Treaty on Avoidance of Double Taxation
• On June 4 the US President George Bush wrote to the Senate of the United States with regard to the Ratification of the TADT:
I transmit herewith, for Senate advice and consent to ratification, the Convention Between the Government of the United States of America and the Government of the Republic of Bulgaria for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion With Respect to Taxes on Income, with accompanying Protocol, signed at Washington on February 23, 2007 (the "Proposed Treaty"), as well as the Protocol Amending the Convention Between the Government of the United States of America and the Government of the Republic of Bulgaria for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion With Respect to Taxes on Income, signed at Sofia on February 26, 2008 (the "Proposed Protocol of Amendment").
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• Bulgaria, US Sign Agrement on Avoiding Double Taxation (Updated info, Febr. 28, 2008)
A Treaty for Avoidance of Double Taxation (TADT) between the United States and Bulgaria was signed in Washington D.C. on February 23, 2007, by the Minister of Finance of Bulgaria Plamen Oresharski and the Deputy Secretary of the U.S. Department of Treasury, Robert M. Kimmitt. The two sides signed February 26th, 2008, an additional protocol that had to accompany the treaty. The Treaty and the protocol are now back to the U.S. State Department for transmittal to the Senate. The Treaty and protocol must undergo formal ratification procedures in both the U.S. Senate and the Parliament of Bulgaria. Once ratified, they will take effect on January 1 of the following year.
The TADT applies to direct taxes only and excludes indirect levies, such as value-added and excise taxes, as well as all social contributions. TADT applies to all sources of income that residents of either state have received "at source" in the other state. The TADT will reduce the tax burden for residents of both states, which will stimulate cross-border trade and investment.
For more information about the tax benefits offered by the Treaty for Avoidance of Double Taxation and for answers to frequently asked questions, please see More_Information. To view the text of the U.S.-Bulgaria treaty, please see Text_of_the_Treaty.
If you have additional questions about the treaty, please send them to: sofia@usembassy.bg.
The Agreement
• Bulgarian Parliament Ratifies TADT
The Bulgarian Parliament has ratified July 12th 2007 the Treaty for Avoidance of Double Taxation (TADT) between the United States and Bulgaria. The document was signed in Washington on Feb. 23 this year by Bulgaria's Minister of Finance Plamen Oresharski and the U.S. Deputy Secretary for the Department of Treasury, Robert M. Kimmitt.
The list of tax breaks available to residents of either state now includes a reduction from 10% to 5% of tax on copyright and licensing royalties and a tax exemption for cases when the beneficial owner of the dividends is a pension fund that is a resident of either state; a 5% tax on the gross amount of the dividends if the beneficial owner is a company that owns directly at least 10 percent of the voting stock of the company paying the dividends; 10% of the gross amount of the dividends in all other cases. U.S. companies shipped goods worth $490.5 mln to Bulgaria last year while Bulgarian exports to the U.S. topped $438.9 mln.
The Treaty should go for ratification by the U.S. Senate and will come into force as of January 2008.
• Bulgaria, US Sign Agreement on Avoiding Double Taxation
Bulgaria and the United States of America signed on Feb. 23 an agreement for avoiding double taxation between the two countries. The document was signed by Bulgaria's Minister of Finance Plamen Oresharski and the U.S. Deputy Secretary for the Department of Treasury, Robert M. Kimmitt.
"This is an important event for the development of our relations. Signing this agreement will bring serious growth of US investments in Bulgaria," Kimmitt said, underlining this is the first of a kind agreement between the two countries. It will bring financial advantages to the Bulgarian financial environments and to US business, Minister Oresharski said. The treaty will substantially lighten the tax burden over dividends of trans-border trade, provides for special mechanisms that will keep it safe from violations by citizens of third countries. The document also includes clauses on exchange of any kind of financial information between the two countries.
The treaty on the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income generally reduces but does not eliminate, the rates of taxation on cross-border dividend, interest and royalty payments, the U.S. government said on its website. However, the treaty generally eliminates withholding when cross-border dividends are paid to pension funds, and when cross-border interest is paid to the government of the other country or a financial institution resident in the other country.
In addition, the treaty contains provisions preventing so-called treaty shopping, which is the inappropriate use of a tax treaty by third-country residents. The treaty also contains provisions for the exchange of information between the two countries, including bank information.
The list of tax breaks available to residents of either state now includes a reduction from 10% to 5% of tax on copyright and licensing royalties and a tax exemption for cases when the beneficial owner of the dividends is a pension fund that is a resident of either state; a 5% tax on the gross amount of the dividends if the beneficial owner is a company that owns directly at least 10 percent of the voting stock of the company paying the dividends; 10% of the gross amount of the dividends in all other cases. U.S. companies shipped goods worth $490.5 mln to Bulgaria last year while Bulgarian exports to the U.S. topped $438.9 mln.
AmCham has lobbied actively and successfully for the re-launch of negotiations on a US - Bulgaria DTT since 2003. Several rounds of negotiations between US Treasury and Bulgarian Ministry of Finance took place during 2005 and 2006. On October 7, 2003 AmCham presented its position paper on the matter at the meeting with US Treasury in Washington D.C. The document has been a result of extensive discussion in the Chamber. It was prepared with the assistance of Ernst & Young Bulgaria, KPMG, Deloitte and Borislav Boyanov & Co. and supported by individual letters written to Secretary of Treasury from American Standard, AbC.R.O., BAEF, Bristol-Myers Squibb, Citibank, Coca-Cola HBC Bulgaria, Curtis/Balkan EBRD, Earnst&Young Bulgaria, Entergy, Hilton Sofia, Michigan Magnetics.
The Treaty should go for ratification by the U.S. Senate and the Bulgarian Parliament later this year and will come into force as of January 2008.
• DTT Update by Kenneth Lefkowitz, June 15 2006
Kenneth Lefkowitz, Chair of PA Committee has provided this update for the developments in the DTT negotiations.
Briefing [updated]
• Position Paper - February 2006
DTT Position paper.pdf
• Archive_Minister of Finance Meets AmCham Bulgaria /in BG/_Jan. 26 2006
На 26 януари 2006 г. министърът на финансите Пламен Орешарски се срещна с ръководството на Американската търговска камара у нас. На срещата присъстваха г-н Кенет Лефковиц, президент на Американската търговска камара, г-н Валентин Георгиев, изпълнителен директор, както и търговското аташе и икономическият съветник на Американското посолство в България .
Една до темите, която бе обсъждана по време на разговорите беше възможността за започване на преговори за решаване на въпроса за подписване на споразумение за избягване на двойното данъчно облагане.
Министърът на финансите Пламен Орешарски увери представителите на американския бизнес у нас в готовността и желанието на българското правителство да съдейства за увеличаване на американските инвестиции в страната. Министър Орешарски изтъкна, че съществен принос за това би имало споразумението за избягване на двойното данъчно облагане. „Оптимист съм, че в хода на преговорите ще успеем да намерим удовлетворителни решения за финализиране на документа”, заяви финансовият министър.
Той припомни, че преговорите продължават вече 10 години, но е постигнат съществен напредък в отношението на американската администрация по въпроса от 2000-та година досега, като заслугата за това е на Американската камара.
Представителите на американския бизнес у нас изразиха общото си задоволство от развитието на данъчната система у нас и заявиха, че ще лобират за създаване на все по-благоприятен бизнес климат в страната.
• Archive_US-Bulgaria DTT Action Plan Jan. 2006
Action plan and Report by Kenneth Lefkowitz, Chair Public Affairs Committee
• Archive_US and Bulgaria to Negotiate Income Tax Treaty /April 2005/
The United States and Bulgaria announced April 19 2005 that they plan to begin negotiations of Bilateral Income Tax Treaty. The first round of negotiations is expected to take place in the autumn of 2005. The treaty would be the first tax treaty between the two countries.
The Treasury Department invites written comments from the public regarding the upcoming negotiations. Comments should be sent to Patricia Brown, Acting International Tax Counsel, Room 5064C Main Treasury building, 1500 Pennsylvania Avenue NW Washington, DC 20220. Comments also may be sent by fax to (202) 622 1772, or e-mail to Patricia.A.Brown@do.treas.gov
• Archive_AmCham Meets with US Treasury /May 27 2005/
For more information click Meeting Memo