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BEPS Multilateral Convention

March 23, 2018

The Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (the Convention), signed also by Bulgaria, will enter into force on 1 July 2018 for the first five jurisdictions that have already ratified the Convention: Austria (22 September 2017), the Isle of Man (19 October 2017), Jersey (15 December 2017), Poland (23 January 2018), Slovenia (22 March 2018).

Bulgaria signed the Convention on 7 June 2017, together with 67 more jurisdictions, at a special ceremony in Paris. So far, 78 jurisdictions in total have signed the Convention. Ratification procedures are in progress. The Convention is expected to be ratified in the near future by Bulgaria as well, which will bring in changes in 66 out of the 69 bilateral double tax treaties (DTT) whereto Bulgaria is a party.

One of the BEPS minimum standards the Convention will implement is the so-called Principal Purpose Test as grounds for denial of a benefit under a DTT where obtaining the benefit was one of the principal purposes of an arrangement or transaction.

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