Updated last 26.03.2021
The value added tax (VAT) is regulated by the Value Added Tax Act (VATA) and the Rules on the Application of the Value Added Tax Act (RAVATA), which implement in the Bulgarian legislation the rules of Directive 2006/112/ЕО on the common system of value added tax in the EU. The European VAT legislation may be found on the following website.
VATA differentiates between taxable and exempt supplies of goods and services.
According to the Act the following supplies may give rise to an obligation to charge VAT:
- Local supplies of goods or services;
- Intra-community acquisitions of goods or services;
- Import of goods.
Exempt supplies are stipulated in Chapter Four of VATA. Generally these include supplies related to healthcare, social care, education, sports or physical education, religion, supplies of non-profit nature, supplies of financial services, supplies of insurance services, gambling, supply of post stamps and postal services, as well as supplies of goods or services for which no right of tax credit was used.
As a rule 20% VAT is charged on all local supplies, intra-community acquisitions of goods, import of goods and services with a place of supply in Bulgaria. The Bulgarian VAT system envisages a reduced 9% rate for hotel accommodation services.With a reduced rate of 9% for a limited period of time until 31.12.2021, as part of the temporary measures to recover the following sectors from the effects of the COVID-19 pandemic, the following supplies are charged:
– restaurant and catering services;
– foods suitable for babies and small children;
– baby peeled and baby hygiene items;
– general tourist service and excursions organized by tour operators and travel agents with occasional bus transport of passengers;
– service for use of sports facilities.
How is VAT reported?
The obligations to report and pay VAT arise after registration under VATA. Registration may be mandatory – if certain criteria specified in the VAT Act are met, such as reaching a taxable turnover of BGN 50,000 for the last twelve months, or voluntary as chosen by the person. The registration can be done also ex officio by the NRA, in case there are grounds for mandatory registration and the person has not submitted an application for registration within the prescribed time limits. In this case, the administrative penal provisions provided for in the law will be applied to the person. Additional information is available on the website of the NRA.
VATA registered persons are obliged to issue the documents regulated in the VAT Act and the Regulations for its application for each delivery made by them. In certain cases, the registered persons have an obligation to issue documents also when they are recipients of supplies, such as to issue protocols for received supplies of services from abroad, for intra-community acquisition of goods, etc.
The information from the documents mentioned above should be included in the purchases and sales ledgers, which the registered person should keep.
VATA registered persons are obliged to report the supplies of goods and services made and received by declaring and paying the VAT due to the state budget on a monthly basis.
VATA registered persons are obliged to file monthly VAT Reference return in a standard form. The return is filed only electronically via the NRA system, with the exception of cases set out in detail in the VATA. Additional information on the electronic filing of the VAT return is available at the following web address.
The deadline for the filing of the return is the 14th day of the month, following the reporting period (month). The return is drawn up based on the information available in the ledgers, where are included the issued and received in the respective month documents. The registered person is obliged to file the purchases and sales ledgers together with the return for the respective month. It is important to know that return should be filed even when the person has not made any supplies during the respective calendar month.
If the registered person has made intra-community supplies of goods or services with a place of supply in another EU member state, the person should file VIES-return, where these supplies are included. Additional information on the VIES return is available at the following web address.
As a rule, VAT should be charged by the supplier. However, the Act stipulates explicitly situations (Art. 84, Art. 163a of VATA, etc.) where the recipient of the supply is obliged to charge the VAT and pay the tax themselves (in most cases in intra-community acquisition of goods or services, also when purchasing goods under Annex № 2 – waste, grain and technical services, etc.).
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It is important to know that payment of VAT should be made within the deadline for its declaration (by the 14th day of the month following the reporting period). Payment may only be made via bank transfer to the NRA accounts. In this respect you have to have in mind that the different territorial directorates of the NRA have different bank accounts, which are available on the website of the NRA. Furthermore, in the payment order companies should include a specific code for the specific tax due, as otherwise they risk paying other tax liabilities (if there are such outstanding and eligible).
When and how is VAT refunded?
VAT is subject to refund as a result of exercising the right to tax credit. The right to tax credit is the possibility to deduct the VAT paid for the supplies received by the person against the VAT due calculated on the basis of the taxable supplies made by the person.
The right to tax credit arises only when the supplies (inward receipts) for which the person has paid VAT are related to the economic activity carried out by that person and are intended for subsequent taxable supplies (outward sales). In most cases the right to deduct tax credit is rejected exactly due to the lack of these preconditions (for example, when the goods or services received are for personal use or exempt supplies).
VAT should be refunded when the total result after three consecutive reporting periods is VAT to be refunded. The amount of the VAT to be refunded is calculated as the positive difference between the amount of the VAT paid on the supplies received and the amount of the VAT due on the supplies made by the person within three consecutive reporting periods.
If the result in three consecutive reporting periods is VAT refundable, the revenue authority initiates a check.
As part of this check the revenue authority has the right to request additional information from the liable person (for example, copies of invoices, credit / debit notes thereto, written explanations, etc.). As a result of the check it is found whether the registered person has a valid right to receive VAT refund.
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In this respect it is important to know that, if there are liabilities related to outstanding public payables due by your company as at the time of the check, these liabilities will be offset against the VAT that is subject to refund.
The VAT refund is made to a bank account set out by the registered person. In most cases this occurs within the check initiated in relation to the VAT refund.
|Important to know|
More information regarding the VAT reporting and refund is available on the website of the NRA.
VAT on supplies to non-taxable persons in the EU
When a Bulgarian company supplies goods and services for which recipients are tax-free (individuals) from another EU Member State, the supplier company is obliged to charge VAT according to the rules and rates in the respective Member State where these consumers are established. (Member State of consumption). This also applies to the supply of the following goods and services:
– supply of telecommunications services, radio and television broadcasting services and services provided electronically;
– supply of services which have a place of performance in another Member State ;
– intra-Community distance sales of goods with a place of performance in the territory of another Member State, ie electronic sale of goods to another Member State .
The provisions related to these supplies require the Bulgarian company to register and file a VAT return in each Member State where it makes supplies to non-taxable persons or to register under a special regime in Bulgaria that allows VAT to be declared and paid for all supplies in the EU in one place.
If the total value, VAT excluded, of the supply of telecommunications services, radio- and television broadcasting and electronic services and of intra-Community distance sales of goods to non-taxable persons does not exceed the threshold of EUR 10,000, the supplier may choose to tax these supplies according to the Bulgarian legislation.
 In legal force as of July 1st, 2021.
 In legal force as of July 1st, 2021.