In Bulgaria, a special tax is imposed on protocol expenses or similar expenses.
Protocol or similar expenses shall mean the following:
- Gifts, restaurants etc.;
- Expenses related to the use of company cars for personal needs.
It should be kept in mind that the expenses incurred by a vehicle as part of the Bulgarian company's customer-supplier cycle are not subject to this tax. On the other hand, private expenditure shall be subject to such taxation. So for example, if an employee uses the company vehicle to go to a customer, the expense incurred (gasoline, etc. ...) will not be taxed, whereas if the same vehicle is used by the same employee to go home in the evening or to go to the mountains on the weekend, the expense incurred will be taxed.
The tax rate is 10%.
The tax on protocol expenses shall be declared in the annual tax statement. The due tax shall be paid within the same period.
It should be noted that this tax on expenses also affects in the same way and under the same conditions social benefits provided in kind to employees or managers in Bulgaria, for example :
- Supplementary health insurance (over BGN 60 per month) ;
- Food vouchers (over BGN 80 per month) ;
- Subscription for gyms, dating sites etc.
- Transportation costs from home to work and back (other than bus cards)
- Etc.
In case the employee’s monthly remuneration is lower than BGN 3000 (the threshold on which social charges are applied), it is necessary to add the “expenses/part of these expenses” to the remuneration.