed Oct 07, 2015 9:48 am

goldenfish wrote:When I purchased the villa , there was no loan element.


Presumably you established a company with 5.000 leva capital (at that time) and then put your own money in to buy the place? That was the directors loan.

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Postby mike4727 » Wed Oct 07, 2015 10:43 am

Hi Mat,

there you go again with the logical thinking, when was the last time such thinking worked for you here in BG ? :lol:

Unless the correct protocols were put in place at the time of capital input ( apart from the legal element required to form the company - in this case 5k BGN ) then the BG revenue authorities will regard the repatriation of capital from company to director as dividend, currently taxable at 5%.

Mike

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Mat
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Postby Mat » Thu Oct 08, 2015 10:14 am

I'll get me coat

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goldenfish
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Postby goldenfish » Thu Oct 08, 2015 5:20 pm

Still in touch with my solicitors but here is a copy of an article from another firm of solicitors.
Will explore the 5%Corporate Tax and EU Membership.
The Corporate Income Tax Act governs taxation of dividends

In Bulgaria, according to the Corporate Income Tax Act, dividends are subject to a withholding tax of 5 percent rate when distributed to individuals or non-profit entities, as well as to non-residents as long as they are not members of EU or EEA. As long as Special Purpose Investment Vehicles (REITS) distribute the dividends or Non-EU / EEA foreign entities, then the dividend distributed to resident companies are not included in their taxable income. Capital gains from the disposal of shares in subsidiaries are subject to the flat corporate income tax worth 10 percent on the level of the Bulgarian holding company.

Special conditions

In Bulgaria, withholding tax may not be necessary to be paid if shareholders in the Bulgarian companies are tax residents of an EU country and they are not residents of a third state on the grounds of a double tax treaty. Moreover, if the shareholders are payers of corporate income tax in their resident state and they are not entitled to any tax exemptions, then they are not subject to withholding tax. It also applies to non-residents that hold at least 15 percent of the shares in the Bulgarian company that distributes the dividends for at least two years.

What are the recipient’s responsibilities?

Once a dividend was received from a Bulgarian entity, the tax is applied at the source, therefore the recipient does not have to report and therefore pay any personal income tax on the dividends. However, if the dividends are received from foreign entities, they are part of the tax return and they must be reported, as they will be taxed as part of the individual’s annual personal income tax return.


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