The Double Taxation Relief (Taxes on Income) (Bulgaria) Order 1987

Made: 26th November 1987

At the Court at Buckingham Palace, the 26th day of November 1987 Present, The Queen’s Most Excellent Majesty in Council

Now, therefore, Her Majesty, in exercise of the powers conferred upon Her by section 497 of the said Income and Corporation Taxes Act 1970, and of all other powers enabling Her in that behalf, is pleased, by and with the advice of Her Privy Council, to order, and it is hereby ordered, as follows:—

1

This Order may be cited as the Double Taxation Relief (Taxes on Income) (Bulgaria) Order 1987.

2

It is hereby declared —

• (a) that the arrangements specified in the Convention set out in the Schedule to this Order have been made with the Government of the People’s Republic of Bulgaria with a view to affording relief from double taxation in relation to income tax, corporation tax or capital gains tax and taxes of a similar character imposed by the laws of Bulgaria;

• (b) that those arrangements include provisions with respect to the exchange of information necessary for carrying out the domestic laws of the United Kingdom and the laws of Bulgaria concerning taxes covered by the arrangements; and

• (c) that it is expedient that those arrangements should have effect.

SCHEDULE — CONVENTION BETWEEN THE GOVERNMENT OF THE UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND AND THE GOVERNMENT OF THE PEOPLE'S REPUBLIC OF BULGARIA FOR THE AVOIDANCE OF DOUBLE TAXATION WITH RESPECT TO TAXES ON INCOME AND CAPITAL GAINS

The Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the People’s Republic of Bulgaria;

Confirming their desire to extend and promote economic co-operation to their mutual benefit;

Desiring to conclude a Convention for the avoidance of double taxation with respect to taxes on income and capital gains;

Have agreed as follows:

ARTICLE 1 — Personal scope

This Convention shall apply to persons who are residents of one or both of the Contracting States.

ARTICLE 2 — Taxes covered

ARTICLE 3 — General definitions

ARTICLE 4 — Residence

ARTICLE 5 — Permanent establishment

ARTICLE 6 — Income from immovable property

ARTICLE 7 — Business profits

ARTICLE 8 — International traffic

ARTICLE 9 — Dividends

ARTICLE 10 — Interest

ARTICLE 11 — Royalties

ARTICLE 12 — Capital gains

ARTICLE 13 — Professional services

ARTICLE 14 — Salaries and similar remuneration of individuals

ARTICLE 15 — Directors' fees

Directors' fees and other similar payment derived by a resident of a Contracting State in his capacity as a member of the management or supervisory board or of the board of directors of a company which is a resident of the other Contracting State may be taxed in that other State.

ARTICLE 16 — Artistes and athletes

ARTICLE 17 — Pensions

Subject to the provisions of paragraph (2) of Article 18 of this Convention, pensions and other similar remuneration paid to a resident of a Contracting State in consideration of past employment shall be taxable only in that State.

ARTICLE 18 — Government service

ARTICLE 19 — Students

Payments which a student or business apprentice who is or was immediately before visiting a Contracting State a resident of the other Contracting State and who is present in the first-mentioned State solely for the purpose of his education or training receives for the purpose of his maintenance, education or training shall not be taxed in that State, provided that such payments arise from sources outside that State.

ARTICLE 20 — Teachers, etc

ARTICLE 21 — Income not expressly mentioned

Items of income of a resident of a Contracting State, wherever arising, other than income paid out of trusts or the estates of deceased persons in the course of administration, which are not dealt with in the foregoing Articles of this Convention shall be taxable only in that State.

ARTICLE 22 — Elimination of double taxation

ARTICLE 23 — Non-discrimination

ARTICLE 24 — Mutual agreement procedure

ARTICLE 25 — Exchange of information

ARTICLE 26 — Members of diplomatic and consular missions

ARTICLE 27 — Entry into force

Each of the Contracting States shall notify to the other the completion of the procedures required by its law for the bringing into force of this Convention. The Convention shall enter into force on the date of the later of these notifications:

• (a) in the United Kingdom:

• (i) in respect of income tax and capital gains tax, for any year of assessment beginning on or after 6 April in the calendar year next following that in which the Convention enters into force;

• (ii) in respect of corporation tax, for any financial year beginning on or after 1 April in the calendar year next following that in which the Convention enters into force; and

• (b) in Bulgaria:

• in respect of income and capital gains arising for any tax year beginning on or after 1 January in the calendar year next following that in which the Convention enters into force.

ARTICLE 28 — Termination

This Convention shall remain in force until terminated by one of the Contracting States. Either Contracting State may terminate the Convention, through diplomatic channels, by giving notice of termination at least six months before the end of any calendar year beginning after the expiration of five years from the date of entry into force of the Convention. In such event, the Convention shall cease to have effect:

• (a) in the United Kingdom:

• (i) in respect of income tax and capital gains tax, for any year of assessment beginning on or after 6 April in the calendar year next following that in which the notice is given;

• (ii) in respect of corporation tax, for any financial year beginning on or after 1 April in the calendar year next following that in which the notice is given; and

• (b) in Bulgaria:

• in respect of income and capital gains arising for any tax year beginning on or after 1 January in the calendar year next following that in which the notice is given.

Signed

G. I. de Deney — Clerk of the Privy Council

Explanatory note

(This note is not part of the Order)

The Convention with the People’s Republic of Bulgaria is set out in the Schedule to this Order.

The Convention provides for business profits not arising through a permanent establishment to be taxed only in the country of the taxpayer’s residence. Profits attributable to a permanent establishment may be taxed in the country in which the permanent establishment is situated (Articles 5 and 7). Profits arising from the operation of ships, aircraft or road vehicles in international traffic are to be taxed only in the country in which the place of effective management of the enterprise is situated (Article 8).

The rate of tax imposed in the country of source on dividends derived by a resident of the other country is not to exceed 10 per cent. of the gross amount of dividends (Article 9).

The country of source will exempt from tax interest and royalties paid to a resident of the other country (Articles 10 and 11).

Provision is made for income arising from immovable property and gains from the alienation of that property to be taxed in the country in which the property is situated (Articles 6 and 12).

The earnings of temporary business visitors and some other individuals are, subject to certain conditions, to be taxed only in the country of the taxpayer’s residence (Articles 13 and 14).

Income derived in respect of the personal activities of entertainers and athletes may normally be taxed in the country in which those activities are exercised (Article 16). The income of visiting teachers and researchers (Article 20) and certain payments made to visiting students and trainees (Article 19) are, subject to certain conditions, to be exempt from tax in the country visited.

Government service salaries and pensions are normally to be taxed by the paying Government only (Article 18) while other pensions are to be taxed only in the country of the taxpayer’s residence (Article 17).

Where income continues to be taxable in both countries relief from double taxation will be given, in effect, in accordance with the laws of each country. In the case of dividends, the United Kingdom will give credit for underlying tax paid in Bulgaria while the United Kingdom company receiving the dividend owns at least 10 per cent. of the capital in the Bulgarian company. The United Kingdom will also give credit for tax spared under certain provisions of Bulgarian law designed to promote development there (Article 22).

There are provisions safeguarding nationals and enterprises of one country against discriminatory taxation in the other country (Article 23) and for consultation (Article 24) and exchange of information (Article 25) between the taxation authorities of the two countries.

The Convention will enter into force when the legislative procedures in both countries have been completed and will have effect in the United Kingdom from April in the following calendar year (Article 27).

Footnotes

[^f00001]: 1970 c. 10; section 497 was amended and extended by sections 98(2) and 100(1) of the Finance Act 1972 (c. 41), section 10 of the Capital Gains Tax Act 1979 (c. 14) and section 70 of the Finance Act 1987 (c. 16).