20.08.2024
ON THE NEW ALTERNATIVE TAX ON THE INCOME OF NATURAL PERSONS, WHO ARE NOT TRADERS, FROM THE COLLECTION OF WILD MUSHROOMS AND BERRIES
Comment from the specialist
Evgeniya Popova, tax expert
From 01.01.2024, a new alternative tax was introduced, with which the income of natural persons who are not traders within the meaning of the Commercial Law from the collection of wild mushrooms and fruits, with the exception of medicinal plants, is taxed.
This is a completely new type of tax, the introduction of which has given rise to various discussions, and there are also many opponents of the idea of its existence, and even a proposal for its abolition. It is a question of income from a specific seasonal activity, which also implies the possession of specific knowledge, but at the same time very profitable, given the prices of certain types of mushrooms such as truffles, the income from the sale of which falls within this scope.
Of course, there is no predictability in the amount of income that could be realized from this activity, since production largely depends on specific factors and atmospheric conditions such as rainfall, drought and other climatic features. Therefore, paying tax as a fixed amount that does not depend on the actual amount of income earned is something subjective, but practice shows that over the years there are other types of similar taxes that replace income tax and their amount is not affected by the amount of the acquired income - for example, the patent tax.
It is very important to note that this tax regime does not apply to persons who act as traders - for example, an individual is not registered as a sole trader, but systematically performs the activity by occupation.
Another important feature of taxation with this type of alternative tax under the Personal Income Tax Act is that the obligation to pay the tax is on another person - the state-owned enterprises under the Forestry Act, and not on the payers of the income - the companies that buy the collected produce.
The new alternative tax is included in the provision of Art. 14, para. 6 of the Law on taxes on the income of natural persons, according to which the income of natural persons, who are not traders within the meaning of the Commercial Law, from the collection of wild mushrooms and fruits, with the exception of those from medicinal plants, is subject to an alternative tax, and in part three of the Personal Income Tax Act there is a new chapter seven "a" with the title "Alternative tax on income from gathering wild mushrooms and fruits".
The basis for taxation of the income from collecting wild mushrooms and fruits is in Art. 41a of the Law on Personal Income Taxes, where in para. 1, it is stated that the income of natural persons, who are not traders within the meaning of the Commercial Law, from the collection of wild mushrooms and fruits, with the exception of those from medicinal plants, are taxed once with an alternative tax in the amount of BGN 30 for each month in which the activity is carried out.
In para. 2 of this provision states that the alternative tax for the income from gathering wild mushrooms and fruits is withheld from the state enterprises under Art. 163, para. 1 of the Law on Forests immediately before the issuance of a permit for carrying out the activity of collecting wild mushrooms and fruits, with the exception of those from medicinal plants, for the relevant month and is submitted within the terms and in accordance with the procedure of Art. 65 and 66 of the Personal Income Tax Act.
Therefore, the alternative tax under Art. 41a of the Law on Personal Income Taxes shall be submitted by state-owned enterprises under Art. 163, para. 1 of the Law on Forests, by the 25th of the month following the month of its withholding in the state budget, at the expense of the competent territorial directorate of the National Revenue Agency under Art. 8 of the Tax and Insurance Procedural Code, i.e. at the place of registration of the person obliged to withhold the alternative tax.
It should be borne in mind that an alternative tax, which taxes the income from collecting wild mushrooms and fruits, with the exception of those from medicinal plants, in the amount of BGN 30 is due only for the month during which the activity is carried out and pay before receiving the permit, i.e. before the start of the activity that will be carried out in the relevant month.
As was specified above, the responsibility for the collection and payment of the alternative tax is the state-owned enterprises - legal entities, with the status of state-owned enterprises under Art. 62, para. 3 of the Commercial Law. The Minister of Agriculture and Food, by order, determines the areas of activity of these state-owned enterprises.
State enterprises under the Law on Forests are:
– North-West State Enterprise;
– North Central State Enterprise;
– Northeast State Enterprise;
– Southeast State Enterprise;
– Southwest State Enterprise;
– South Central State Enterprise.
State enterprises that issue a permit for a specific month withhold, declare and pay both the alternative tax and the mandatory insurance contributions.
For the alternative tax due under Art. 41a of the Law on Personal Income Taxes, state-owned enterprises submit information in the order and manner specified in an ordinance issued by the Minister of Finance, i.e. in accordance with Ordinance H-13 of 17.12.2019 with declaration model No. 1 and No. 6, which is laid down in the provision of Art. 55, para. 3 of the Law on Personal Income Taxes. In practice, state-owned enterprises submit a declaration, but it contains information only about the amount of tax due and mandatory insurance contributions for the specific persons, but not about the amount of income acquired by them - the amount of tax under Art. 41a of the Personal Income Tax Act is indicated in 31.A in declaration form 1, and the code is 41. In declaration form 6 in item 16 "withheld tax under Art. 41a of the Law on Personal Income Taxes" the amount of tax withheld during the relevant month under Art. 41a.
According to the Law on Forests, a permit for the use of non-timber forest products from the forest territories - state and municipal property, is issued by the state enterprise under Art. 163 for each month in the month before the performance of the activity, and its value includes:
And in the Law on Forests, it is explicitly stated that the state enterprise under Art. 163, which issues a permit for a specific month, deducts, declares and pays the mandatory insurance contributions under para. 6, items 2 and 3, as well as the alternative tax under para. 6, item 4;
It is important to keep in mind that this regime does not apply to medicinal plants, within the meaning of § 1, item 64 of the Additional Provisions of the Personal Income Tax Act. These are plants that can be used to make herbs.
For the income from this activity of natural persons who are not merchants within the meaning of the Commercial Law, taxation is reserved in accordance with Art. 29, para. 2, b. "a" of the Law on personal income taxes, whereby 40 percent of legally recognized expenses are deducted when forming the taxable income.
Individuals are not obliged to file an annual tax return when they have only acquired income taxable with an alternative tax from collecting wild mushrooms and fruits, with the exception of those from medicinal plants, according to Art. 52, para. 1, item 6 of the Law on Personal Income Taxes. Even if the persons are obliged to submit an annual tax declaration on another basis, they are not obliged to indicate in it the income from the collection of wild mushrooms and fruits, with the exception of those from the medicinal plants, subject to an alternative tax according to the order of chapter seven "a" .
However, local individuals will be able to declare in their annual tax return under Art. 50 of the Law on personal income taxes for 2024 and the incomes acquired during the year, which are taxable with an alternative tax under chapter seven "a" on the basis of art. 50a, para. 1 of the Law on Personal Income Taxes.
Example: A natural person carries out an activity of picking wild mushrooms in the period from May to October inclusive. For each month of this period, the person pays the due alternative tax in the amount of BGN 30 and the due mandatory insurance contributions to the state forestry enterprise at the beginning of of the month before acquiring the permit to carry out the activity for the corresponding month. The tax thus paid is final.
In this case, the state-owned enterprise declares this tax in accordance with Ordinance No. H-13, submitting model declarations No. 1 and No. 6.
The company that buys the production, that actually pays the income from this activity to the natural persons, has no obligation to determine and pay tax for this income, as well as to submit information with the reference under Art. 73, para. 1 of the Law on personal income taxes for the amount of income paid by him, as he had for income from gathering wild mushrooms and fruits until the end of 2023, i.e. it is no longer intended to submit information on the income thus paid by the payers from the collection of wild mushrooms and fruits.
Regarding the documentation of income, there is also no special obligation to issue a document when paying/acquiring income from collecting wild mushrooms and fruits, as a Bill for paid amounts is no longer issued.
