Bulgarian Tax on Expenses and Recent Developments in Cross-Border Scenarios

This article analyses the Bulgarian tax on expenses. Thirty years ago, the Bulgarian legislator introduced a direct proportional tax on certain expenses incurred by companies and sole proprietors. In the meantime, there have been several international tax developments, including the OECD’s Base Erosion and Profit Shifting (BEPS) Project, the signing of multilateral conventions and the adoption of the EU Minimum Tax Directive (2022/2523), which necessitate a new approach to tax legislation. This article discusses the peculiarities of the tax on expenses and notes how it could easily be replaced by a more typical form of tax, such as corporate tax. Further, the article addresses the consistency of the expenditure tax with tax treaties. Finally, the article addresses the impact of recent developments in international and EU tax law, in particular, the OECD GloBE Rules and the EU Minimum Tax Directive (2022/2523).