INTERNATIONAL TAX

Bulgaria and Romania Join the EU Crowd:

New Opportunities and Challenges

For Multinationals

Bulgaria and Romania joined the European Union on January 1, 2007, bringing the number of EU countries to 27. Their accession follows the 2004 accession of Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, the Slovak Republic, and Slovenia. Bulgaria and Romania had been slated to join the EU in the 2004 expansion, but their memberships were delayed because of concerns over economic and political issues. Since then, continued progress toward meeting the defined goals for EU membership (the Copenhagen criteria ^[1]) enabled Bulgaria and Romania to join the EU club at the beginning of this year.

Accession Stimulates Multinationals’ Interest in Direct Investment

Joining the EU brings challenges for Bulgaria and Romania as they modify their tax systems to meet the requirements of EU membership. For multinationals investing in Bulgaria and Romania, the enlargement creates issues and opportunities as they respond to the changing tax environment.

Interest in Bulgaria and Romania as locations for direct investment by multinationals will increase as a result of accession. US multinationals found additional reasons to invest in Bulgaria following the February 2007 signing of a new income tax treaty between the two countries. This combination—accession and the new treaty—clearly puts Bulgaria on the direct investment map.

For our readers, we have prepared an overview that examines some of the key tax issues in Bulgaria and Romania arising from accession, and considers some of the opportunities for a multinational with operations in or planned there.^[2]

Read the full article here.

An earlier version of this article originally appeared in the June 2007 Journal of International Taxation.

^[1] The relevant criteria were established by the Copenhagen European Council in 1993. See “Accession criteria (Copenhagen criteria),” http://europa.eu/scadplus/glossary/accession_criteria_copenhague_en.htm.

^[2] On the 2004 accession, see Lebovitz, MacLachlan, Scheer, “EU Enlargement: Issues and Opportunities for Multinationals,” 14 JOIT 18 (October 2003), 1008. Portions of that article are included here for additional background.

DLA Piper's International Tax group provides sophisticated and creative tax and business planning advice, delivering prompt, innovative, and effective service to our clients wherever they do business.

For more information, please contact:

In Los Angeles
Michael S. Lebovitz
Bernhard von Thaden

In Amsterdam
Roderik Bouwman

In Brussels
Marc de Munter

In Sofia
Stamen Yanev
Katerina Kraeva

Published by DLA Piper US LLP
Copyright © 2007 DLA Piper US LLP
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