Bulgaria's crypto-asset market has grown significantly, with the country emerging as a hub for crypto businesses in Southeastern Europe due to competitive operating costs and a flat tax regime. DAC8 transposition will introduce new reporting obligations that these businesses must address.
Regulatory Context
The Bulgarian National Bank (Българска народна банка — BNB) and the Financial Supervision Commission (Комисия за финансов надзор — КФН) oversee aspects of financial services. CASPs must register under Bulgaria's AML framework with the National Revenue Agency (Национална агенция за приходите — NAP).
Tax Treatment
Bulgaria applies a flat tax rate of 10% on all personal income, including crypto-asset gains. This low flat rate, combined with low operating costs, has made Bulgaria attractive to both crypto businesses and individual crypto traders.
Transposition and TIN System
The Ministry of Finance (Министерство на финансите) leads transposition. The NAP will serve as the competent authority for DAC8 reporting. Bulgaria uses the ЕГН (Единен граждански номер — Uniform Civil Number) as the individual TIN — a 10-digit number assigned to all Bulgarian citizens. For foreign residents, the ЛНЧ (Личен номер на чужденец) is used. Entities use the ЕИК (Единен идентификационен код).
Expected Penalties and Impact
Bulgaria's penalty framework includes fines under the Tax and Social Insurance Procedures Code for reporting violations. The NAP has been modernizing its systems and is expected to integrate DAC8 data into its existing enforcement tools.
The main challenge for Bulgarian CASPs will be building the technical infrastructure needed for DAC8 compliance, particularly for smaller operators that may lack experience with international tax reporting standards.
Conclusion
Bulgaria's flat tax regime and growing crypto ecosystem make it an attractive jurisdiction, but DAC8 compliance will require investment in reporting infrastructure that some smaller CASPs may find challenging. Early preparation and potential consolidation of compliance resources will be important strategies for the Bulgarian market.
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