Gifts to associations/foundations

According to the Law on Corporate Income Taxation, donations in favor of NGOs in public benefit, healthcare institutions, specialized organizations providing social services under the Law on Social Support, the Bulgarian Red Cross and others must be accounted as expenses. They are not levied with a tax withheld at the source and lead directly to decrease of the financial result if they amount up to 10% from the positive financial result. If the expenses for donation exceed 10% from the positive financial result of the legal entity-donor, the surpass is levied with a corporate tax.

Property taxes – "inheritance tax", "donation tax" and "tax on chattels" are based on all fixed or intangible assets reflected on the organization's balance sheet. This tax is payable to the municipalities and their type and size of taxes and fees are regulated by the Law on Local Taxes and Fees /LLTF/. Exempt from tax on chattels are Municipalities, "Chitalishta", buildings of the Bulgarian Red Cross, buildings, used by the Universities and Bulgarian Academy of Science, park and sport facilities for public use, historical buildings and cultural monuments, museums, galleries and libraries, and other persons exhaustively listed in the Law. According to the LLTF the property inherited by the state, municipalities, the Bulgarian red cross, "Chitalishta" and other non-profit legal entities except NGOs designated for performing mutual benefit activities shall not be taxed with inheritance and donation tax.

There is no tax on donations made and received by public benefit organizations registered in the Central Registry with the Ministry of Justice. Otherwise the municipal council shall determine by an ordinance the amount of the taxes of property taxes – "inheritance tax", "donation tax" and "tax on chattels" under the terms and conditions, following the procedures and within the limits, set in this law.

According to the Law on Individuals Income Taxation individuals working under labour contract, self-employed individuals, or people receiving income from rent, annuity and lease are entitled to deduct donations from their taxable income. The donations must be made in favor of some of the recipients, exhaustively listed in the law, among which are public benefit organizations. The amount of the deduction may not exceed 5 % of the income. It is made after deducting the activity expenses and certain insurance contributions.

A special legal requirement is that the persons, making the donation, should not have any unpaid declared state receivables or receivables, established by a tax audit act at the moment of the donation. Considered from 2005, the law provides for that these benefits might be used by the person at submitting its annual tax declaration, unless the payment of the sums has been made through the employer.