The agreement between Estonia and Bulgaria has been signed on 13 October 2008 in Luxembourg, ratified by Bulgaria’s Parliament on 11 December 2008, and entered into force on 30 December 2008. The agreement is to be applied with regards to tax considerations that have arisen on or after 1 January 2009. The treaty provides for rates as specified below.
Dividends(1) The withholding tax on dividends shall not exceed
(a) 0% if the beneficiary is in direct possession of at least 10% of the company’s capital and
(b) 5% otherwise
Interest(1) The tax on interest payments shall not exceed 5%
(2) Despite the provisions of item (1) interest payments originating in one of the treaty countries shall be taxed only in the other treaty country if the beneficiary of the income is its tax resident and the income is paid:
(a) to the Government, to a municipal authority or to the Central Bank of that other country
(b) in relation to a loan of any kind, extended, secured or guaranteed by the Government, a municipal
authority or the Central Bank of that other country
(c) in relation to the sale of a credit to any industrial, commercial or scientific installation
(d) in relation to a loan of any kind, extended by a bank
The tax on royalty income (authors’ and licensing remunerations) shall not exceed 5%. New DTT between Estonia and Bulgaria has come into force with effect as of 1 January 2009.
D.C.