Taxable persons

A taxable person is any person carrying out an independent economic activity, whatever the purpose or results of that activity.

In the event of importation of goods, any individual or legal person is a taxable person.

In addition, a taxable person is any person who, on an occasional basis, carries out an intra-Community supply or acquisition of a new means of transportation for consideration.

A taxable person is also any person who is not established within the territory of Bulgaria but carries out taxable supplies of goods that are assembled or installed within the territory of Bulgaria by or for the account of that person.

Independent economic activity
An independent economic activity is any activity of producers, traders or persons supplying services, including mining and agricultural activities, as well as practising the liberal professions, including those of a private enforcement agent and a notary public.

An independent economic activity refers also to any activity carried out on a regular basis or by occupation against remuneration, including the exploitation of tangible or intangible property for the purposes of obtaining income from it on a continuing basis.

Charging of tax by a registered person

A registered person for whom the tax has become chargeable must charge it by:

1. issuing a tax document indicating the tax on a separate line;

2. including the tax amount when determining the result for the respective tax period in a tax return for that tax period;

3. indicating the tax document in the sales journal for the respective tax period.

The tax is payable by the registered person for the tax period in which the tax document was issued, and in cases where no such document has been issued or it has not been issued within the time limit prescribed by this Act, for the tax period in which the tax became chargeable.

‘Tax document’ refers to the following:

1. an invoice;

2. an advice annexed to the invoice;

3. a memorandum.

Registered persons must keep the following records:

1. a purchases journal;

2. a sales journal.

A registered person must file:

- a tax return drawn up on the basis of accounting records (purchases journal and sales journal);

- a VIES return, in the event that, in the tax period, he has carried out intra-Community supplies, supplies as an intermediary operator in a triangular transaction or supplies of services, where the place of transaction is in another Member State, along with the VAT return;

- the accounting records for the respective tax period.

The right to deduct tax credit exists for any goods or services intended for taxable supply, acquisition or importation.

Tax rates

Under the the Value Added Tax Act, value added tax is levied at three different rates, as follows:

1. 20% – the basic tax rate applicable to:

- taxable supplies, except for those listed as taxable at a zero rate;

- the importation of goods within the territory of Bulgaria;

- taxable intra-Community acquisitions.

2. 9% – a reduced tax rate applicable to accommodation provided at hotels and similar establishments, including the provision of holiday accommodation and rental of tourist camp-site or caravan park space;

3. zero tax rate – applicable exclusively to supplies that are expressly listed in the Act, such as

- supplies of goods dispatched or transported outside the territory of the European Union;

- international passenger transport;

- international cargo transport;

- supplies relating to international transport;

- supplies relating to international traffic of goods;

- supplies relating to processing of goods;

- supplies of gold to central banks;

- supplies carried out in the course of duty-free trade;

- supplies of services provided by agents, brokers or other intermediaries relating to the supply of the above-listed supplies taxable at zero rate;

- supplies pursuant to international treaties, agreements, accords, conventions and other similar instruments to which the Republic of Bulgaria is a party signatory, duly ratified and published;

- supplies of goods and services, where the recipients are the armed forces of other States that are party to the North Atlantic Treaty;

- supplies of import-related services such as commission, packaging, transport and insurance, where their cost is included in the taxable base of imports;

- intra-Community supplies, with the exception of exempt intra-Community supplies, where the recipient is a taxable person or a non-taxable legal person registered for VAT purposes in another Member State;

- intra-Community supplies of new means of transportation, including by individuals.

Tax-exempt supplies. These include:

- supplies relating to healthcare;

- supplies relating to social care and social security;

- supplies relating to education, sports or physical education;

- supplies relating to culture;

- supplies relating to religious denominations;

- supplies of non-profit nature;

- supplies relating to land or buildings;

- supplies of financial services;

- supplies of insurance services;

- gambling;

- supplies of postal stamps and postal services;

- supplies of goods or services for which no tax credit has been used.

Exempt import transactions:

1. goods imported by:

- diplomatic missions, consulates or members of their staff, where the goods are compliant with the conditions for exemption from customs duties upon importation;

- the European Union, the European Atomic Energy Community, the European Central Bank, the European Investment Bank or by the authorities of the European Union to which the Protocol on the privileges and immunities of the European Union applies, subject to the restrictions and conditions laid down in that protocol and the agreements on its implementation or the headquarters agreements, provided that this does not result in distortions of competition;

- international bodies recognised as such by the public authorities of the host Member State, or by members of such bodies, within the limits and under the conditions laid down by the international conventions establishing the bodies or by headquarters agreements;

2. dental prostheses imported by doctors of dental medicine or dental technicians, human organs, tissues and cells, blood, blood components and breast milk;

3. textbooks and teaching/training aids;

4. products of marine fishing extracted outside European Union waters by ships, where the products are imported into ports unprocessed or after undergoing preservation for marketing but before being supplied;

5. goods, where the importation is followed by an intra-Community supply and provided the importer submits the following data:

- his identification number;

- the VAT identification number of the client for which the goods are being supplied issued in another Member State, or his own VAT identification number issued in the Member State of final destination of the dispatch or transportation of goods;

- evidence that the imported goods are intended for transportation or dispatch to another Member State following a procedure laid down in the Rules for the implementation of the VAT Act.

6. gold from the Bulgarian National Bank;

7. aircraft and sea craft, and spare parts therefor;

8. investment gold;

9. gas, through а natural gas distribution system, or through a network connected to such a system or gas fed by a vessel transporting gas, in a natural gas distribution system or a network of gas pipelines preceding such a system, and of electricity or of heat or cooling energy through district heating or cooling networks;

10. official publications issued under the control of the authorities of the State or territory of exportation, of international bodies, public entities and public law bodies established in the State or territory of exportation, and printed materials distributed in the context of elections for the European Parliament or in the context of national elections in the country in which the printed materials are issued by foreign political organisations officially recognised as such in the Member States, to the extent that these publications and printed materials have been taxed in the State or territory of exportation and do not enjoy any tax exemption from upon exportation;

11. pure-bred horses, not more than 6 months old and born in a third country or third territory of an animal covered in the European Union and then exported temporarily to give birth;

12. goods which are destroyed or abandoned to the State according to a procedure laid down in customs legislation, as well as goods provided free of charge which have been abandoned to the State or confiscated, with the exception of motor vehicles;

13. goods under customs control destroyed or irretrievably lost as a result of their actual nature or force majeure;

14. goods which have been temporarily exported for repair or putting them in order, provided that the conditions laid down in customs legislation are fulfilled;

15. goods being returned to the exporting party while preserving the condition in which they were exported, except for the normal depreciation due to the use made of them, in cases where those goods are exempt from import duties;

16. motor vehicles that have been misappropriated or stolen and for which the import duties payable have been repaid or remitted according to a procedure laid down in customs legislation.

Tax-exempt intra-Community acquisitions

Exemption is granted for the following intra-Community acquisitions of goods for which the place where the acquisition transaction is carried out is within the territory of Bulgaria, provided that:

1. the recipients are:

- commands/headquarters of the North Atlantic Treaty Organization or [bodies] of the armed forces of other States that are party to the North Atlantic Treaty, for the use of those forces, or of the civilian staff accompanying them, or for supplying their messes or canteens when such forces take part in the common defence effort of NATO on the territory of Bulgaria;

- diplomatic missions, consulates, representative offices of international bodies and staff members of the recipients.

2. where the importation of those goods onto the territory of Bulgaria would have been tax exempt;

3. where the recipients are European Union institutions, the European Atomic Energy Community, the European Central Bank, the European Investment Bank or the authorities of the European Union to which the Protocol on the privileges and immunities of the European Union applies, subject to the restrictions and conditions laid down in that protocol and the agreements on its implementation or the headquarters agreements, provided that this does not result in distortions of competition;

4. the acquisition is carried out by an intermediary operator registered for VAT purposes in another Member State, in a triangular transaction.

The registration requirement under this Act applies to each taxable person who is established within the territory of Bulgaria and carries out taxable supplies of goods or services.

The registration requirement under this Act applies to each taxable person who is not established within the territory of Bulgaria and carries out taxable supplies of goods or services other than those for which the tax is chargeable by the recipient.

The registration under the Value Added Tax Act can be mandatory or optional.

Mandatory registration

A taxable person who has generated a taxable turnover of BGN 50 000 or more

- within a period not exceeding the past 12 consecutive months preceding the current month, or

- within a period not exceeding 2 consecutive months, including the current one, is required to lodge an application for registration under the ZDDS within 7 days following the end of tax period within which that turnover level was reached, or within 7 days as from the date on which the turnover level was reached, in case the latter was reached within a period not exceeding 2 consecutive months, including the current one, respectively.

Further information on the calculation of turnover for registration purposes

In the case of consecutive performance of homogeneous activity in the same commercial outlet by two or more related persons or persons acting in concert, the turnover of each subsequent person must include the turnover generated in the commercial outlet by all persons who had consecutively performed the activity in the commercial outlet before him, for a period not exceeding the past 12 consecutive months, including the current one, and it is deemed to be turnover generated by the respective person on the first day when that person commences the homogeneous activity in the commercial outlet. An activity is deemed homogeneous where there is a significant identity in terms of two or more of the following features: the goods or services offered, the assets used, the staff, the brand/outlet name, or the suppliers/customers.

Mandatory registration applies also in respect of:

- supplies of goods involving assembly or installation;

- distance sales of goods;

- intra-Community acquisition;

As from 1 January 2020, irrespective of the value of taxable intra-Community acquisitions, mandatory registration applies also to any taxable person established in another Member State that carries out an intra-Community acquisition of goods within the territory of Bulgaria as required by Article 15a(6) and Article 65a of the Value Added Tax Act.

Those persons have the obligation to lodge an application to register within 7 days before the relevant circumstances arise.

- supplies of services for which the tax is chargeable by the recipient;

- supplies of telecommunication services, radio or television broadcasting services or services carried out by electronic means, where the place of supply is within the territory of Bulgaria, carried out by taxable persons who are not established within the territory of Bulgaria.

Other special cases of registration:

Mandatory registration resulting from restructuring

According to the Value Added Tax Act, the obligation to register under the VAT Act arises for anyone who acquires goods or services from a registered person as a result of the following:

1. restructuring of a company in a procedure laid down in the Bulgarian Commercial Act;

2. transfer of an enterprise in a procedure laid down in the Bulgarian Commercial Act;

3. making an in-kind contribution into a company;

4. restructuring of budget entities, State- or municipally-owned enterprises as a result of which the newly established bodies or enterprises become universal legal successors of the restructured ones;

5. provision of the use of real property by the State and by municipalities to applicants for the needs of private kindergartens and schools as provided for in the Pre-School and School Education Act and their subsequent transfer back to the State or the municipalities by the applicants upon closure of the kindergartens or schools.

Registration in the event of inheritance

According to the Value Added Tax Act, upon the death of an individual registered under this Act or an individual who is a sole proprietor whose enterprise has been taken over by virtue of succession or by legacy, where the independent economic activity of the deceased is continued by a person who is not registered under this Act and for which the conditions for mandatory registration are not present, the person has the right to register under this Act.

Registration of a non-resident person not established in Bulgaria

The following are subject to registration under the Value Added Tax Act:

1. a non-resident person having a permanent establishment within the territory of Bulgaria from which he conducts an economic activity, fulfilling the conditions for mandatory or optional registration stipulated in this Act;

2. a non-resident person that is not established within the territory of Bulgaria but carries out taxable supplies where the place of supply is within the territory of Bulgaria and fulfils the conditions for mandatory or optional registration stipulated in this Act.

Registration relating to supplies of telecommunication services, radio and television broadcasting services or services carried out by electronic means, where the recipients are non-taxable persons that are established or have their permanent address, or usually reside in another Member State

The Value Added Tax Act applies to supplies of telecommunication services, radio and television broadcasting services or services carried out by electronic means, where the recipients are non-taxable persons that are established or have their permanent address, or usually reside in a Member State, in cases where the supplier:

1. is a taxable person not established in the Member State of consumption, and

2. has opted to register for any of the special schemes in Bulgaria or in another Member State.

Special schemes are: non-Union scheme, where the supplier of the above-mentioned services is not established within the European Union, and Union scheme, where the supplier of the above-mentioned services is established within the European Union.

Optional registration

Registration following the general procedure:

Any taxable person for whom the conditions for mandatory registration are not present has the right to register under the Value Added Tax Act.

Further information on optional registration

Registration in case of an intra-Community acquisition

Any taxable person or non-taxable legal person for whom the conditions for mandatory registration in case of an intra-Community acquisition are not present has the right to opt for registering for the purposes of an intra-Community acquisition.

Registration for the purposes of distance sales

Any taxable person may register under this Act, irrespective of the amount of supplies carried out in the conditions of distance sales, provided that he has notified the tax administration of the Member State of his registration for VAT purposes of his wish for the place of supply of distance sales that he makes to be within the territory of Bulgaria.

Registration at the initiative of a revenue authority

In the event that a revenue authority has established that a person has failed to comply with his obligation to apply for registration, it shall register him by issuing a registration instrument, provided that the registration conditions are present.

For the registration to be performed, the person who is required or has the right to register needs to lodge an application for registration, in a standard form, with the competent territorial directorate of the Bulgarian National Revenue Agency, or declare his request for an optional registration before the Registry Agency.

The submission to the competent territorial directorate of the National Revenue Agency is made:

- in person, where the taxable person is an individual having legal capacity or a sole proprietorship;

- by a person vested with representative authority by law, where the taxable person is a legal person or a co-operative;

- by a person vested with representative authority by Articles of Association, where the taxable person is an unincorporated enterprise or a social insurance fund;

- by an accredited representative;

- by a person who has been expressly authorised to do so by means of a notarised Power of Attorney;

- by a lawyer authorised to do so by means of a Power of Attorney in writing.

The application may also be filed electronically

The application to register must state the grounds for registration and must be accompanied by documents specified in the Rules for the Implementation of the Value Added Tax Act.

The application for optional registration lodged with the Registry Agency must state the registration grounds. The application form must be accompanied by documents specified in the Rules for the Implementation of the Value Added Tax Act. When applying for initial registration with the Registry Agency, the person is not required to submit a summary statement of taxable turnover.

Within 7 days of the submission, the revenue authority conducts a check to verify the grounds for registration.

Within 7 days of the check, the revenue authority issues an administrative instrument by which it performs the registration or declines the application, stating reasons.

The revenue authority can refuse a VAT registration in cases where:

- the person cannot be found at the correspondence address provided by him in accordance with the procedure specified in the Bulgarian Code of Tax and Social Security Procedure;

- the person has changed his correspondence address and has failed to provide due notification according to the established procedure;

- the person has systematically failed to fulfil his obligations under this Act;

- the person has public liabilities outstanding at a total value exceeding the value of his assets less his liabilities;

- the person has failed to provide an email address for correspondence for a period of more than 3 months, as from the date when the obligation to notify arises;

- the person has failed to submit or provide access to original accounting documents issued or drawn up by him that have been requested by the revenue authority, except in cases where the documents are lost or destroyed and the person has notified the revenue authorities thereof.

In the case of a change of email address, the person must notify the revenue authority within 7 days, except in cases where the change has been made by way of a submission lodged with the Registry Agency.

Within 7 days of the submission, the revenue authority conducts a check to verify the grounds for registration.

Within 7 days of the check, the revenue authority issues an administrative instrument by which it performs the registration or declines the application, stating reasons.

Registration date

The date on which the registration memorandum is handed over is considered date of registration under the Value Added Tax Act.

The date of registration, in cases of mandatory registration based on legal succession in the event of:

- restructuring of a company in a procedure laid down in Chapter 16 of the Bulgarian Commercial Act;

- making an in-kind contribution into a company;

- restructuring of budget entities, State- or municipally-owned enterprises as a result of which the newly established bodies or enterprises become universal legal successors of the restructured ones;

- transfer of an enterprise in a procedure laid down in the Bulgarian Commercial Act;

- is the date on which the above circumstances are registered in the business register or in the BULSTAT register of companies.

Mandatory registration resulting from restructuring

The obligation to register under this Act arises for anyone who acquires goods or services from a registered person as a result of the following:

- restructuring of a company in a procedure laid down in the Bulgarian Commercial Act;

- transfer of an enterprise in a procedure laid down in the Bulgarian Commercial Act;

- making an in-kind contribution into a company;

- restructuring of budget entities, State- or municipally-owned enterprises as a result of which the newly established bodies or enterprises become universal legal successors of the restructured ones.

The date of registration in the above-mentioned cases is the date on which the relevant circumstances are registered in the business register or in the BULSTAT register of companies.

An unincorporated enterprise in which there is a partner who is a person registered under this Act must register under the Value Added Tax Act. For the registration to be performed, an application for registration must be lodged within 7 days of the date of establishment of the unincorporated enterprise; the latter date is considered date of registration of the company under this Act. Where the partner is registered after the date of establishment of the unincorporated enterprise, the application must be lodged within 7 days of the date of registration of the partner; the latter date is considered date of registration of the company under this Act.

The following are subject to registration under the Value Added Tax Act:

- a non-resident person having a permanent establishment within the territory of Bulgaria from which he conducts an economic activity, fulfilling the conditions for mandatory or optional registration stipulated in this Act;

- a non-resident person that is not established within the territory of Bulgaria but carries out taxable supplies where the place of supply is within the territory of Bulgaria and fulfils the conditions for mandatory or optional registration stipulated in this Act.

A non-resident person is registered via an accredited representative (a derogation from that procedure applies to branches of non-resident persons; those are registered under the general procedure). The registration is performed with the Sofia Territorial Directorate of the National Revenue Agency.

The function of an accredited representative can be performed only by a legally capable individual having a permanent address in Bulgaria or residing permanently in Bulgaria, or by a resident legal person that is not in liquidation proceedings or declared bankrupt and has no tax or social security contribution liabilities outstanding to the Bulgarian National Revenue Agency.

An accredited representative represents the non-resident person referred in all of his legal relations in tax matters that arise under of the the Value Added Tax Act. The accredited representative is responsible jointly and severally and has unlimited liability in respect of any obligations of the registered non-resident person arising under the Value Added Tax Act.

In the event that the person who is an accredited representative is terminated, or upon occurrence of other circumstances that lead to an impossibility for that person to discharge his obligations, the non-resident person must designate a new accredited representative within 14 days after the date of occurrence of the intervening circumstances.

Special rules of registration

- The persons should lodge an electronic application to register or deregister addressed to the Sofia Territorial Directorate of the National Revenue Agency.

- The requisite details, form and manner of making the electronic submission requesting registration or deregistration are available on the website of the National Revenue Agency.

- Within 7 days of receiving the submission, the Sofia Territorial Directorate of the National Revenue Agency notifies the person electronically that the registration has been made, providing its identification number and the date of registration.

- The date of registration is the first day of the month following the month in which the notification is made.

Upon deregistration under the Value Added Tax Act, the company / sole proprietor should submit a reference-declaration for the last tax period.

Once you have registered under the Bulgarian VAT Act, an obligation to file a VAT return arises under the Act.

A VAT return must be filed for each tax period. A VAT return must be filed also in cases where the tax is not payable or refundable, and in cases where the registered person has not carried out or received, as the case may be, any supply of acquisition, or has not carried out any importation in the respective tax period.

If, as a person registered under the Value Added Tax Act, you are carrying out also intra-Community supplies, supplies as an intermediary operator in a triangular transaction or supplies of services, where the place of transaction is in another Member State, you should file a VIES return along with your VAT return.

The VAT return and the VIES return must be submitted by, and including, the 14th day of the month following the tax period to which the returns relate.

The VAT return and the VIES return must be submitted via the electronic service portal of the National Revenue Agency using a qualified electronic signature.

Where the result for the tax period is a tax payable, the registered person must pay the tax into the State budget to an account held by the competent territorial directorate of the National Revenue Agency within the time limit set for filing the VAT return for that tax period, which is up to, and including, the 14th of the month following the relevant tax period.

Where the result for the final tax period is a tax payable, the person must pay the tax by the end of the calendar month in which a VAT return for that tax period would be due.

NB! The tax is deemed paid on the date on which the amount is credited to an account held by the competent territorial directorate of the National Revenue Agency.

Payment of tax in the case of importation of goods

The importer of goods must make payment of the tax assessed by the customs authorities into the State budget as follows:

1. to an account held by the relevant customs office clearing the import;

2. to the cash desk of the relevant customs office clearing the import, in case the importer is an individual not registered under this Act that is not a sole proprietor.

Upon payment of the assessed tax or provision of surety for it in the procedure laid down for the customs debt, the customs authorities authorise the release of goods.

Payment of tax by a non-registered person

In the case of an intra-Community acquisition of a new means of transport by a person who is not registered under this Act, the tax must be paid by the person within 14 days of the end of the tax period in which the tax on the acquisition became chargeable.

In the case of an intra-Community acquisition of products subject to excise duty, the tax must be paid by the person who carried out the acquisition within 14 days of the end of the month in which the tax became chargeable.

The tax is paid into the State budget to an account held by the territorial directorate of the National Revenue Agency in the area of which the person is registered or is subject to registration according to the Bulgarian Code of Tax and Social Security Procedure, and the tax is deemed paid on the date on which the amount is credited to the relevant account.

Payment of tax when a Union or a non-Union scheme is applied

Within the time limit set for filing the VAT return (by the 20th of the month following the tax period, which is 3 months and coincides with the calendar quarter), the registered person must pay the total amount of the value added tax chargeable for the relevant tax period into the State budget to an account held by the National Revenue Agency, in euro.

The tax is deemed paid on the date on which the amount is credited to the account.

Where the result for the tax period is a refundable tax, the tax is sett off, deducted and refunded.

The refundable tax amount is refunded within 30 days of the submission of the VAT return in cases where:

1. for the past 12 months preceding the current month, the person has carried out supplies chargeable at a zero rate in a total amount exceeding 30% of the total value of all taxable supplies carried out by him, including zero-rated supplies; supplies of the following services with a place of supply within the territory of another Member State in respect of which the recipient is a person registered for VAT purposes in another Member State should also be treated as zero-rated supplies: transport of goods within the European Union and forwarding, courier and postal services provided in connection with such transport other than the services specified in Article 49 of the Bulgarian VAT Act (ZDDS); handling of goods in transport; transport-related services provided by agents, brokers and other intermediaries acting on behalf and for the account of another person, and services relating to valuation, expert evaluation and work done on movable property;

2. for agricultural producers, for the past 12 months preceding the current month, the person has carried out supplies chargeable at a rate of 20% of the goods produced by him in a total amount exceeding 50% of the total value of all taxable supplies carried out by him;

3. the person has utilised funds for the construction, management, maintenance and exploitation of water and sewage systems and facilities in implementing water projects under Priority 1 of the Operational programme Environment 2007-2013, and of systems and facilities in implementing projects under Priorities 1 and 2 of Operational programme Environment 2014-2020, until the completion of their construction;

4. the person provides access to railway infrastructure and has utilised project funds financed under Operational programme Transport 2007-2013, Operational programme Transport and Transport Infrastructure 2014-2020, the Connecting Europe Facility programme of the EU and the trans-European transport network TEN-T, until their completion.