(Finance) – significant reversal of course by theRevenue and INPS agency regarding the taxation of pensions received by Italians residing in Bulgaria. It highlights the New analysis of MFLAW Company between actions lawyers underlining that the question is sExiting perplexity and raises an interpretative rebus complex that deserves detailed study.
There Convention Against double impositions between Italy and Bulgaria, ratified in 1990, it establishes that pensions are taxed in the country of residence of the taxpayer. According to article 1, paragraph 2, lett. B of the Convention, to be considered taxally resident in Bulgaria, a taxpayer must be registered in AIRE and possess the “Bulgarian nationality”. Although the term “nationality” can arouse interpretative doubts, it has traditionally been intended as a strengthening of the notion of residence, which includes both cultural and social and formal aspects.
Until 2023, The Italians residing in Bulgaria registered in the AIRE have always taxed the pensions received in Bulgaria, without disputes by the financial administration. However, starting from 2023, the tax position has undergone a radical change. The Revenue Agency (with response no. 244 of 8 March 2023) and INPS (message n. 1270 of April 3, 2023) have now interpreted the term “nationality” as synonymous with “citizenship”. This change implies that, in order to be considered fiscally resident in Bulgaria, Italian pensioners should not only be enrolled in AIRE, but also acquire Bulgarian citizenship. This interpretation raises questions, as Bulgarian legislation allows the attribution of the tax residence even to those who do not have Bulgarian citizenship.
In addition, the terms “Nationality” and “Citizenship” They are not entirely superimposable, given that “nationality” has a wider value, recalling a sense of cultural and social belonging, while “citizenship” refers to a formal bond with the state. Another critical aspect concerns tax recovery by the Revenue Agency. Despite the new interpretation, the recovery of taxes should only be started from 2023, the year in which taxpayers have been informed of the new position of the administration. The absence of previous official clarifications on the interpretation of the “Bulgarian tax residence” and “nationality” has led to a situation of legitimate custody for Italian pensioners residing in Bulgaria. Therefore, a retroactive tax recovery for the years preceding 2023 does not appear compliant with the principle of “legitimate assignment” provided for by the legislation.
However, The Revenue Agency has also launched tax recovery for the years prior to 2023, generating uncertainties and inconveniences among Italian pensioners in Bulgaria .Mflaw society between actions lawyers underlines the need for urgent clarification by the financial administration. With the large number of Italian pensioners involved, it is essential that the place of taxation of pensions received in Bulgaria is defined with greater precision, also clearly establishing the operating methods for tax recovery. A structured and definitive intervention by the Revenue Agency is essential to resolve interpretative ambiguity and guarantee transparent and just management of the matter.