BULGARIA Law and Practice Contributed by: Todor Banchev Todorov and Victoriya Grishina, Banchev and Grishina Law Firm
fraud, tax evasion and tax avoidance. These include country-by-country reporting (CbCR) for large mul - tinational groups, transfer pricing documentation requirements, and mandatory disclosure rules (DAC 6) for certain cross-border arrangements. Additional obligations include: • SAF-T electronic reporting, phased in from 2026; • enhanced VAT reporting; • real-time control measures; and • extensive information exchange mechanisms under the EU and OECD frameworks. Together, these measures significantly increase the tax authorities’ data availability and audit capabili - ties, particularly for cross-border and high-risk trans - actions. A special measure under the internal legislation con - cerns the hidden distribution of profit, according to which the voluntary disclosure of hidden distribution of profit in the corporate tax declaration eliminates the sanction provided for such omissions. This is a deviation from the general approach of the national legislation, as, in principle, voluntary tax disclosure is not a judicially regulated measure. 5.5 Role of Tax Authorities and Enforcement Measures The Bulgarian tax authorities, primarily the National Revenue Agency, are vested with extensive investiga - tory powers to detect and investigate tax fraud. These include the authority to access accounting records and electronic data, request information from tax - payers and third parties, and conduct tax audits and inspections. The NRA may conduct on-site inspec - tions, including unannounced visits, and impose interim measures, such as the seizure of documents, goods or electronic devices, where there is a risk that evidence will be destroyed or concealed. In cases involving serious tax fraud, particularly VAT fraud, the authorities may initiate tax searches and co-ordinate with law enforcement bodies, subject to procedural safeguards and, where required, judicial oversight. The tax authorities have a broad range of powers connected with the control of the transport of goods
of high fiscal risk, including forfeiture in favour of the State, the right to request financial securities, the seal - ing of truck loads, and others. The tax raids are also a familiar practice of the tax authorities, conducted in some cases together with authorities from other regulatory institutions. Depend - ing on the search, these could be representatives of Customs, Police, Food Safety Agency, Commission for Consumer Protection, Commission on Protection of Competition and others. Penalties for cross-border transactions in Bulgaria are primarily governed by the Tax and Social Security Pro - cedure Code, the Corporate Income Tax Act, the Val - ue Added Tax Act, and related secondary legislation. The framework provides for administrative sanctions in cases of non-compliance, late reporting, incorrect tax treatment or failure to meet transfer pricing and disclosure obligations. The National Revenue Agency is the principal authority responsible for imposing and enforcing tax penalties, including fines, sanctions and interest. In cases involving serious tax fraud or criminal offences, enforcement may involve the pros - ecution authorities and criminal courts, while judicial review of administrative sanctions is carried out by the regional courts as the first court of instance and the administrative courts as the cassation instance. 6.2 Criminal Penalties Tax fraud and tax evasion in Bulgaria may give rise to criminal liability under the Criminal Code, where the offence involves intentional acts aimed at avoiding or reducing tax liabilities above statutory thresholds. Criminal offences typically include the use of false documentation, concealment of taxable income or participation in organised VAT fraud schemes. Sanc - tions may include imprisonment, criminal fines and the confiscation of assets, with penalties increasing where the offence involves particularly large amounts, repeated conduct or organised criminal activity. Crim - inal proceedings are conducted by the prosecution authorities, with cases adjudicated by the criminal 6. Penalties and Sanctions 6.1 Tax Penalties
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