Press Release: Direct taxes: The European Commission requests that Bulgaria end discriminatory taxation of non-resident taxpayers

The European Commission formally requested Bulgaria to change its tax provisions according to which certain types of Bulgarian source income are subject to a withholding tax on a gross base when paid to non-residents whereas Bulgarian residents may deduct expenses related to the same income. The Commission considered that these rules may lead to higher taxation for non resident taxpayers and therefore are incompatible with the freedom to provide services and the free movement of capital. The request takes the form of a reasoned opinion (second step of the infringement procedure provided for in Article 226 of the EC Treaty). If there is no satisfactory reaction to the reasoned opinion within two months, the Commission may decide to refer the matter to the Court of Justice of the European Communities.