VAT registration process in Bulgaria

Understand about the VAT registration process in Bulgaria.

In Bulgaria, the Value Added Tax (VAT) system is governed by the Value Added Tax Act (VATA), aligning with European Union directives. Understanding the processes of VAT registration, filing, and deregistration is essential for businesses operating within the country.

Mandatory Registration:

  • Threshold: Businesses must register for VAT if their annual taxable turnover exceeds BGN 100,000 (approx. €51,000) in the previous 12 months.
  • Intra-EU Activities: Registration is mandatory for:
    • Intra-EU acquisitions (goods purchased from EU suppliers).
    • Distance sales exceeding €10,000 (to Bulgarian consumers from other EU countries).
  • Non-Resident Businesses: Must appoint a local fiscal representative (if based outside the EU) and register regardless of turnover.

Voluntary Registration:

  • Businesses below the threshold can register voluntarily to:
    • Reclaim input VAT on expenses.
    • Compete with VAT-registered businesses.

VAT Registration Process:

  • Documents Required:
    • Application form (Form VAT-1).
    • Company incorporation documents (e.g., BULSTAT registration).
    • ID/passport copies of directors/owners.
    • Proof of business activity (e.g., contracts, invoices).
  • Timeline: 7–14 days for approval.
  • VAT Number: Issued as a BG + 9 digits code (e.g., BG123456789).
  1. VAT Filing & Compliance
  • Monthly: Default for most businesses.
  • Quarterly: Allowed if annual taxable turnover is below BGN 500,000.

Deadlines

  • VAT Returns: By the14th day of the month following the reporting period.
    • E.g., January VAT return due by 14 February.
  • EC Sales List (Recapitulative Statement):
    • Monthly submission by the 14th (for intra-EU B2B transactions).
  • Intrastat: Required if intra-EU trade exceeds BGN 200,000 for arrivals or BGN 160,000 for dispatches.

Key Components of VAT Return

  • Output VAT: VAT charged on sales.
  • Input VAT: VAT paid on purchases (reclaimable).
  • Net VAT Payable/Refundable: Output VAT – Input VAT.

Payment

  • Payable amount must be settled by the filing deadline.
  • Refunds are processed within 30–60 days (longer for non-residents).

VAT Deregistration in Bulgaria:

When to Deregister:

  • Business ceases taxable activities.
  • Annual turnover falls below BGN 100,000 (if registered voluntarily).

Deregistration Process:

  1. Submit deregistration application form to the NRA and they review the application and issues a decision within 7 days. If approved, the business is officially deregistered from VAT.
  2. File a final VAT return covering the last period of activity.
  3. Settle all outstanding VAT liabilities.
  4. Return the VAT certificate to the NRA.

Deadline: Upon deregistration, the business must submit a final VAT return for the last tax period by the 14th day of the following month. This return accounts for all taxable activities up to the date of deregistration.

VAT Rates:

  • Standard Rate: 20% (most goods/services).
  • Reduced Rate: 9% (e.g., books, hotel services, pharmaceuticals).
  • Zero Rate: Exports, intra-EU supplies, international transport.
  • Exemptions: Education, healthcare, financial services.

 Penalties & Challenges:

  • Late Filing/Payment: Fines up to BGN 500–5,000.
  • Incorrect Returns: Penalties of 10–50% of underpaid VAT.
  • Common Challenges:
    • Complex intra-EU transaction rules.
    • Language barriers (documents must be in Bulgarian).