Brussels, 19 February 2009
According to the Bulgarian rules, interest and discounts (difference between the market price of a bond and its nominal value) from Bulgarian governmental, municipal and corporate bonds are tax exempt. Interest and discounts from governmental, municipal and corporate bonds issued in other EU Member States or EEA/EFTA states are not eligible for such an exemption and are subject to income tax in Bulgaria at a rate of 10%.
The Commission is of the opinion that these rules may dissuade Bulgarian taxpayers from investing in bonds issued in other Member States and thus restrict the free movement of capital. Bulgaria thus fails to fulfil its obligations under Article 56 of the EC Treaty and Article 40 of the EEA Agreement.
The Commission's case reference number is 2008/2053.
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