Companies usually finance their activities by loans, arranged via formal agreements with the shareholders, other legal entities, banks or other credit institutions. Loans are always expected to include interest on the borrowed amount, which is payable monthly or annually and is recognized as tax deductible expense.Loans should be repaid after contracted period of time together with the interest. When BG Ltd’s execute loans cross-border, they are liable to register the loan at the Bulgarian national bank. Loans have to be booked in the books of a Bulgarian Ltd under Other Creditors. Loan amounts may exceed the value of the assets of the company. Loans do not reflect the annual taxable result at the end of the year. Only the interest calculated on loans is reflecting the taxable result, no matter if the actual interest payment is preceded or not.When the interest on loan is calculated and agreed for period for more than one financial year, the total interest amount is treated as an asset (i.e. Deferred Expenses). When the part of the interest is charged and becomes payable, this part becomes a tax deductible expense and a liability of the company payable to the lender. All lenders are liable to tax on interest income. If the private person is a local (Bulgarian) person, they are liable to report the interest income in their annual tax return. A foreign lender receiving interest income will be charged by the borrower a withholding tax of 10% on the Interest income and will be paid the difference, but after deducting and paying the tax of 10%. This is however subject to withholding tax exemption rules.The precise loan structure has no relation to tax, also to the value of the assets.