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The Government of Canada and the Government of the Republic
of Bulgaria, hereinafter referred to as ``Contracting States'',
desiring to further develop and facilitate their mutual
economic relationship and desiring to conclude a
Convention for the avoidance of double taxation and the
prevention of fiscal evasion with respect to taxes on income
and on capital, have agreed as follows:
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This Convention shall apply to persons who are residents of
one or both of the Contracting States.
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1. This Convention shall apply to taxes on income and on
capital imposed on behalf of each Contracting State, irrespective
of the manner in which they are levied.
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2. There shall be regarded as taxes on income and on capital
all taxes imposed on total income, on total capital, or on elements
of income or of capital, including taxes on gains from the
alienation of movable or immovable property, as well as taxes on
capital appreciation.
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3. The existing taxes to which the Convention shall apply are,
in particular:
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(a) in the case of Canada:
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the income and capital taxes imposed by the Government
of Canada under the Income Tax Act, (hereinafter referred
to as ``Canadian tax'');
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(b) in the case of the Republic of Bulgaria:
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(i) individual income tax,
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(ii) corporate income tax, and
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(hereinafter referred to as ``Bulgarian tax'').
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4. The Convention shall apply also to any substantially similar
taxes and to taxes on capital which are imposed after the date of
signature of the Convention in addition to, or in place of, the
existing taxes as well as to any other tax as may be specified and
agreed in letters exchanged between the competent authorities of
the Contracting States. The competent authorities of the
Contracting States shall notify each other of any significant
changes which have been made in their respective taxation laws.
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1. In this Convention, unless the context otherwise requires:
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(i) ``Canada'', used in a geographical sense, means the
territory of Canada, including any area beyond the
territorial seas of Canada which, in accordance with
international law and the laws of Canada, is an area within
which Canada may exercise rights with respect to the
seabed and subsoil and their natural resources,
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(ii) ``Bulgaria'' means the Republic of Bulgaria and, when
used in a geographical sense, means the territory and the
territorial sea over which it exercises its State sovereignty,
as well as the continental shelf and the exclusive economic
zone over which it exercises sovereign rights or jurisdiction
in conformity with international law;
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(b) the terms ``a Contracting State'' and ``the other
Contracting State'' mean, as the context requires, Canada or
Bulgaria;
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(c) the term ``person'' includes an individual and:
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(i) in the case of Canada, a trust, a company and any other
body of persons,
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(ii) in the case of Bulgaria, any legal person, including a
company and any other body of persons;
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(d) the term ``company'' means any body corporate or any
entity which is treated as a body corporate for tax purposes;
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(e) the term ``competent authority'' means:
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(i) in the case of Canada, the Minister of National Revenue
or the Minister's authorized representative,
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(ii) in the case of Bulgaria, the Minister of Finance or his
authorized representative;
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(f) the term ``national'' means:
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(i) any individual possessing the nationality of a
Contracting State,
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(ii) any legal person or body of persons deriving its status
from the laws in force in a Contracting State;
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(g) the term ``tax'' means Canadian tax or Bulgarian tax, as the
context requires;
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(h) the term ``international traffic'' means any transport by a
ship or aircraft operated by a resident of a Contracting State,
except where the ship or aircraft is operated solely between
places in the other Contracting State.
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2. As regards the application of the Convention by a
Contracting State at any time, any term not defined therein shall,
unless the context otherwise requires, have the meaning which it
has at that time under the laws of that State concerning the taxes
to which the Convention applies.
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1. For the purposes of this Convention, the term ``resident of
a Contracting State'' means:
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(a) any person who, under the laws of that State, is liable to tax
therein by reason of his domicile, residence, place of
management, place of incorporation or any other criterion of
a similar nature; but this term does not include any person who
is liable to tax in that State in respect only of income from
sources in that State or capital situated therein;
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(b) the Government of that Contracting State or of a political
subdivision or local authority or any legal entity owned by
that State, subdivision or authority; and
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(c) in the case of Bulgaria, any individual who, under the laws
of Bulgaria, is liable to tax therein by reason of his nationality
and whose personal and economic relations are closer to
Bulgaria than to any third State.
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2. Where by reason of the provisions of paragraph 1 an
individual is a resident of both Contracting States, then his status
shall be determined as follows:
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(a) he shall be deemed to be a resident only of the State with
which his personal and economic relations are closer (centre
of vital interests);
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(b) if the State in which he has his centre of vital interests
cannot be determined, the competent authorities of the
Contracting States shall settle the question by mutual
agreement.
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3. Where by reason of the provisions of paragraph 1 a
company is a resident of both Contracting States, then it shall be
deemed to be a resident only of the State under the laws of which
it has been created.
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4. Where by reason of the provisions of paragraph 1 a person
other than an individual or a company is a resident of both
Contracting States, the competent authorities of the Contracting
States shall by mutual agreement endeavour to settle the question
and to determine the mode of application of the Convention to
such person.
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1. For the purposes of this Convention, the term ``permanent
establishment'' means a fixed place of business through which
the business of a resident of a Contracting State is wholly or
partly carried on.
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2. The term ``permanent establishment'' includes especially:
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(a) a place of management;
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(f) a mine, an oil or gas well, a quarry or any other place of
extraction of natural resources; and
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(g) a building site or construction or installation project which
exists for more than six months.
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3. Notwithstanding the preceding provisions of this Article,
the term ``permanent establishment'' in respect of a resident of a
Contracting State shall be deemed not to include:
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(a) the use of facilities solely for the purpose of storage,
display or delivery of goods or merchandise belonging to the
resident;
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(b) the maintenance of a stock of goods or merchandise
belonging to the resident solely for the purpose of storage,
display or delivery;
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(c) the maintenance of a stock of goods or merchandise
belonging to the resident solely for the purpose of processing
by another person;
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(d) the maintenance of a fixed place of business solely for the
purpose of purchasing goods or merchandise or of collecting
information, for the resident;
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(e) the maintenance of a fixed place of business solely for the
purpose of carrying on, for the resident, any other activity of
a preparatory or auxiliary character;
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(f) the maintenance of a fixed place of business solely for any
combination of activities mentioned in subparagraphs (a) to
(e) provided that the overall activity of the fixed place of
business resulting from this combination is of a preparatory or
auxiliary character.
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4. Notwithstanding the provisions of paragraphs 1 and 2,
where a person - other than an agent of an independent status
to whom paragraph 5 applies - is acting on behalf of a resident
of a Contracting State and has, and habitually exercises in the
other Contracting State an authority to conclude contracts in the
name of the resident, that resident shall be deemed to have a
permanent establishment in that other State in respect of any
activities which that person undertakes for the resident unless the
activities of such person are limited to those mentioned in
paragraph 3 which, if exercised through a fixed place of business,
would not make this fixed place of business a permanent
establishment under the provisions of that paragraph.
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5. A resident of a Contracting State shall not be deemed to
have a permanent establishment in the other Contracting State
merely because it carries on business in that other State through
a broker, general commission agent or any other agent of an
independent status, provided that such persons are acting in the
ordinary course of their business.
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6. The fact that a company which is a resident of a Contracting
State controls or is controlled by a company which is a resident
of the other Contracting State, or which carries on business in that
other State (whether through a permanent establishment or
otherwise), shall not of itself constitute either company a
permanent establishment of the other.
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1. Income derived by a resident of a Contracting State from
immovable property (including income from agriculture or
forestry) situated in the other Contracting State may be taxed in
that other State.
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2. For the purposes of this Convention, the term ``immovable
property'' shall have the meaning which it has under the law of
the Contracting State in which the property in question is
situated. The term shall in any case include property accessory to
immovable property, livestock and equipment used in
agriculture and forestry, rights to which the provisions of general
law respecting landed property apply, usufruct of immovable
property and rights to variable or fixed payments as
consideration for the working of, or the right to work, mineral
deposits, sources and other natural resources; ships and aircraft
shall not be regarded as immovable property.
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3. The provisions of paragraph 1 shall apply to income derived
from the direct use, letting, or use in any other form of immovable
property.
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4. The provisions of paragraphs 1 and 3 shall also apply to the
income from immovable property used in carrying on a business
or in the performance of independent professional services.
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1. The business profits of a resident of a Contracting State shall
be taxable only in that State unless the resident carries on
business in the other Contracting State through a permanent
establishment situated therein. If the resident carries on business
as aforesaid, the business profits of the resident may be taxed in
the other State but only so much of them as is attributable to that
permanent establishment.
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2. Subject to the provisions of paragraph 3, where a resident
of a Contracting State carries on business in the other Contracting
State through a permanent establishment situated therein, there
shall in each Contracting State be attributed to that permanent
establishment the business profits which it might be expected to
make if it were a distinct and separate person engaged in the same
or similar activities under the same or similar conditions and
dealing wholly independently with the resident and with all other
persons.
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3. In the determination of the business profits of a permanent
establishment, there shall be allowed those deductible expenses
which are incurred for the purposes of the permanent
establishment including executive and general administrative
expenses, whether incurred in the State in which the permanent
establishment is situated or elsewhere.
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4. No business profits shall be attributed to a permanent
establishment of a person by reason of the mere purchase by that
permanent establishment of goods or merchandise for the
person.
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5. For the purposes of the preceding paragraphs, the business
profits to be attributed to the permanent establishment shall be
determined by the same method year by year unless there is good
and sufficient reason to the contrary.
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6. Where business profits include items of income which are
dealt with separately in other Articles of this Convention, then
the provisions of those Articles shall not be affected by the
provisions of this Article.
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1. Profits derived by a resident of a Contracting State from the
operation of ships or aircraft in international traffic shall be
taxable only in that State.
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2. Notwithstanding the provisions of paragraph 1 and Article
7, profits derived from the operation of ships or aircraft used
principally to transport passengers or goods exclusively between
places in a Contracting State may be taxed in that State.
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3. The provisions of paragraphs 1 and 2 shall also apply to
profits referred to in those paragraphs derived by a resident of a
Contracting State from its participation in a pool, a joint business
or an international operating agency.
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1. Where
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(a) a resident of a Contracting State participates directly or
indirectly in the management, control or capital of a resident
of the other Contracting State, or
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(b) the same persons participate directly or indirectly in the
management, control or capital of a resident of a Contracting
State and a resident of the other Contracting State,
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and in either case conditions are made or imposed between the
two persons in their commercial or financial relations which
differ from those which would be made between independent
persons, then any income which would, but for those conditions,
have accrued to one of the persons, but, by reason of those
conditions, have not so accrued, may be included in the income
of that person and taxed accordingly.
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2. Where a Contracting State includes in the income of a
resident of that State - and taxes accordingly - income on
which a resident of the other Contracting State has been charged
to tax in that other State and the income so included is income
which would have accrued to the first-mentioned person if the
conditions made between the two persons had been those which
would have been made between independent persons, then that
other State shall make an appropriate adjustment to the amount
of tax charged therein on that income. In determining such
adjustment, due regard shall be had to the other provisions of this
Convention and the competent authorities of the Contracting
States shall, if necessary, consult each other.
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3. A Contracting State shall not change the income of a person
in the circumstances referred to in paragraphs 1 and 2 after the
expiry of the time limits provided in its national laws and, in any
case, after five years from the end of the year in which the income
which would be subject to such change would, but for the
conditions referred to in paragraph 1, have accrued to that person.
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4. The provisions of paragraphs 2 and 3 shall not apply in the
case of fraud, wilful default or neglect.
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1. Dividends paid by a company which is a resident of a
Contracting State to a resident of the other Contracting State may
be taxed in that other State.
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2. However, such dividends may also be taxed in the
Contracting State of which the company paying the dividends is
a resident, and according to the laws of that State, but if the
recipient is the beneficial owner of the dividends the tax so
charged shall not exceed:
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(a) except in the case of dividends paid by a non-resident
owned investment corporation that is a resident of Canada, 10
per cent of the gross amount of the dividends if the beneficial
owner is a company which controls directly or indirectly at
least 10 per cent of the voting power in the company paying
the dividends;
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(b) 15 per cent of the gross amount of the dividends in all other
cases.
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The provisions of this paragraph shall not affect the taxation of
the company on the profits out of which the dividends are paid.
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3. The term ``dividends'' as used in this Article means income
from shares or other rights, not being debt-claims, participating
in profits, as well as income which is subjected to the same
taxation treatment as income from shares by the laws of the State
of which the company making the distribution is a resident.
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4. The provisions of paragraph 2 shall not apply if the
beneficial owner of the dividends, being a resident of a
Contracting State, carries on business in the other Contracting
State of which the company paying the dividends is a resident,
through a permanent establishment situated therein, or performs
in that other State independent professional services from a fixed
base situated therein, and the holding in respect of which the
dividends are paid is effectively connected with such permanent
establishment or fixed base. In such case the provisions of Article
7 or Article 14, as the case may be, shall apply.
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5. Where a company which is a resident of a Contracting State
derives profits or income from the other Contracting State, that
other State may not impose any tax on the dividends paid by the
company, except insofar as such dividends are paid to a resident
of that other State or insofar as the holding in respect of which the
dividends are paid is effectively connected with a permanent
establishment or a fixed base situated in that other State, nor
subject the company's undistributed profits to a tax on
undistributed profits, even if the dividends paid or the
undistributed profits consist wholly or partly of profits or income
arising in such other State.
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1. Interest arising in a Contracting State and paid to a resident
of the other Contracting State may be taxed in that other State.
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2. However, such interest may also be taxed in the Contracting
State in which it arises, and according to the laws of that State, but
if the recipient is the beneficial owner of the interest the tax so
charged shall not exceed 10 per cent of the gross amount of the
interest.
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3. Notwithstanding the provisions of paragraph 2:
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(a) interest arising in a Contracting State and paid in respect
of a bond or other similar obligation of the government of that
Contracting State or of a political subdivision or local
authority thereof shall, provided that the interest is
beneficially owned by a resident of the other Contracting
State, be taxable only in that other State;
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(b) interest arising in a Contracting State and paid to the
government or the central bank of the other Contracting State,
provided the central bank is wholly-owned by that other State,
shall be taxable only in that other State;
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(c) interest arising in Bulgaria and paid to a resident of Canada
shall be taxable only in Canada if it is paid in respect of a loan
made, guaranteed or insured, or a credit extended, guaranteed
or insured by the Export Development Corporation; and
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(d) interest arising in Canada and paid to a resident of Bulgaria
shall be taxable only in Bulgaria if it is paid in respect of a loan
made, guaranteed or insured by:
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(i) the Bulgarian National Bank,
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(ii) the Bulgarian Foreign Trade Bank, or
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(iii) any other entity as may be specified and agreed in
letters exchanged between the competent authorities of the
Contracting States.
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4. The term ``interest'' as used in this Article means income
from debt-claims of every kind, whether or not secured by
mortgage, and in particular, income from government securities
and income from bonds, including premiums attaching to such
securities or bonds, as well as income which is subjected to the
same taxation treatment as income from money lent by the laws
of the State in which the income arises. However, the term
``interest'' does not include income dealt with in Article 10.
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5. The provisions of paragraph 2 shall not apply if the
beneficial owner of the interest, being a resident of a Contracting
State, carries on business in the other Contracting State in which
the interest arises through a permanent establishment situated
therein, or performs in that other State independent professional
services from a fixed base situated therein, and the debt-claim in
respect of which the interest is paid is effectively connected with
such permanent establishment or fixed base. In such case the
provisions of Article 7 or Article 14, as the case may be, shall
apply.
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6. Interest shall be deemed to arise in a Contracting State when
the payer is that State itself, a political subdivision, a local
authority or a resident of that State. Where, however, the person
paying the interest, whether he is a resident of a Contracting State
or not, has in a Contracting State a permanent establishment or
a fixed base in connection with which the indebtedness on which
the interest is paid was incurred, and such interest is borne by
such permanent establishment or fixed base, then such interest
shall be deemed to arise in the State in which the permanent
establishment or fixed base is situated.
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7. Where, by reason of a special relationship between the
payer and the beneficial owner of the interest or between both of
them and some other person, the amount of the interest, having
regard to the debt-claim for which it is paid, exceeds the amount
which would have been agreed upon by the payer and the
beneficial owner in the absence of such relationship, the
provisions of this Article shall apply only to the last-mentioned
amount. In such case, the excess part of the payments shall
remain taxable according to the laws of each Contracting State,
due regard being had to the other provisions of this Convention.
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1. Royalties arising in a Contracting State and paid to a
resident of the other Contracting State may be taxed in that other
State.
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2. However, such royalties may also be taxed in the
Contracting State in which they arise, and according to the laws
of that State, but if the recipient is the beneficial owner of the
royalties the tax so charged shall not exceed 10 per cent of the
gross amount of the royalties.
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3. Notwithstanding the provisions of paragraph 2, copyright
royalties and other like payments in respect of the production or
reproduction of any cultural, dramatic, musical or other artistic
work (but not including royalties in respect of motion picture
films and works on film or videotape or other means of
reproduction for use in connection with television), arising in a
Contracting State and paid to a resident of the other Contracting
State who is subject to tax thereon shall be taxable only in that
other State.
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4. The term ``royalties'' as used in this Article means payments
of any kind received as a consideration for the use of, or the right
to use, any copyright, patent, certificate of invention, trade mark,
design or model, plan, secret formula or process or other
intangible property, or for the use of, or the right to use, industrial,
commercial or scientific equipment, or for information
concerning industrial, commercial or scientific experience, and
includes payments of any kind in respect of motion picture films
and works on film, videotape or other means of reproduction for
use in connection with television.
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5. The provisions of paragraphs 2 and 3 shall not apply if the
beneficial owner of the royalties, being a resident of a
Contracting State, carries on business in the other Contracting
State in which the royalties arise through a permanent
establishment situated therein, or performs in that other State
independent professional services from a fixed base situated
therein, and the right or property in respect of which the royalties
are paid is effectively connected with such permanent
establishment or fixed base. In such case the provisions of Article
7 or Article 14, as the case may be, shall apply.
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6. Royalties shall be deemed to arise in a Contracting State
when the payer is that State itself, a political subdivision, a local
authority or a resident of that State. Where, however, the person
paying the royalties, whether he is a resident of a Contracting
State or not, has in a Contracting State a permanent establishment
or a fixed base in connection with which the obligation to pay the
royalties was incurred, and such royalties are borne by such
permanent establishment or fixed base, then such royalties shall
be deemed to arise in the State in which the permanent
establishment or fixed base is situated.
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7. Where, by reason of a special relationship between the
payer and the beneficial owner of the royalties or between both
of them and some other person, the amount of the royalties,
having regard to the use, right or information for which they are
paid, exceeds the amount which would have been agreed upon
by the payer and the beneficial owner in the absence of such
relationship, the provisions of this Article shall apply only to the
last-mentioned amount. In such case, the excess part of the
payments shall remain taxable according to the laws of each
Contracting State, due regard being had to the other provisions
of this Convention.
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1. Gains derived by a resident of a Contracting State from the
alienation of immovable property situated in the other
Contracting State may be taxed in that other State.
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2. Gains from the alienation of movable property forming part
of the business property of a permanent establishment which a
resident of a Contracting State has in the other Contracting State
or of movable property pertaining to a fixed base available to a
resident of a Contracting State in the other Contracting State for
the purpose of performing independent professional services,
including such gains from the alienation of such a permanent
establishment (alone or with the whole enterprise carried on by
such resident) or of such a fixed base may be taxed in that other
State.
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3. Gains from the alienation of ships or aircraft operated in
international traffic by a resident of a Contracting State or
movable property pertaining to the operation of such ships or
aircraft, shall be taxable only in that Contracting State.
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4. Gains from the alienation of any property, other than that
referred to in paragraphs 1, 2, and 3 shall be taxable only in the
Contracting State of which the alienator is a resident.
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5. The provisions of paragraph 4 shall not affect the right of
either of the Contracting States to levy, according to its law, a tax
on gains from the alienation of any property derived by an
individual who is a resident of the other Contracting State and has
been a resident of the first-mentioned State at any time during the
six years immediately preceding the alienation of the property.
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1. Income derived by an individual who is a resident of a
Contracting State in respect of professional services shall be
taxable only in that State unless he has a fixed base regularly
available to him in the other Contracting State for the purpose of
performing his activities. If he has such a fixed base, the income
may be taxed in the other State but only so much of it as is
attributable to that fixed base.
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2. The term ``professional services'' includes especially
independent scientific, literary, artistic, educational or teaching
activities, independent activities of physicians, lawyers,
engineers, architects, dentists and accountants as well as other
activities of an independent character.
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1. Subject to the provisions of Articles 16, 18 and 19, salaries,
wages and other similar remuneration derived by a resident of a
Contracting State in respect of an employment shall be taxable
only in that State unless the employment is exercised in the other
Contracting State. If the employment is so exercised, such
remuneration as is derived therefrom may be taxed in that other
State.
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2. Notwithstanding the provisions of paragraph 1,
remuneration derived by a resident of a Contracting State in
respect of an employment exercised in the other Contracting
State shall be taxable only in the first-mentioned State if:
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(a) the recipient is present in the other State for a period or
periods not exceeding in the aggregate 183 days in any twelve
month period commencing or ending in the calendar year
concerned; and
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(b) the remuneration is paid by, or on behalf of, an employer
who is not a resident of the other State; and
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(c) the remuneration is not borne by a permanent
establishment or a fixed base which the employer has in the
other State.
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3. Notwithstanding the preceding provisions of this Article,
remuneration in respect of an employment exercised aboard a
ship or aircraft operated in international traffic by a resident of a
Contracting State, shall be taxable only in that State unless the
remuneration is derived by a resident of the other Contracting
State.
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Directors' fees and other similar payments derived by a
resident of a Contracting State in his capacity as a member of the
board of directors or a similar organ of a company which is a
resident of the other Contracting State, may be taxed in that other
State.
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1. Notwithstanding the provisions of Articles 7, 14 and 15,
income derived by a resident of a Contracting State as an
entertainer, such as a theatre, motion picture, radio or television
artiste, or a musician, or as a sportsman, from his personal
activities as such exercised in the other Contracting State, may be
taxed in that other State.
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2. Where income in respect of personal activities exercised by
an entertainer or a sportsman in his capacity as such accrues not
to the entertainer or sportsman himself but to another person, that
income may, notwithstanding the provisions of Articles 7, 14 and
15, be taxed in the Contracting State in which the activities of the
entertainer or sportsman are exercised.
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3. The provisions of paragraph 2 shall not apply if it is
established that neither the entertainer or the sportsman nor
persons related thereto, participate directly or indirectly in the
profits of the person referred to in that paragraph.
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4. The provisions of paragraphs 1 and 2 shall not apply to
income derived from activities performed in a Contracting State
by a resident of the other Contracting State if these activities are
performed:
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(a) in the context of a visit in the first-mentioned State of a
non-profit organization of the other State, provided that the
visit is wholly supported by public funds; or
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(b) in the context of the visit of a cultural group in the
first-mentioned State within the framework of a cultural
agreement between the Contracting States.
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1. Pensions and annuities arising in a Contracting State and
paid to a resident of the other Contracting State may be taxed in
that other State.
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2. Pensions arising in a Contracting State and paid to a resident
of the other Contracting State may also be taxed in the State in
which they arise, and according to the law of that State. However,
in the case of periodic pension payments, the tax so charged shall
not exceed 15 per cent of the gross amount of the payment.
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3. Annuities arising in a Contracting State and paid to a
resident of the other Contracting State may also be taxed in the
State in which they arise, and according to the law of that State;
but the tax so charged shall not exceed 10 per cent of the portion
thereof that is subject to tax in that State. However, this limitation
does not apply to lump-sum payments arising on the surrender,
cancellation, redemption, sale or other alienation of an annuity,
or to payments of any kind under an annuity contract the cost of
which was deductible, in whole or in part, in computing the
income of any person who acquired the contract.
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4. For the purposes of this Convention, the term ``annuity''
means a stated sum payable to an individual periodically at stated
times during his life or during a specified or ascertainable period
of time under an obligation to make the payments in return for
adequate and full consideration in money or in money's worth,
but does not include a pension or a payment that is not a periodic
payment or any annuity the cost of which was deductible for the
purposes of taxation in the Contracting State in which it was
acquired.
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5. Notwithstanding anything in this Convention:
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(a) alimony, maintenance and child support payments in
respect of a divorce or a separation, arising in a Contracting
State and paid to a resident of the other Contracting State who
is subject to tax therein in respect thereof, shall be taxable only
in that other State; and
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(b) payments under the social security legislation in a
Contracting State made to a resident of the other Contracting
State shall be taxable only in the first-mentioned State.
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1. Salaries, wages and similar remuneration, other than a
pension, paid by a Contracting State or a political subdivision or
a local authority thereof to an individual in respect of services
rendered to that State or subdivision or authority shall be taxable
only in that State. However, such salaries, wages and similar
remuneration shall be taxable only in the other Contracting State
if the services are rendered in that other State and the individual
is a resident of that other State who:
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(a) is a national of that other State; or
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(b) became a resident of that other State not solely for the
purpose of rendering the services.
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2. The provisions of paragraph 1 shall not apply to
remuneration in respect of services rendered in connection with
a business carried on by a Contracting State or a political
subdivision or a local authority thereof.
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1. Payments which a student, business apprentice or trainee
who is, or was immediately before visiting a Contracting State,
a resident of the other Contracting State and who is present in the
first-mentioned State solely for the purpose of his education or
training receives for the purpose of his maintenance, education
or training shall not be taxed in that State, provided that such
payments arise from sources outside that State.
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2. A student, business apprentice or trainee referred to in
paragraph 1 shall be entitled, in the Contracting State that he
visits, to the same exemptions, reliefs or reductions in respect of
taxes as are available to residents of a third State in the same
circumstances.
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1. Subject to the provisions of paragraph 2, items of income
of a resident of a Contracting State, wherever arising, not dealt
with in the foregoing Articles of this Convention shall be taxable
only in that State.
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2. However, if such income is derived by a resident of a
Contracting State from sources in the other Contracting State,
such income may also be taxed in the State in which it arises, and
according to the law of that State. However, in the case of income
arising in Canada from a trust, other than a trust to which
contributions were deductible, the tax so charged shall, provided
that the income is taxable in Bulgaria, not exceed 15 per cent of
the gross amount of the income.
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3. The provisions of paragraph 1 shall not apply to income,
other than income from immovable property, if the recipient of
the income, being a resident of a Contracting State, carries on
business in the other Contracting State through a permanent
establishment situated therein, or performs in that other State
independent professional services from a fixed base situated
therein, and the right or property in respect of which the income
is paid is effectively connected with such permanent
establishment or fixed base. In such case the provisions of Article
7 or Article 14, as the case may be, shall apply.
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1. Capital represented by immovable property owned by a
resident of a Contracting State and situated in the other
Contracting State, may be taxed in that other State.
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2. Capital represented by movable property forming part of
the business property of a permanent establishment which a
resident of a Contracting State has in the other Contracting State
or by movable property pertaining to a fixed base available to a
resident of a Contracting State in the other Contracting State for
the purpose of performing independent professional services,
may be taxed in that other State.
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3. Capital represented by ships and aircraft operated by a
resident of a Contracting State in international traffic and by
movable property pertaining to the operation of such ships and
aircraft, shall be taxable only in that State.
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4. All other elements of capital of a resident of a Contracting
State shall be taxable only in that State.
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1. In the case of Canada, double taxation shall be avoided as
follows:
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(a) Subject to the existing provisions of the law of Canada
regarding the deduction from tax payable in Canada of tax
paid in a territory outside Canada and to any subsequent
modification of those provisions - which shall not affect the
general principle hereof - and unless a greater deduction or
relief is provided under the laws of Canada, tax payable in
Bulgaria on profits, income or capital gains arising in Bulgaria
shall be deducted from any Canadian tax payable in respect of
such profits, income or capital gains.
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(b) Subject to the existing provisions of the law of Canada
regarding the taxation of income from a foreign affiliate and
to any subsequent modification of those provisions - which
shall not affect the general principle hereof - for the purpose
of computing Canadian tax, a company which is a resident of
Canada shall be allowed to deduct in computing its taxable
income any dividend received by it out of the exempt surplus
of a foreign affiliate which is a resident of Bulgaria.
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(c) Where in accordance with any provision of the Convention
income derived or capital owned by a resident of Canada is
exempt from tax in Canada, Canada may nevertheless, in
calculating the amount of tax on other income or capital, take
into account the exempted income or capital.
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2. In the case of Bulgaria, double taxation shall be avoided as
follows:
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(a) Where a resident of Bulgaria derives income or owns
capital which in accordance with the provisions of this
Convention may be taxed in Canada, Bulgaria shall, subject
to the provisions of subparagraphs (b) and (c) of this
paragraph, exempt such income or capital from tax.
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(b) Where a resident of Bulgaria derives dividends, interest,
royalties or capital gains which in accordance with the
provisions of Articles 10, 11, 12 and paragraph 5 of Article 13
of this Convention may be taxed in Canada, Bulgaria shall
allow as a deduction from the tax on the dividends, interest,
royalties or capital gains of that resident an amount equal to the
tax paid in Canada. Such deduction shall not, however, exceed
that part of the tax, as computed before the deduction is given,
which is attributable to such dividends, interest, royalties or
capital gains derived from Canada.
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(c) Where in accordance with any provision of this
Convention income derived or capital owned by a resident of
Bulgaria is exempt from tax in Bulgaria, Bulgaria may
nevertheless, in calculating the amount of the tax on the
remaining income or capital of such resident, take into account
the exempted income or capital.
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3. For the purposes of this Article, profits, income or capital
gains of a resident of a Contracting State which are taxed in the
other Contracting State in accordance with this Convention shall
be deemed to arise from sources in that other State.
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4. For the purposes of subparagraph (a) of paragraph 1, tax
payable under the law of Bulgaria by a company which is a
resident of Canada in respect of profits attributable to
manufacturing, tourism and agricultural activities, exploration or
exploitation of natural resources and construction or
telecommunication projects carried on by it in Bulgaria shall be
deemed to include any amount which would have been payable
thereon as Bulgarian tax for any year but for an exemption from,
or reduction of, tax granted for that year or any part thereof under
specific Bulgarian legislation to promote economic development
to the extent that the exemption or reduction is for a period not
in excess of ten years.
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1. The nationals of a Contracting State shall not be subjected
in the other Contracting State to any taxation or any requirement
connected therewith which is more burdensome than the taxation
and connected requirements to which nationals of that other State
in the same circumstances are or may be subjected.
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2. The taxation on a permanent establishment which a resident
of a Contracting State has in the other Contracting State shall not
be less favourably levied in that other State than the taxation
levied on residents of that other State carrying on the same
activities.
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3. Nothing in this Article shall be construed as obliging a
Contracting State to grant to residents of the other Contracting
State any personal allowances, reliefs and reductions for taxation
purposes on account of civil status or family responsibilities
which it grants to its own residents.
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4. Except where the provisions of paragraph 1 of Article 9 or
paragraph 7 of Article 12 apply, royalties and other
disbursements, other than interest, paid by a resident of a
Contracting State to a resident of the other Contracting State
shall, for the purpose of determining the taxable profits of such
resident, be deductible under the same conditions as if they had
been paid to a resident of the first-mentioned State. Similarly, any
debts of a resident of a Contracting State to a resident of the other
Contracting State shall, for the purpose of determining the
taxable capital of such resident, be deductible under the same
conditions as if they had been contracted to a resident of the
first-mentioned State.
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5. Except where the provisions of paragraph 1 of Article 9 or
paragraph 7 of Article 11 apply, interest paid by a resident of a
Contracting State to a resident of the other Contracting State
shall, for the purpose of determining the taxable profits of such
resident, be deductible under the same conditions as if they had
been paid to a resident of a third State.
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6. Companies which are residents of a Contracting State, the
capital of which is wholly or partly owned or controlled, directly
or indirectly, by one or more residents of the other Contracting
State, shall not be subjected in the first-mentioned State to any
taxation or any requirement connected therewith which is more
burdensome than the taxation and connected requirements to
which other similar companies which are residents of the
first-mentioned State, the capital of which is wholly or partly
owned or controlled, directly or indirectly, by one or more
residents of a third State, are or may be subjected.
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7. In this Article, the term ``taxation'' means taxes which are
the subject of this Convention.
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8. The provisions of paragraphs 4 and 5 shall not affect the
ability of a Contracting State to provide that a person which is not
a resident of that State does not enjoy, under the laws of that State,
a tax treatment that is more favourable than that enjoyed by
residents of that State.
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1. Where a person considers that the actions of one or both of
the Contracting States result or will result for him in taxation not
in accordance with the provisions of this Convention, he may,
irrespective of the remedies provided by the domestic law of
those States, address to the competent authority of the
Contracting State of which he is a resident an application in
writing stating the grounds for claiming the revision of such
taxation. To be admissible, the said application must be
submitted within two years from the first notification of the
action which gives rise to taxation not in accordance with the
Convention.
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2. The competent authority referred to in paragraph 1 shall
endeavour, if the objection appears to it to be justified and if it is
not itself able to arrive at a satisfactory solution, to resolve the
case by mutual agreement with the competent authority of the
other Contracting State, with a view to the avoidance of taxation
not in accordance with the Convention.
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3. A Contracting State shall not, after the expiry of the time
limits provided in its national laws, and, in any case, after five
years from the end of the taxable period in which the income
concerned has accrued, increase the tax base of a resident of either
of the Contracting States by including therein items of income
which have also been charged to tax in the other Contracting
State. This paragraph shall not apply in the case of fraud, wilful
default or neglect.
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4. The competent authorities of the Contracting States shall
endeavour to resolve by mutual agreement any difficulties or
doubts arising as to the interpretation or application of the
Convention.
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5. The competent authorities of the Contracting States may
consult together for the elimination of double taxation in cases
not provided for in the Convention and may communicate with
each other directly for the purpose of applying the Convention.
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1. The competent authorities of the Contracting States shall
exchange such information as is relevant for carrying out the
provisions of this Convention or of the domestic laws of the
Contracting States concerning taxes covered by the Convention
insofar as the taxation thereunder is not contrary to the
Convention. The exchange of information is not restricted by
Article 1. Any information received by a Contracting State shall
be treated as secret in the same manner as information obtained
under the domestic laws of that State and shall be disclosed only
to persons or authorities (including courts and administrative
bodies) involved in the assessment or collection of, the
enforcement in respect of, or the determination of appeals in
relation to taxes. Such persons or authorities shall use the
information only for such purposes. They may disclose the
information in public court proceedings or in judicial decisions.
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2. If information is requested by a Contracting State in
accordance with this Article, the other Contracting State shall
endeavour to obtain the information to which the request relates
in the same way as if its own taxation were involved
notwithstanding the fact that the other State does not, at that time,
need such information.
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3. Nothing in paragraphs 1 and 2 shall be construed so as to
impose on a Contracting State the obligation:
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(a) to carry out administrative measures at variance with the
laws or the administrative practice of that or of the other
Contracting State;
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(b) to supply information which is not obtainable under the
laws or in the normal course of the administration of that or of
the other Contracting State;
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(c) to supply information which would disclose any trade,
business, industrial, commercial or professional secret or trade
process, or information, the disclosure of which would be
contrary to public policy (ordre public).
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1. Nothing in this Convention shall affect the fiscal privileges
of diplomatic agents or consular officers under the general rules
of international law or under the provisions of special
agreements.
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2. Notwithstanding Article 4, an individual who is a member
of a diplomatic mission, consular post or permanent mission of
a Contracting State which is situated in the other Contracting
State or in a third State shall be deemed for the purposes of the
Convention to be a resident of the sending State if he is liable in
the sending State to the same obligations in relation to tax on his
total income as are residents of that sending State.
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3. The Convention shall not apply to international
organizations, to organs or officials thereof and to persons who
are members of a diplomatic mission, consular post or permanent
mission of a third State or group of States, being present in a
Contracting State and who are not liable in either Contracting
State to the same obligations in relation to tax on their total
income as are residents thereof.
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1. The provisions of this Convention shall not be construed to
restrict in any manner any exemption, allowance, credit or other
deduction accorded:
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(a) by the laws of a Contracting State in the determination of
the tax imposed by that State; or
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(b) by any other agreement entered into by a Contracting
State.
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2. Nothing in the Convention shall be construed as preventing
a Contracting State from imposing a tax on amounts included in
the income of a resident of that State with respect to a body of
persons, trust, or controlled foreign affiliate, in which he has an
interest.
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3. Where under any provision of this Convention any income
is relieved from tax in a Contracting State and, under the law in
force in the other Contracting State a person, in respect of that
income, is subject to tax by reference to the amount thereof which
is remitted to or received in that other Contracting State and not
by reference to the full amount thereof, then the relief to be
allowed under this Convention in the first-mentioned
Contracting State shall apply only to so much of the income as
is taxed in the other Contracting State.
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4. For purposes of paragraph 3 of Article XXII (Consultation)
of the General Agreement on Trade in Services, the Contracting
States agree that, notwithstanding that paragraph, any dispute
between them as to whether a measure falls within the scope of
this Convention may be brought before the Council for Trade in
Services, as provided by that paragraph, only with the consent of
both Contracting States. Any doubt as to the interpretation of this
paragraph shall be resolved under paragraph 4 of Article 25 or,
failing agreement under that procedure, pursuant to any other
procedure agreed to by both Contracting States.
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1. This Convention shall be ratified and the instruments of
ratification shall be exchanged at Sofia.
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2. The Convention shall enter into force upon the exchange of
instruments of ratification and its provisions shall have effect:
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(a) in respect of tax withheld at the source on amounts paid or
credited to non-residents on or after the first day of January in
the calendar year next following that in which the exchange of
instruments of ratification takes place; and
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(b) in respect of other tax for taxation years beginning on or
after the first day of January in the calendar year next
following that in which the exchange of instruments of
ratification takes place.
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This Convention shall continue in effect indefinitely but either
Contracting State may, on or before June 30 of any calendar year
beginning after the expiration of a period of five years from the
date of its entry into force, give to the other Contracting State a
notice of termination in writing through diplomatic channels; in
such event, the Convention shall cease to have effect:
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(a) in respect of tax withheld at the source on amounts paid or
credited to non-residents on or after the first day of January of
the next following calendar year; and
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(b) in respect of other tax for taxation years beginning on or
after the first day of January of the next following calendar
year.
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IN WITNESS WHEREOF the undersigned, duly authorized
to that effect, have signed this Convention.
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DONE in duplicate at Ottawa, this 3rd day of March 1999, in
the English, French and Bulgarian languages, each version being
equally authentic.
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FOR THE GOVERNMENT FOR THE
GOVERNMENT OF CANADA: OF THE REPUBLIC OF BULGARIA: Robert Wright Slav Danev
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At the moment of signing the Convention between the
Government of Canada and the Government of the Republic of
Bulgaria for the avoidance of double taxation and the prevention
of fiscal evasion with respect to taxes on income and on capital,
the undersigned have agreed upon the following provisions
which shall be an integral part of the Convention.
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1. With reference to subparagraph (a) of paragraph 1 of Article
4 of the Convention it is understood that for the purposes of the
application of the Convention to,
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(a) income taxes, the term ``liable to tax'' refers to liability to
taxes on income and not to taxes on capital;
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(b) capital taxes, the term ``liable to tax'' refers to liability to
taxes on capital and not to taxes on income.
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2. It is understood that the provisions of paragraph 1 of Article
6 of the Convention shall apply to income from the alienation of
immovable property.
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3. With reference to Article 7 of the Convention, it is
understood that where a resident of a Contracting State has
carried on business in the other Contracting State through a
permanent establishment situated therein, the business profits of
the resident that are attributable to that permanent establishment
and that are received by the resident after it has ceased to carry on
business as aforesaid, may be taxed in that other State in
accordance with the principles laid down in Article 7.
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4. It is understood that, notwithstanding any provision of the
Convention, a company or a legal person which is a resident of
Bulgaria and which has a permanent establishment in Canada
shall, in accordance with the provisions of Canadian law, remain
subject to the additional tax on companies other than Canadian
corporations, but the rate of such tax shall not exceed 10 per cent.
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5. It is understood that, notwithstanding the provisions of
paragraph 4 of Article 13 of the Convention, gains derived by a
resident of a Contracting State from the alienation of:
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(a) shares (other than shares quoted on an approved stock
exchange in the other State) forming part of a substantial
interest in the capital stock of a company which is a resident
of that other State the value of which shares is derived
principally from immovable property situated in that other
State; or
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(b) a substantial interest in a partnership or trust, established
under the law in the other State, the value of which is derived
principally from immovable property situated in that other
State,
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may be taxed in that other State. For the purposes of this
paragraph, the term ``immovable property'' includes the shares
of a company referred to in subparagraph (a) or an interest in a
partnership or trust referred to in subparagraph (b) but does not
include any property, other than rental property, in which the
business of the company, partnership or trust is carried on; and
a substantial interest exists when the resident or persons related
thereto own 25 per cent or more of the shares of any class of the
capital stock of a company or have an interest of 25 per cent or
more in a partnership or trust.
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6. With reference to Article 14 of the Convention, it is
understood that where a resident of a Contracting State has
exercised independent professional services in the other
Contracting State through a fixed base situated therein, the
income of the resident that is attributable to that fixed base and
that is received by the resident after the resident has ceased to
exercise services as aforesaid, may be taxed in that other State in
accordance with the principles laid down in Article 14.
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7. In the event that pursuant to an Agreement or Convention
concluded with a country that is a member country of the
Organisation for Economic Co-operation and Development after
the date of signature of this Convention, Bulgaria agrees to a rate
of tax on dividends or royalties that is lower than 10 per cent, then
such lower rate (but not in any event a rate below 5 per cent for
dividends) shall apply for the purpose of subparagraph (a) of
paragraph 2 of Article 10 of the Convention with respect to
dividends or paragraph 2 of Article 12 of the Convention with
respect to royalties for the use of, or the right to use, computer
software or any patent or for information concerning industrial,
commercial or scientific experience (but not including any such
information provided in connection with a rental or franchise
agreement), as the case may be.
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8. Notwithstanding anything in the Convention, the
provisions of paragraph 4 of Article 23 of the Convention shall
apply only for the first five years for which the Convention is
effective, but the competent authorities of the Contracting States
may consult with each other to determine whether this period
shall be extended for a further period of five years.
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IN WITNESS WHEREOF, the undersigned, duly authorized
to that effect, have signed this Protocol.
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DONE in duplicate at Ottawa, this 3rd day of March 1999, in
the English, French and Bulgarian languages, each version being
equally authentic.
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FOR THE GOVERNMENT FOR THE
GOVERNMENT OF CANADA: OF THE REPUBLIC OF BULGARIA: Robert Wright Slav Danev
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