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Name of law
Law on economic and financial relations with companies registered in jurisdictions with preferential tax regime related persons and their beneficial owners




Name Bill
BILL economic and financial relationships with companies registered in jurisdictions with preferential tax regime and their actual owners





Date of adoption
20/12/2013



Number / year Official Gazette
1/2014







DECREE № 272
Pursuant to Art. 98 pt. 4 of the Constitution of the Republic of Bulgaria
DECREE:
To be published in the "Official Gazette" Act on economic and financial relations with companies registered in jurisdictions with preferential tax regime, their affiliates and their actual owners HLІI adopted by the National Assembly on December 20, 2013
Released in Sofia on December 27, 2013
President of the Republic: Rosen Plevneliev
stamped with the state seal.
Minister of Justice: Zinaida Zlatanova LAW

economic and financial relations with companies registered in jurisdictions with preferential tax regime related persons and their beneficial owners Subject

Art. 1. This law governs economic and financial relations with companies registered in jurisdictions with preferential tax regime, their affiliates and their actual owners.
The main objective
Art. 2. Economic and financial relations with companies registered in jurisdictions with preferential tax regime related persons and their beneficial owners based on the exclusion from public funds and management of financial resources of these companies contrary to the public interest and prevent diversion from taxation.

Prohibitions Art. 3. companies registered in jurisdictions with preferential tax regime and their affiliates shall be prohibited, directly or indirectly:
1. participation in the procedure for obtaining a license as a credit institution under the Law on Credit Institutions or participation in such an institution, regardless of the percentage of participation and the number of shares it wishes to acquire;
2. participation in the procedure for obtaining a license to conduct business under the Insurance Code or participation in a company which operates under the Insurance Code, regardless of the percentage of participation and the number of shares it wishes to acquire;
3
. participation in the procedure for obtaining a license to conduct business as pension company in the Social Security Code or participation in such a company, regardless of the percentage of participation and the number of shares he wishes to acquire;
4. participation in the procedure for obtaining a license to perform the service or activity under the Markets in Financial Instruments or participation in a company which holds a license under the same law, regardless of participation rates or the number of shares it wishes to acquire;
5. participation in the procedure for obtaining a license to conduct business under the operation of collective investment schemes and other collective investment undertakings or participation in a company which holds a license under the same law, regardless of participation rates or the number of shares;
6. participation in the procedure for obtaining a license to perform activities of payment institutions under the Payment Services and Payment Systems or participation in such an institution that holds the same law, regardless of participation rates or the number of shares;
7. participation in the procedure for obtaining a license or permit for prospecting and mineral exploration;
8. participation in public procurement in the Public Procurement Act and the regulations for its implementation, regardless of the nature and value of the contract, including through a partnership / consortium, which involved a company registered in a jurisdiction with low tax regime;
9. participation in privatizations, including the municipal property;
10. acquisition of state or municipal property in the sale and / or exchange of state and / or municipal property;
11. participation in the procedure for granting a license under the Excise Duties and Tax Warehouses;
12. establishment or acquisition of participation in a professional sports club licensed by the Federation;
13. Application priority investment project under the Law on Investment Promotion;
14. participation in the procedure for granting a license under the Energy Act;
15. participation in the procedure for granting a license under the Gambling Act;
16. participation in the procedure for granting a license to trade in dual-use goods;
17. participation in the provision of mobile operator license in the Electronic Communications Act, respectively acquiring a stake in that operator;
18. participation in the procedure for obtaining concession or the award of contract for work on delivery and / or water discharges;

19. participation in the process of obtaining a concession or contract award to conduct business waste collection and disposal of municipal waste disposal in landfills or other facilities of garbage or to maintain the cleanliness of public areas;
20. establishment or acquisition of participation in a person who applies or has received a license for radio and television broadcaster under the Law on radio and television;
21. establishment or acquisition of participation in person, publisher of the periodical printed matter;
22. participation in public-private partnership;
23. establishing or participating in polling agency or person who prepares and submits public opinion surveys;
24. establishing or participating in a person who carries out activities under the independent financial audit;
25. establishing or participating in a person who carries out activities under the independent evaluators;
26. establishing or participating in a person who operates under the Renewable Energy;
27. participation in a company with state or municipal participation;
28. acquire ownership of lands and forests of the state forest fund.

Exceptions Art. 4. Article 3 shall not apply where:
1. the company's shares, which directly or indirectly participates company registered in a jurisdiction with low tax, are traded on a regulated market in a Member - State of the European Union or in another country - party to the Agreement on the European Economic Area or a market listed on the social Security Code, the law on public offering of securities Act or the activities of collective investment schemes and other collective investment undertakings and the actual owners - individuals have been declared under the particular law;
2. company registered in a jurisdiction with a preferential tax regime is part of an economic group whose parent company is resident for tax purposes in a country with which the Republic of Bulgaria has an effective convention for the avoidance of double taxation or enforceable agreement to exchange information; 3
. company registered in a jurisdiction with a preferential tax regime is part of an economic group whose parent company or subsidiary is a Bulgarian resident and its actual owners - individuals are known or traded on a regulated market in a Member - State of the Union, or in another country - party to the Agreement on the European economic Area;

4. company, which directly or indirectly participates company registered in a jurisdiction with a preferential tax regime is the publisher of periodicals printed and presented information about the real owners - individuals under the Law on compulsory deposit of printed and other works.
Implementation of Art. 4 based on false data
Art. 5. Where on the basis of false data is supplied exception of art. 4, in the cases of:
1. Article 3 pt. 1-6 - refusing to issue a license, permit to conduct business or authorization to acquire participatory accordingly take when issued;
2. Article 3 pt. 7 - remove the applicant for participation in concession or authorization for prospecting and exploration of minerals, respectively, are terminated the concession contract or suspend the permit when it is issued; 3
. Article 3 pt. 8:
a) the applicant is removed from participation in the tender procedure;
B) terminate the contract is for a contract without notice, and is not due to either return the deposit or payment of the works and payments received are subject to immediate recovery together with legal interest;
C) recovered all amounts received together with statutory interest if the contract is fulfilled by the contracting authority of the contract does not owe compensation and benefits;
4. Article 3 pt. 9 - remove the applicant from participating in the privatization procedure; after conclusion of the privatization contract deal is considered invalid unless they expire five years from the conclusion of the contract; in announcing the deal invalid contracting authority shall not refund received in the transaction, as well as compensation and benefits;
5. Article 3 pt. 10 - Advocates invalidity of the sale or exchange; in announcing the deal invalid contracting authority shall not refund received in the transaction, as well as compensation and benefits;
6. Article 3 pt. 11 - refused to grant a license, or be withdrawn when issued;
7. Article 3 pt. 12 - refuses to grant a license to the club, respectively lose their license, when issued;
8. Article 3 pt. 13 - refused announcement of the investment project as a priority, accordingly takes the status of the project, announced as a priority;
9. Article 3 pt. 14-17 - refused to provide a license, or be withdrawn in cases where it is issued;
10. Article 3 pt. 18-19 - remove the applicant from participating in concession or refusing the award of a contract to carry out activities accordingly terminated where the agreement is concluded;
11. Article 3 pt. 20 - refuses to grant a license for radio and television broadcaster, respectively consuming license, when issued;

12. Article 3 pt. 22 - remove participant of the procedure for determining a private partner accordingly terminated the contract of public-private partnership;
13. Article 3 pt. 27 - Advocates invalidity of participation; Announced participation void does not return the received acquisition and compensation and benefits;
14. Article 3 pt. 28 - Advocates invalidity of the sale; in announcing the deal invalid seller does not return the consideration received, and compensation and benefits.
Entry in the Commercial Register
Art. 6. (1) In the commercial register of art. 3, para. 1 of the Commercial Register Act fit the circumstances of art. 4 of this Act as follows:
1. under item. 1 and 2 - a lot of company registered in a jurisdiction with low tax regime; if the company is not subject to entry for other reasons, the presence of the circumstances under Art. 4 is grounds for registration in the commercial register;
2. under p. 3 and 4 - a lot of companies.
(2) Commercial Register, unless the circumstances of art. 4, fit and identification data on actual owners - individuals, according to a notarized statement in a form approved by the Minister of Justice.
(3) Persons notified the relevant competent authority under Art. 28a of the Credit Institutions Act, art. 16 of the Insurance Code, Art. 121zh of the Social Security Code and Art. 145 of the Public Offering of Securities, entered in the commercial register and identification data on actual owners - individuals, according to the declaration under par. 2.
(4) The relevant competent authority under Art. 3 checks the availability of registration under par. 1, 2 and 3.
(5) If the circumstances under par. 1, 2 and 3 are not entered in the commercial register, the competent authority Art. 3.

Administrative Liability Art. 7. (1) Any person who presented false documents to verify the circumstances of art. 4, unless subject to a more severe punishment, shall be punished by a fine of 50 000 to 100 000 Levs.
(2) a company registered in a jurisdiction with low tax or a related person who established or acquire a holding in a legal person - publisher of the periodical printed matter, and not the exceptions of art. 4, a pecuniary sanction of 100 000 to 500 000 Levs.
(3) For repeated violation under par. 1 or 2 fine ranging from 100,000 to 200,000 Levs, respectively proprietary sanction from 500 000 to 1 million lev.
Establishment of administrative offenses and impose administrative penalties

Art. 8. Administrative Offences are established by the relevant competent authority under Art. 3, and the administrative penalties imposed by the head of the competent administration or authorized by officials. Additional provision

§ 1. For the purposes of this Act:
1. "Company" means any entity, unincorporated association or other entity receiving the status of legislation of the country of registration, regardless of the form of association, incorporation, registration or any other similar criteria.
2. "Jurisdictions with low tax" jurisdictions are under § 1, p. 64 of the Additional Provisions of the Law on Corporate Income Tax. 3
. "Related parties" are the persons under § 1 of the additional provisions of the Commercial Law.
4. "Land" means all land from the land fund. Final provisions

§ 2. In the Tax Procedure Code (prom. SG. 105 of 2005 .; amend. And suppl., SG. 30, 33, 34, 59, 63, 73 80, 82, 86, 95 and 105 of 2006, pcs. 46, 52, 53, 57, 59, 108 and 109 of 2007, pcs. 36, 69 and 98 in 2008, pcs. 12 32, 41 and 93 of 2009, pcs. 15, 94, 98, 100 and 101 of 2010, pcs. 14, 31, 77 and 99 of 2011, pcs. 26, 38, 40, 82 94 and 99 of 2012, pcs. 52, 98, 106 and 109 of 2013) the following amendments:
1. In art. 116:
a) paragraph 3 shall be repealed;
B) in para. 4 words "2 and 3" are replaced by "and 2";
C) in para. 6 words "para. 3 "are replaced by" § 1, p. 3 letter "H" of the additional provisions ".
2. In § 1, p. 3 of the Supplementary Provisions are created letters "n" and "o":
"n) local and foreign person with whom the resident has entered into a transaction if:
aa) the foreign person registered in a country which is not a party - State of the Union and in which the due income or corporate income tax that the foreign person has realized or will realize as a result of transactions with more than 60 percent lower than income or corporation tax in the country unless the resident did not provide evidence that the foreign person owes tax, which is not subject to any preferential treatment or that the foreign person has realized the goods or services performed in the local market and
bb) State which is registered foreign person refuses or is unable to exchange information about executed transactions or relationships where there is a concluded and enacted international tax convention.
For a foreign person within the meaning of this provision shall be considered and any legal person, whether resident in the Republic of Bulgaria, or over which control exercised person eligible under letters "aa" and "bb".

For residents within the meaning of this provision shall be deemed and foreign legal entities operating in the country through a place of business and foreign individuals realizing income from a source in the country from a fixed base for transactions carried out by permanent establishment or fixed base;
O) the owners of the resident and non-resident in cases under letter "n". "
§ 3. The Law on Income Tax of Individuals (prom. SG. 95 of 2006 ; amend., SG. 52, 64 and 113 in 2007, pcs. 28, 43 and 106 of 2008, pcs. 25, 32, 35, 41, 82, 95 and 99 of 2009, pcs. 16, 49, 94 and 100 in 2010, pcs. 19, 31, 35, 51 and 99 of 2011, pcs. 40, 81 and 94 of 2012, pcs. 23, 66, 100 and 109 2013) in art. 8 par. 11 is amended as follows:
"(11) Penalties and damages of any kind, except for benefits under insurance contracts levied by local entities, local sole traders or foreign legal entities and sole traders through a permanent establishment or fixed base in the country to foreign natural persons resident in jurisdictions with preferential tax regime are a source of income in the country. "
§ 4. The Law on corporate income tax (prom. SG. 105 of 2006 ., amend., SG. 52, 108 and 110 of 2007, pcs. 69 and 106 in 2008, pcs. 32, 35 and 95 of 2009, pcs. 94 of 2010, pcs. 19 31, 35, 51, 77 and 99 of 2011, pcs. 40 and 94 of 2012, pcs. 15, 16, 23, 68, 91, 100 and 109 of 2013) in art. 12 para. 9 is amended as follows:
"(9) Penalties and damages of any kind, except for benefits under insurance contracts levied by local entities, local sole traders or foreign legal entities and sole traders through a permanent establishment or fixed base in the country to foreign legal persons established in jurisdictions with preferential tax regime are a source of income in the country. "
§ 5. in the Law on excise Duties and tax warehouses Act (prom. SG. 91 of 2005 d .; amend. pcs. 105 of 2005, pcs. 30, 34, 63, 80, 81, 105 and 108 in 2006, pcs. 31, 53, 108 and 109 of 2007, pcs. 36 and 106 of 2008, pcs. 6, 24, 44 and 95 of 2009, pcs. 55 and 94 in 2010, pcs. 19, 35, 82 and 99 of 2011, pcs. 29 54 and 94 of 2012, pcs. 15, 101 and 109 of 2013) in § 39 of the transitional and final provisions of the Law amending the Law on excise Duties and tax warehouses Act (SG. 101 of 2013 .) finally added "and § 21 para on. 10 and 11 and § 22, which come into force from April 1, 2014 ".

§ 6. The Law on Value Added Tax (Prom. SG. 63 of 2006 .; amend., SG. 86, 105 and 108 of the 2006 .; Decision № 7 of the Constitutional Court since 2007 years - SG. 37 of 2007 .; amend., SG. 41, 52, 59, 108 and 113 in 2007, pcs. 106 of 2008, pcs. 12, 23, 74 and 95 of 2009 . No.. 94 and 100 in 2010, pcs. 19, 77 and 99 of 2011, pcs. 54, 94 and 103 of 2012, pcs. 23, 30, 68, 98, 101, 104 and 109 of 2013) in art. 118, para. 3 second sentence is amended as follows: "In the case of sales of services to entertainment or goods by fiscal devices, built-in automatic self-powered-fiscal receipt registering the sale can be visualized only display without paper document issued by an order determined by the ordinance under para. 4. "
§ 7. (1) Persons subject to restrictions under Art. 3 bring their operations into compliance with the law within 6 months of its entry into force.
(2) After the deadline under par. 1 for those who had not brought their activities in compliance with law, Art. 5.
§ 8. This law comes into force on January 1, 2014
law was adopted by the 42 th National Assembly on December 20, 2013 and was affixed with the official seal of the National Assembly.
Chairman of the National Assembly Mihail Mikov
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