VAT Registration in Bulgaria
VAT Registration in BulgariaUpdated on Friday 03rd July 2020
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The standard VAT rate in Bulgaria is 20%. Most supplies in Bulgaria are liable to VAT and legal entities and tax liable individuals must register for VAT in Bulgaria at the competent authorities. Reduced rates and exemptions are available. Our Bulgarian lawyers can help you register for VAT in Bulgaria.
VAT registration is required for all Bulgarian companies and Bulgarian tax liable persons who produce VAT taxable sales in Bulgaria that reach the 50,000 BGN limit (approximately 26,000 euros) within a financial year. Any legal entities or taxable individuals who record taxable sales below this limit can register for VAT voluntarily.
Register for VAT in Bulgaria
When VAT registration is compulsory (the set threshold is exceeded), the application for registration with the tax authorities is to be submitted within 14 days after the end of the tax period during which the amount was surpassed. Registration is mandatory in case of:
- intra-EU acquisitions;
- for the supplied of assembled and installed goods and the supply of services when the tax is chargeable on the recipient.
Any tax liable person or legal entity in Bulgaria not registered for VAT purposes can be automatically registered by the competent authorities and different penalties can apply.
Branches and representative offices in Bulgaria are registered through the standard VAT registration procedure, however, non-residents with a fixes establishment in their country or origin that effect taxable supplies are to be registered through the agency of an accredited representative. This is not required, however, when the non-resident is established in another Member State or in a third country with which Bulgaria has signed a legal assistance treaty. Our lawyers in Bulgaria can provide more information about the commercial laws in the country.
Deregistration takes place upon the dissolution of the company (with or without liquidation) or the death of the natural person/sole trader who was registered for VAT purposes. In some cases, deregistration can be commenced by the Revenue Authority.
Below, our team answers some common questions about the VAT regime, obtaining refunds as well as other issues.
Who is liable for VAT in Bulgaria?
The standard VAT rate of 20% applies to taxable supplies of goods or services and the import of goods. Intra-community acquisitions and various other actions fall under the scope of the European Community. In order to simplify the VAT registration and verification procedure within the European Union, traders have the option to register for an EORI number. Our Bulgarian lawyers can provide complete details about this registration.
A reduced VAT rate of 9% applies in Bulgaria for hotel accommodation and other touristic establishments. A zero VAT rate applies for: international transport of goods and international transport of passengers, supplies concerning international transport, duty-free trade supplies and others.
The following categories of services are exempt from VAT in Bulgaria:
- health care supplies;
- social security and welfare supplies;
- supplies related to culture or religion;
- supplies related to land and buildings;
- postage services and stamps etc.
What are the requirements for reporting?
Companies subject to value-added tax need to observe the regulations for recording and reporting transactions. For this purpose, the purchase and sales books are relevant.
VAT returns are submitted for every tax period and they are based on the aforementioned books of account. Registered companies that have been engaged in supplies as an intermediary during an intra-EU supplies of services or goods, with the place of supply in another EU Member State, will need to submit the VIES return on the supplies for the relevant period (in addition to the VAT return). One of our attorneys in Bulgaria can provide more information on this issue.
What are the conditions for tax refunds in Bulgaria?
Refunds are possible for the net input tax and the credit for the input tax is the amount that can be deducted from the tax liabilities under the VAT Law, linked with the economic activity. These are claimable within 30 days after the submission of the VAT return, when the taxable person has provided supplies liable for the zero tax rate during the 12 months before the current one during which the claim is made. In this case, the value of the zero rate supplies needs to have a total value of more than 30% of the value of the total taxable supplies (including the zero-rate ones). In some cases, the right to deduct credit for input tax cannot be claimed. This applies when the goods and services are used for business entertainment purposes, upon the purchase of a motorcycle of passenger car and in several other cases.
A different regime applies to taxable persons that qualify as agricultural producers. In this case, he must have produced taxable supplies within the prior 12 months at a rate of 20% of the goods. One of our lawyers in Bulgaria can provide more details in this case.
The refund can also be granted to taxable persons that are not established in Bulgaria but are registered for VAT purposes in another EU Member State. On a basis of reciprocity, this is also possible in case of taxable individuals that are registered in a non-EU state. The Ministry of Finance is the one that establishes the documents that are required for the tax refund.
Penalties in relation to the VAT Law in Bulgaria
Taxpayers who do not comply with the requirements for VAT registration in Bulgaria are liable to a fine. This is done according to Article 178 of the VAT Law and one of our lawyers in Bulgaria can provide more specific details about this Article and others that may be of interest regarding value-added tax and the general tax law. Below, we list some of the common sanctions:
- the penalty for those who fail to register for VAT purposes starts at 500 BGN and cannot exceed 5,000 BGN.
- those who fail to submit the VAT returns and the supporting documentation are subject to a penalty of 500 BGN or more, but no larger than 10,000 BGN,
- companies or individuals who fail to submit the return for an intra-EU acquisition in due time are subject to a pecuniary penalty of 1,000 BGN but no larger than 10,000 BGN; repeated violations are subject to higher penalties, starting at 5,000 BGN but lo larger than 20,000 BGN.
Penalties also apply for failure to provide all of the required documents (thus leading to a smaller tax assessment) or for failure to properly submit the information from the ledgers on an indicates means of storage.
Our law firm in Bulgaria can help taxpayers who need more information about the VAT Law and the manner in which violations thereof are treated. The penalty is issued, executed and can be appealed as per the Administrative Violations and Sanctions Law.
We can also complete and detailed information about other taxes in Bulgaria applicable both to Bulgarian nationals and to international supplies and import and export activities.
Contact our lawyers in Bulgaria for more details about VAT registration and requirements.