Inheritance tax in Bulgaria
In Bulgaria inheritance tax is payable on acquisitions due to death and gift tax on disposals among the living free of charge . Spouses and descendants are exempt from the tax.
Legal basis
Inheritance and gift tax is levied as a municipal tax based on the Local Taxes and Fees Act, which also regulates other taxes such as property tax or vehicle tax. Inheritance and gift taxes are also assessed by the municipalities. It was amended in 2005 as part of a major tax reform, whereby spouses and descendants were completely exempt from tax and the tax rates were again greatly reduced.
Tax liability
The tax is levied on the acquisition of property both in Bulgaria and abroad by Bulgarian citizens. Stateless persons who are permanent residents in Bulgaria are treated as Bulgarian nationals. Foreigners only pay tax on parts of the inherited estate that is located in Bulgaria. If assets located abroad are taxable for Bulgarian citizens, this obligation does not apply if inheritance tax is levied on these items under foreign law.
The basis for taxation is the market value of the inherited assets. However, real estate is taken into account with its tax values, which are determined with regard to the levying of property and property transfer tax. These values are well below the market values, which is why the government increased the tax values for real estate by a flat rate of 50% with effect from January 1, 2009. Motor vehicles are valued at their insurance value. Debts are deducted from the value, the funeral costs only in the amount of a lump sum of 500 levs (about 250 euros).
Tax class, allowances and tax rates
There are three different tax classes:
- Tax class I: spouses and descendants as well as ancestors in the ascending line (such as parents)
- Tax class II: siblings and their descendants
- Tax class III: all other people
Heirs in tax class I are tax-free, but must submit a tax return.
The heirs of tax classes II and III have a tax exemption of 250,000 lev (approx. 125,000 euros) and then tax 0.7% in tax class II and 5% in tax class III.
Exemptions and benefits
For heirs in tax class II, household effects, small agricultural equipment, book collections and musical instruments are tax-free. Family works of art (i.e. those that come from the testator or one of his ancestors) are tax-free for relatives up to the fourth degree.
No inheritance tax is due if the testator has an accident as a result of an occupational accident, a military operation or on the occasion of a disaster.
Discounts exist for properties that the testator himself has inherited shortly before his death. They are only set at 40% of their value if there was less than a year between the death of the testator and his own acquisition, with 50% for a maximum of two years and 60% for a maximum of three years. If several people who would inherit from each other die in the same event, then inheritance tax can only be charged once.
Orders in favor of public or non-profit organizations are tax-free.
Procedure
The tax returns must be submitted within six months of the testator's death to the municipality in which he last lived. In the case of heirs who do not belong to the family circle of the testator, the deadline for declarations does not begin until knowledge of death is obtained. If the testator lived abroad, the municipality with the largest part of the domestic estate is responsible. The tax must be paid within two months. If the estate includes companies or participations and these account for more than half of the estate's value, the tax can be deferred for up to one year (subject to interest). Banks or insurance companies may only pay out balances against proof of payment of inheritance tax. Like all other persons who professionally owned estate assets, they were obliged to submit a register of this to the tax office. Before this has happened, no handover to the heirs may take place.
Gift tax
Bulgaria used to have no gift tax. Gift tax is now due according to the same provisions as inheritance tax. However, there is no tax exemption of 250,000 lev (about 125,000 euros) for gifts.
See also
Individual evidence
- ↑ “Zakon za mestnite danaci i taksi”, DV No. 117 of December 10, 1997, last change DV No. 55/2007 of July 6, 2007
- ↑ Tax reform of 2005 ( Memento of the original from April 27, 2010 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice. ; to the old law, Bulgarian Inheritance Rules & Inheritance Tax (English) ( page no longer available , search in web archives ) Info: The link was automatically marked as defective. Please check the link according to the instructions and then remove this notice.
- ↑ Stela Ivanova: Inheritance law in Bulgaria , in: Rembert Süß (Ed.): Inheritance law in Europe, 2nd edition 2008, Zerb Verlag, ISBN 978-3-935079-57-0 , page 409 item 96
- ↑ Stela Ivanova: Inheritance law in Bulgaria , in: Rembert Süß (Ed.): Inheritance law in Europe, 2nd edition 2008, Zerb Verlag, ISBN 978-3-935079-57-0 , page 409 item 97
- ↑ Bulgaria Properties (English)
- ↑ Inheritance tax reform of 2005 ( Memento of the original from April 27, 2010 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice.
- ↑ Stela Ivanova: Inheritance law in Bulgaria , in: Rembert Süß (Hrsg.): Inheritance law in Europe , 2nd edition 2008, Zerb Verlag, ISBN 978-3-935079-57-0 , page 411 item 103
- ↑ Stela Ivanova: Inheritance law in Bulgaria , in: Rembert Süß (Ed.): Inheritance law in Europe , 2nd edition 2008, Zerb Verlag, ISBN 978-3-935079-57-0 , page 410f. Numbers 102 and 105
- ↑ Stela Ivanova: Inheritance law in Bulgaria , in: Rembert Süß (Ed.): Inheritance law in Europe , 2nd edition 2008, Zerb Verlag, ISBN 978-3-935079-57-0 , page 411. Item 106f.
- ↑ See previous edition of: * Troll / Gebel / Jülicher: Inheritance Tax and Gift Tax Act , 3rd, 7th edition 2009, Vahlen, loose-leaf commentary, ISBN 978-3-8006-2402-7 , § 21 ErbStG, marginal number 94 (Bulgaria)
- ↑ Tax reform of 2005 ( Memento of the original from April 27, 2010 in the Internet Archive ) Info: The archive link was inserted automatically and has not yet been checked. Please check the original and archive link according to the instructions and then remove this notice.
literature
- Stela Ivanova: Inheritance law in Bulgaria , in: Rembert Süß (Ed.): Inheritance law in Europe , 2nd edition 2008, Zerb Verlag, ISBN 978-3-935079-57-0 , pages 389-411
