The Bulgarian Ministry of Finance published draft Ordinance on the procedure and ways for applying the transfer pricing methods, to replace the previous one from 2006. The main purpose of the new Ordinance is to bring the Bulgarian TP framework in line with the post-BEPS OECD TP Guidelines. This is part of the legislative changes triggered by the upcoming accession of Bulgaria in the OECD.
Here’s a link to the draft Ordinance and the motives thereto: https://www.minfin.bg/bg/legislation11/569
Some of the significant changes proposed in the draft Ordinance are as follows:
- concepts of actual delineation of the transaction, control over risk and respective financial capacity introduced as part of the TP analysis, following Chapter I of the OECD Guidelines (added after BEPS project reports);
- updated rules on functional and comparability analysis based on facts and circumstances of the particular case;
- most appropriate method’ replaces hierarchy of TP methods;
- other methods allowed if none of the five TP methods works; valuation also allowed;
- upgraded rules on comparability adjustments;
- benefit test for intragroup services expressly required;
- rules on financial transactions following Chapter X of the OECD TP Guidelines (2022);
- definition of ‘transaction’ also encompasses amendment or termination of business relations resulting in a benefit, which would be compensated between unrelated parties – seems like introducing concept of business restructurings under Chapter IX of the OECD TP Guidelines;
- more detailed rules how NRA should evaluate TP documentation of the taxpayer;
- express reference to the OECD TP Guidelines in their most recent version when applying the Ordinance.
Public consultation open by 23 October, planned adoption of the new Ordinance in the end of October 2025 (mentioned in the motives to the draft) as it would be part of the assessment of Bulgaria’s readiness for membership in the OECD. Entry into force of the new Ordinance is set for 1 January 2026.
Businesses with I/C transactions should monitor carefully the upcoming changes to the Bulgarian TP framework and how would the promulgated Ordinance look like. Taxpayers would be required to comply with the updated rules in applying their TP policies and preparing TP files for Bulgaria.