Declaring investments in shares

Declaring investments in shares

 

Question:
Hello!

I am interested in the situation with long-term investment in shares on foreign markets and taxation. I intend to buy shares and hold them for periods between 1 and 10 years, while also receiving dividends that will be reinvested. In this regard, I have the following questions:

1. Do I have to file a tax return every year, even though the profit / loss from the positions will not be realized (they will be opened)?

2. Are dividends subject to re-taxation, even though they will already be subject to income tax once, in accordance with US tax law.

3. If after say 5 years I decide to close positions and withdraw to a bank account an amount of money that I have deposited with the broker over the years, it would be money that I have saved from salaries and have already been taxed. Would this amount be re-taxable?

4. What are the possible penalties in case I have not declared anything over the years and decide to withdraw my money from the broker's account?

Thanks in advance!

 

Answer:

Hello,

Directly to your questions:

1. Do I have to file a tax return every year, even though the profit / loss from the positions will not be realized (they will be opened)? - The annual tax return declares three circumstances related to the securities - realized profit from trading in securities, received dividend from shares and stakes in foreign companies and shares and stakes in foreign companies as of 31.12 of each year. Ie if at the end of the year you own shares and / or stakes in foreign companies, then you are obliged to file a tax return and declare them, regardless of the fact that during the year you may not have realized income or paid dividend.

2. Are dividends subject to re-taxation, even though they will already be subject to income tax once, in accordance with US tax law. - If upon receipt of a dividend tax is withheld according to the legislation of the respective country, from which the company that pays your dividend is, then only dividend tax is paid in Bulgaria, if the tax already withheld is lower than the tax due in Bulgaria. For example - Dividend tax in Bulgaria is 5%. If you have been paid a dividend and you have been deducted an amount lower than 5%, you will have to pay the difference up to 5% in Bulgaria. If you have withheld tax higher than 5%, then in Bulgaria you do not pay any tax (but you do not get a difference if the tax withheld is more than 5%)

3. If after say 5 years I decide to close positions and withdraw to a bank account an amount of money that I have deposited with the broker over the years, it would be money that I have saved from salaries and have already been taxed. Would this amount be re-taxable? - In reality, the profit will be taxed, not the entire income. For example - you have savings of BGN 10,000, with which you decide to buy shares. After 5 years you sell these shares at a total value of BGN 15,000, where you realize a profit of BGN 5,000. You will actually pay a tax on the realized profit in the amount of BGN 5,000.

4. What are the possible penalties in case I have not declared anything over the years and decide to withdraw my money from the broker's account? - The minimum sanction for failure to file a tax return within the term is BGN 500.00 plus the undeclared tax due (if any has been due) with interest included for the period from which this tax was due until the moment when the violation was established.

We hope we have been helpful to you.

Greetings!