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Notes on charity

1/ Through existing company

Legal framework - Law on Corporate Taxes; Law on Maecenas; Law on Local Taxes

Donations, grants to preferential subjects /healthcare providers, institutions for social services, disabled persons, foster homes, schools, nurseries, persons with low incomes, cultural institutes, associations with socially useful objective etc./– allowance for donations up to 10% from the profit/5% of the income if person, not company/

Donations, grants to Fund medical treatment for children – up to 50%

Donations to persons, companies and associations, registered under the Law on Maecenas – up to 15%;

Computers for schools produced up to 1 year before the date of the donation

The total amount of the donation should not exceed 65% of the accounting profit.

Consult with an accountant before taking any action                                                                         

Note: difference between donation/darenie/ and sponsorship/sponsortvo/. The donation is gratuitcus, free, the sponsorship is against publicity.

Documents needed – contract and written statement for giving and receiving the donation, signed by both parties

 2/ Through charity organisation

Legal framework: Law on Non-Trade Associations; Law on Maecenas

2a/ Under the Law on Non-Trade/Non-profit/ Associations

There are 3 organised forms of charity organizations:

Association with private objective – 3 or more persons; non-profit activity, private objectives.

Association with socially useful objective – min 7 persons or 3 companies, with socially useful objectives, public oriented, to support intellectual activities/development and recognition of the intellectual values, civil society, healthcare, science, technology, physical culture and sport, supporting the people with low incomes, disabled or people with special needs, supporting the social integration and the personal development, human rights protection or protection of the environment, etc./. It should be registered in the court, registry agency and in the Central register at Ministry of Justice. The social objective should be present in the Statute. Should have Collective Supreme body/Assembly/ and managing body/board of managers or just a manager/. For the sessions of the Collective Supreme body should be kept a book. It is subject to financial audit each year, should submit information till 31 May each year and annual report to the Ministry of Justice for the activity; It cannot be transformed in an association with private goal and this requirement should be clearly stated in the Statute, as well as the requirement that upon liquidation the property of the association cannot be distributed between its members, it could be granted to other similar associations per instance.

Advantages of associations with non-profit social objectives - if the objective is to support the culture pursuant to Law on Maecenas, there is an allowance of 15% of the profit for donations to such organisation, registered under this Law as well. Law on Corporate taxes and Law on Income Taxes stimulate companies and persons to donate to such organisations with social objectives/excl. the one under  the Law on Maecenas/ as they provide an allowance of 10% /5% of the accounting profit/ taxable income. There is a possibility of state subsidy for projects of such associations and participation in Programmes of the EU for Grant Schemes. Property bequeathed to such accusations is not taxable pursuant to Law on Local Taxes. Pursuant to the same Law these entities are not taxed for received and granted donations. Pursuant to Law on VAT free of VAT are the services and goods of such associations in relation to humanitarian aid, physical culture and sport.

Both associations are established on Constituent Assembly – decisions for the set – up, Statute, managing body should be taken. The Statute should stipulate the main issues – name, head office and operating address, objectives – non-profit, legitimate, type of activity – with socially useful objective or private, subject of the activity, how the objective will be achieved – with membership due/fees, donations, voluntary work, trade activity/only to satisfy the needs of the non-profit objective/ etc., how the property will be managed or disposed, the managing and representative bodies/the managing body should consist of min 3 persons/, rules regarding beginning and termination of membership and settlement of the property relations at membership termination, rules regarding the affiliates of the association, transformation, rights of the association’s bodies, term for which it is established/if any/, how the membership due will be paid, how the property will be distributed after liquidation and bankruptcy. For more see Law on Non-Trade Associations.

Documents needed for court registration – application, Statute, report from the Constituent Assembly, certified by notary samples of the signature of the representatives, CRB certificates of the managing bodies, document for company’s name uniqueness and receipt for paid state fee for the registration.

In 7 days time after the court registration the association with social/private objective should be registered in the BULSTAT registry at the Registry Agency.

In 2 months time after the court registration the association with social objective should be registered in the Ministry of Justice of Bulgaria. Documents required – a copy of the court decision for the registration, certificate of good standing, declarations, and rules for the social activity performance.

In 4 months time after the court registration the association with social/private objective should be registered in the Agency for Financial Reconnaissance to the Ministry of Finance. Documents needed – by-laws of the non-profit associations regarding the control and prevention of the money laundry and terrorism financing, copy of the court decision for the registration, certificate of good standing, and copy of BULSTAT card.

Foundation – granting property/money, real estate, items/ for free to achieve a non-profit goal; with unilateral document, certified before Notary or as Notary deed in case of real estate; More or less the same rules regarding the Statute and managing bodies as the associations apply. Difference with the associations – no membership, only property.

2b/ Under the Law on Maecenas

Association to support the culture is a non-profit association, registered in the Ministry of Justice/see above par.2a/

Culture - work of literature and translation, journalism, music, art, theatre, films, crafts, architecture, photography.

Maecenas – gratuitcus support for creation, preservation or making popular the works of culture directly or/and through a registered association, supporting the culture

Registration as Maecenas in the Ministry of culture required. Documents needed - copy of the court decision for the registration, certificate of good standing, copy of certificate for registration in the registry of Ministry of Justice, copy of BULSTAT card, rules for the social activity performance, application № 1 under the Law, agreement with the recipient of the donation.

Should keep registry for all the agreements for donations concluded and comprehensive records. An annual report for the activity and annual financial report should be submitted to the Ministry of Culture till 1 of March each year as well as reports pursuant to par. 2a/ above.