Under Art. 38, para. 14 of the Personal Income Taxes Act (PITA), the gross amount of taxable cash and non-cash prizes received from games, competitions and contests that are not provided by an employer or a principal is subject to final tax. The tax rate is 10% (Art. 46, para. 1 of the PITA). For cash prizes, the non-profit withholds the tax when it pays out the prize. For non-cash prizes, the tax base is the market price of the prize, and the tax is paid by the non-profit itself, since it cannot be withheld.
Under Art. 13, para. 1, item 22 of the PITA, the following are not taxable: state and national awards granted to artists in the field of culture and to athletes; prizes to winners of contests under projects and programmes financed in whole or in part by the National Culture Fund; state cash awards for special merit to the Bulgarian state and nation; and prizes to gifted students for participation in national and international olympiads, competitions and contests. Therefore, if the prize is received by a student recognised as a gifted child under the Ordinance on the Conditions and Procedure for the Protection of Gifted Children, it is not subject to final tax.
The non-profit declares the tax withheld and paid for each quarter in a return under Art. 55, para. 1 of the PITA and pays the tax by the end of the month following the quarter.
By the end of February of the following year, the non-profit files a statement under Art. 73, para. 1 of the PITA, listing for each prize winner their full name and personal identification number (EGN), the value of the prizes and the tax paid, under code 822 – taxable cash and non-cash prizes from games, competitions and contests not provided by an employer or a principal. Prize winners do not have to file an annual tax return under Art. 50 of the PITA if, during the year, they received only income subject to final tax under Art. 38 of the PITA (Art. 52, para. 1, item 4 of the PITA).