Bulgaria Gazettes its 2025 Budget Law which Includes Numerous Changes to the Global Minimum Tax Regime

General

On March 27, 2025, Bulgaria’s 2025 State Budget Law (the ‘2025 Budget Law’) was published in the Official Gazette. This includes a number of changes to the Corporate Income Tax Law to amend the Global Minimum Tax provisions for accounting periods beginning on or after January 1, 2024.

Changes in the 2025 Budget Law include:

Allocation of UTPR Tax to Constituent Entities

New Articles 260i(5)-(7) of the CIT law provide that the UTPR tax allocated to Bulgaria is allocated to individual constituent entities in Bulgaria based on the following formula:

50% x (Number of employees in the constituent entity/ Number of employees in the MNE group in the country) + 50% x (Total value of tangible assets in the constituent entity/ Total value of tangible assets in the MNE group in the country)

Inclusion of Switch-Off Rules

New Article 260y1 applies the OECDs Switch-Off rule for the QDMTT Safe Harbour where a QDMTT jurisdiction decides:

-not to impose a QDMTT on Flow-through Entities created in its jurisdiction;

-not to impose a QDMTT on Investment Entities subject to equivalents Articles 7.4-7.6 of the OECD Model Rules;

-to adopt an equivalent of Article 9.3 (international activity exemption) without limitation;

-to include JVs or members of a JV Group within the scope of the QDMTT but imposes the liability on Constituent Entities of the main group instead of directly on the members of the JV Group;

-not to apply a QDMTT on a Constituent Entity that is a Securitisation Entity

QDMTT Accounting Standard

Article 260y27 of the CIT Law is amended to include specific provisions for determining which accounting standard should be used for QDMTT purposes.

When the constituent entities of an MNE group located in Bulgaria prepare their financial statements for the reporting period in accordance with the Bulgarian Accounting Act on the basis of:

1. the same accounting standard, the QDMTT is determined on the basis of this accounting standard (ie Bulgarian GAAP if the CEs in Bulgaria apply Bulgarian GAAP or IFRS if the CEs in Bulgaria apply IFRS). The tax period is the calendar year;

2. different accounting standards, the QDMTT is determined on the basis of the accounting standard in used in the consolidated accounts. The tax period is the accounting period of the group.

Under Article 260y27(3) where a constituent entity of an MNE Gorup located in Bulgaria prepares more than one financial statement based on different accounting standards, the QDMTT is determined as follows:

1. where all other constituent entities of the same MNE Group located in Bulgaria prepare their financial statements for the reporting period under the Accountancy Act on the basis of the same accounting standard, that accounting standard is used.

2. If the other constituent entities apply different accounting standards, the accounting standard used in the consolidated accounts applies.

Implementation of the OECD Administrative Guidance

The 2025 Budget Law includes numerous amendments for the:

February 2023 OECD Administrative Guidance (AG1)

July 2023 OECD Administrative Guidance (AG2)

December 2023 OECD Administrative Guidance (AG3)

June 2024 OECD Administrative Guidance (AG4)

An overview of the amendments, the relevant provision in the draft law, and the related Article in the OECD Administrative Guidance is provided in the table below:

Use of OECD Guidance, Generally

A new Section 2 of the additional provisions to the CIT Law states that the OECD Guidance (which includes the OECD Model Rules, Commentary, Administrative Guidance and Safe Harbours Guidance) is to be used as a source of examples or interpretation for the application of the Global Minimum Tax rules in Bulgaria.

Currency/Filing

An amended Article 260y23 provides that the GloBE information return (“GIR”) will be submitted in the currency of the group consolidated financial statements. In cases where conversion into BGN is necessary, the official exchange rate for the last day of the fiscal period of the BGN to the currency in which the top-up tax is determined should be used.

Article 260y25 provides that domestic top-up tax returns will be converted in BGN based on the exchange rate of the Bulgarian National Bank for the last date of the fiscal period.

June 30, 2026 Filing

Section 30 of the 2025 Budget Law provides that the filing/payment deadline for the GIR and tax returns for the first (transitional year) is 18 months after the last day of the tax period however, this cannot be before June 30, 2026. However, the filing system will be operational from January 10, 2026.