Everyone sooner or later has to make a real estate deal – an important moment in life, associated with many deprivations, loans, taking risks. To all the risks that exist for buyers, there are also some that are related to taxation, a reporter learned from Sofia24.bg from a revenue agency post on social networks.
The comment was made by the Director of Risk Management at the National Revenue Agency Nikolay Petkov in the “Construction” podcast from the “Taxes/Insurance we can’t do without” series.
Nikolay Petkov explains that when buying and selling a property, customers are usually offered to pay the real market price, but in the contract or in the invoices to declare a lower value than the actual value. The tax assessment is most often used. He points out that this is a violation of tax law and can lead to various consequences.
“For example, in the event of the contract being canceled for any reason, if there is a pre-paid amount, it will be returned within the framework of a formal and not actually concluded contract. Second, in subsequent litigation, there will again be distortion and incorrect determination of the price of the property, since a lower price than the actual price was indicated at the conclusion of the transaction,” explains Petkov.
He also points to a third problem:
“Under the Personal Income Tax Act, when you buy a property and sell it within three years, you owe tax on the difference between the purchase price and the sale price. If you’ve declared a very low purchase price, that means you’ll pay more tax. “
Therefore, in its risk management program, the NRA provides for numerous measures every year – both communication and control actions. According to Petkov, however, it is much more important for companies to establish a regime of trust with the tax administration, as it is a tool that businesses use.
“We have started a trust-building project with those from a given business who agree to voluntarily comply with tax legislation. This will bring two benefits – for the business itself, that it will not be bothered, and for the NRA – that it will not spend large resources to carry out of control actions, which are generally expensive, slow, lead to an appeal, etc.,” said Nikolay Petkov.
He added that the revenue agency relies a lot on the Chamber of Builders and all professional and business organizations in Bulgaria, as they are the mediators between it and businesses. “We have the same goals – we want business to become more fair, they want the same, since their business environment depends on it,” Petkov summarized.