Clarifications Published On Dividends Paid Between Bulgaria And Moldova

Moldova has recently clarified certain requirements related to the taxation of dividends distributed during the period 2008-2015 to residents of Bulgaria, in the context of the application of the double tax treaty concluded between the two countries in 1998. According to the treaty, Bulgarian residents who hold at least 51 % of the capital of a dividend-distributing Moldavian company are subject to a 5% withholding tax rate on those dividends, whereas all other Bulgarian dividend-recipients (who do not fulfil the capital ownership criteria) are subject to a 15% withholding tax rate.

The rates of taxation of dividends provided by the double tax treaty between Bulgaria and Moldova are significantly lower in comparison with those prescribed in the Tax Code of Moldova. However, as is typically the case, the tax treaty is deemed to prevail over the domestic legislation of Moldova and this has been confirmed by the Moldavian State Tax Service.