Country-by-Country Reporting (CBCR) is a crucial aspect of international taxation that aims to enhance transparency and combat base erosion and profit shifting. In Bulgaria, adherence to CBCR regulations is essential for multinational enterprises (MNEs) to comply with the evolving global tax landscape. This article provides a comprehensive guide for businesses operating in Bulgaria, outlining the key aspects of CBCR and the steps companies need to take to ensure compliance.

Overview of CBCR in Bulgaria

CBCR is an OECD/G20 initiative that requires multinational companies to disclose essential financial and operational information on a country-by-country basis. Bulgaria has adopted these guidelines to align with international standards and promote fiscal transparency. The primary objective is to provide tax authorities with insights into the global operations of MNEs, enabling more effective risk assessment and enforcement.

In Bulgaria, CBCR is applicable to entities that are part of a multinational group with a consolidated group revenue exceeding BGN 304 million (approximately €155 million) in the preceding fiscal year. Once a company meets this threshold, it becomes obligated to file a CBCR report.

To comply with CBCR regulations in Bulgaria, companies must prepare and submit a detailed report containing information on their global allocation of income, taxes paid, and other relevant economic indicators. The key components of a CBCR report include:

• Revenue and Profitability: Breakdown of revenue, profit, and loss in each jurisdiction where the company operates.
• Tax Jurisdiction Information: Identification of entities, their tax residence, and the nature of business activities in each jurisdiction.
• Employee Data: Overview of the number of employees in each jurisdiction.
• Assets: Information on tangible assets and their location.
• Intangibles: Details on intangible assets and their allocation across jurisdictions.

In Bulgaria, CBCR reports are submitted electronically through the National Revenue Agency (NRA). The filing deadline is typically 12 months after the last day of the fiscal year. Companies must ensure accuracy and completeness in their reports to avoid penalties and ensure compliance.

Failure to comply with CBCR requirements in Bulgaria may result in penalties, including fines and potential reputational damage. It is crucial for companies to stay informed about changes in regulations and promptly adapt their reporting practices to remain compliant.

CBCR is closely linked to transfer pricing regulations, which govern the pricing of transactions between related entities within an MNE. In Bulgaria, businesses should align their transfer pricing policies with CBCR information to avoid discrepancies and potential audits.

Complying with CBCR regulations in Bulgaria is an integral part of a multinational company’s responsibility to foster transparency and accountability in the global tax landscape. Businesses operating in the country should stay updated on regulatory changes, invest in robust reporting systems, and seek professional advice to ensure seamless adherence to CBCR requirements. By doing so, companies can navigate the complexities of international taxation, build trust with tax authorities, and contribute to a fair and transparent global business environment.