Mutual Agreement Procedure

The mutual agreement procedure (‘MAP’) is an administrative procedure for resolving difficulties/issues related to the interpretation, application and elimination of taxation not in accordance with the Double Taxation Conventions (DTC) concluded by Bulgaria or the Convention on the elimination of double taxation in connection with the adjustment of profits of associated enterprises (90/463/EEC) (‘Arbitration Convention’). The procedure is conducted between the competent authorities of the Contracting States and the taxpayers are not directly involved in it but are notified in a timely manner about its progress and outcome.

Legal Basis

The legal basis for conducting the procedure are the provisions on the mutual agreement procedure provided for in the relevant DTC or in the Arbitration Convention.

All DTCs concluded by Bulgaria provide for MAP provisions. These provisions are based on the Model Tax Convention of the Organization for Economic Cooperation and Development (OECD), with some deviations from this Model existing in a limited number of conventions.

The Arbitration Convention applies to avoid double taxation where, based on a transfer pricing adjustment, profits   which   are   included   in   the   profits   of   an   enterprise   of   a   Contracting  State  are  also  included  or  are  also  likely  to  be  included  in  the  profits  of  an  enterprise  of  another  Contracting  State. The Convention also applies to the attribution of profits to a permanent establishment.

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MOSS Registration

The mini One Stop Shop came into force on 1 January 2015 and allows taxable persons supplying telecommunication services, television and radio broadcasting services and electronically supplied services to non-taxable persons in Member States in which they do not have an establishment to account for the VAT due on those supplies via a web-portal in the Member State in which they are identified.

This scheme is optional, and is a simplification measure following the change to the VAT place of supply rules, in that the supply takes place in the Member State of the customer, and not the Member State of the supplier (a derogation to this place of supply rule applies as from 1 January 2019 for supplies by certain taxable persons, whose relevant annual turnover does not exceed EUR 10,000 –). The mini One Stop Shop is available to taxable persons which are established in the EU (the Union scheme), as well as taxable persons which are not established within the EU (the non-Union scheme). Without the mini One Stop Shop, the supplier would be required to register in each Member State in which he supplies services to his customers.

In practice, under the scheme, a taxable person which is registered for the mini One Stop Shop in a Member State (the Member State of Identification) electronically submits quarterly mini One Stop Shop VAT returns detailing supplies of telecommunications, broadcasting and electronically supplied services to non-taxable persons in other Member States (the Member State(s) of consumption), along with the VAT due. These returns, along with the VAT paid, are then transmitted by the Member State of Identification to the corresponding Member States of consumption via a secure communications network. The mini One Stop Shop VAT returns are additional to the VAT returns a taxable person renders to its Member State under its domestic VAT obligations.  

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