The 1987 France-Bulgaria tax treaty, article by article

The convention between France and Bulgaria was signed in Sofia on March 14, 1987, and has been in force since May 1, 1988. It deals only with income tax: the administrative list classifies it as "IR" (income tax), excluding wealth, inheritance, and gift taxes. It caps dividends at 5 or 15 13 T and royalties at 5 13 T. It sets no withholding tax ceiling on interest and does not restrict its taxation to the country of residence. Its protocol warrants careful reading for its headings. This page presents the articles we have read in the official text and explains what it does not cover.

A convention limited to income, amended by the MLI in 2023

The BOFiP (Official Bulletin of Public Finances) gave its signature to Sofia on March 14, 1987, with a protocol that forms an integral part of the convention, Law No. 88-4 of January 4, 1988, and Decree No. 88-364 of April 13, 1988. The list of conventions (BOI-ANNX-000306, version of April 29, 2026) bears the reference "C March 14, 1987 (Official Journal of April 19, 1988)," "IR" (Income Tax). Article 2 concerns, for France, income tax and corporation tax.

The list of conventions amended by the MLI (BOI-ANNX-000511, April 29, 2026) includes Bulgaria: effective in France from January 1, 2023 for taxes withheld at source, and from July 1, 2023 for other taxes. The BOFiP (Official Bulletin of Public Finances) dedicated to Bulgaria dates from 2012 and does not mention it. The consolidated version contains a clause on the principal purpose: a treaty benefit is denied if obtaining it was one of the principal purposes of an arrangement, unless its granting is consistent with the object and purpose of the provision.

Resident status: Bulgarian nationality and a tiebreaker based on a single criterion

Article 1, paragraph 2, defines a resident differently in each State. For Bulgaria, the original text refers to a natural person who is a Bulgarian national, or a legal entity having its registered office or headquarters in Bulgaria. For France, it refers to a person liable for tax by virtue of their domicile, residence, place of management, or any similar criterion.

The determination process in Article 1, paragraph 3, is shorter than in most conventions. A natural person resident in both States is considered a resident of the State with which their personal and economic ties are closest, their center of vital interests. If this State cannot be determined, the competent authorities decide by mutual agreement. The text does not consider permanent home, habitual residence, or nationality.

Maximum deductions and key rules

Dividends: 5 % starting from 15 % of capital, 15 % otherwise

Article 8, paragraph 1, assigns the tax liability to the beneficiary's state of residence. Paragraph 2 also allows the state of the company to tax them, with two caps: 5% of the gross amount if the beneficial owner is a company, other than a partnership, that directly holds at least 15% of the capital of the paying company; and 15% in all other cases. An individual is therefore subject to the 15% rate.

Bulgarian dividends at 15 % or 5 %: numerical example (fictitious profile)

Situation. A fictitious French resident owns 20 % shares in a Bulgarian company. The company pays him €30,000 in gross dividends.

Issue. He believes that his holding of 20 % entitles him to the reduced rate. However, the rate of 5 % in Article 8 § 2 a) applies to a profitable company.

Strategy. He compares the ceiling applicable to an individual (15 %) and that of a company directly holding the same stake (5 %), then has his situation examined by a professional, in particular his taxation in France, which is not included in this calculation.

Result. At 15 %, the Bulgarian withholding tax cannot exceed €4,500. At 5 %, it could not exceed €1,500. The difference is €3,000 based on this. The figures are hypothetical and only reflect the maximum amount stipulated in the agreement.

Interest: no withholding limit set

Article 9, paragraph 1, states that interest arising in one State and paid to a resident of the other is taxable in that other State. This article does not employ the formula that reserves taxation solely to the State of residence: the convention does not set a withholding tax ceiling, but neither does it restrict taxation to the State of residence. Point 3 of the protocol excludes Articles 9 and 10 for the portion of interest and royalties that exceeds the rates and amounts usually withheld between businesses.

Royalties: 5 %, and what the protocol excludes

Article 10, paragraph 1, assigns royalties to the beneficiary's state of residence. Paragraph 2 allows the state of origin to tax them, up to a limit of 5% of the gross amount if the beneficial owner resides in the other state. Point 2 of the protocol specifies that remuneration for technical services (scientific, geological, or technical studies, engineering, consulting, monitoring) is not remuneration for industrial, commercial, or scientific expertise.

Capital gains: the protocol designates France as the State of certain securities

Article 11 assigns gains on immovable property to the State of location, gains on the assets of a permanent establishment to the other State, gains on ships and aircraft in international traffic to the State of the place of effective management, and all other gains to the State of residence of the transferor.

The protocol adds two rules. Point 4: Gains on shares or units of a company whose assets consist primarily of real estate are taxable in France when that real estate is located there. Point 5: Gains on a substantial interest in a company resident in France are taxable in France, according to Article 160 of the French General Tax Code (CGI). A substantial interest exists when the transferor, alone or with related persons, directly or indirectly holds securities entitling the holder to 25% or more of the company's profits. Our page on capital gains from securities held by non-residents details French domestic law.

Employees: 183 days in the fiscal year

Article 13, paragraph 1, assigns tax liability to the State of residence, unless the employment is exercised in the other State. Paragraph 2 sets out three cumulative conditions: a stay in the other State not exceeding a total of 183 days during the tax year in question; an employer who is not resident in the other State; and remuneration not borne by a permanent establishment or fixed base of the employer in that State.

Pensions and other income

Article 16, paragraph 1, reserves pensions paid for previous employment to the State of residence. Paragraph 2 assigns social security pensions to the paying State. Article 19 places all other income solely within the State of residence.

Double taxation: exemption in Bulgaria, tax credit in France

Article 20, paragraph 1, exempts income taxable in France from taxation in Bulgaria, except for the provisions of Articles 8 and 10: for dividends and royalties, Bulgaria grants a deduction equal to the tax paid in France, capped at the portion of Bulgarian tax corresponding to that income. Paragraph 2 addresses France: the tax paid in Bulgaria is not deductible, but the recipient is entitled to a tax credit. For dividends and royalties, this credit is equal to the tax paid in Bulgaria in accordance with the treaty, capped at the corresponding French tax. For other income, it is equal to the corresponding French tax.

Disputes and complaints

Article 22 requires that the case be submitted within three years of the first notification of the measure. The convention has no time limit; after five years, each State may terminate it with at least six months' notice (Article 27).

What this page does not cover

Permanent establishment (Article 4), business profits (Article 6), artists, public functions, students, non-discrimination and the protocol except points 2 to 5, inheritances and gifts (the administrative list does not mention any for Bulgaria), and Bulgarian domestic tax law.

What changes depending on your situation

• Your residence as defined in Article 1.
• The nature of the income: dividend, interest, royalty, salary, pension, gain.
• The level and form of your participation: individual or company, 15 % of the capital, 25 % of the profits.
• The number of days spent in Bulgaria during the fiscal year.
• The effects of MLI on your situation.

No outcome is guaranteed. For Bulgaria, have local law verified by a professional on site.