The European Commission (EC) requests that Bulgaria end discriminatory tax treatment of foreign governmental, municipal and corporate bonds, the EC press release informs Thursday.

The EC has formally asked Bulgaria to change its tax provisions according to which income from Bulgarian governmental, municipal and corporate bonds are exempt from tax, whereas no such exemption is granted for similar bonds issued abroad, including other EU Member States or EEA/EFTA states.

The Commission considers that these rules are incompatible with the EC Treaty, which guarantees the free movement of capital.

The request is in the form of a reasoned opinion, which is the second step of the infringement procedure. If there is no satisfactory reaction to the reasoned opinion within two months, the Commission may decide to refer the matter to the European Court of Justice.

The Commission is of the opinion that these rules may dissuade Bulgarian taxpayers from investing in bonds issued in other Member States and thus restrict the free movement of capital.

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