19 January 2023
The Multilateral Convention for amendment of double tax treaties enters in force for Bulgaria
The Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (“the Multilateral Convention”) entered in force for Bulgaria as of 1 January 2023. The Bulgarian Parliament ratified the Multilateral Convention in June 2022 and the ratification documents were deposited on 16 September 2022.
The purpose of the Multilateral Convention is to allow its participants to easily amend and improve certain articles in concluded Double Tax Treaties (DTTs) aiming implementation of a series of tax measures for an update of international tax rules in line with the OECD BEPS Action Plan, without explicit negotiations between each of the contracting countries.
The countries which signed the Multilateral Convention have the right to decide to which DTTs to be applicable, which of the amendments proposed to adopt or decline by filing a list with reservations and notifications. Upon depositing the ratification documents, Bulgaria specified that the Multilateral Convention will apply for 64 out of the 70 DTTs it has currently in force. For 5 of the remaining DTTs, i.e. Malta, Finland, Germany Switzerland and Uzbekistan, the Bulgarian and the respective other governments have already started a process of negotiating the conclusion of new tax treaties or amending the existing ones. With regards to the Netherlands, there is a new DTT wherein the BEPS Action Plan is taken into consideration, applicable as of 1 January 2022.