Key takeaways
- EU alignment: Bulgaria’s VAT Act amendments bring national rules in line with EU law and Court of Justice rulings.
- Key updates: Include extended 9% VAT rates, higher registration threshold (BGN 166,000 from 2025), and deferred VAT on imports.
- Simplified compliance: Non-EU OSS users no longer need a fiscal representative, and businesses gain clearer rules for VAT refunds and bad-debt relief.
The Bulgarian Parliament recently approved amendments to the Value Added Tax (VAT) Act. These changes are designed to align Bulgaria's VAT regulations with European Union (EU) laws and the rulings of the Court of Justice of the European Union.
Key amendments include:
1. VAT adjustment for goods with no further use: In Bulgaria, if goods are shown to have no more usefulness to a taxpayer's business, their destruction or scrapping will no longer trigger an adjustment obligation. This change allows for the potential refund of previously overpaid VAT and may require the updating of internal policies regarding the disposal of goods.
2. Extended VAT rates:
- Restaurant and catering services will be taxed at 9% VAT until December 31, 2024, extended from the previous deadline of December 31, 2023.
- Tourist services and sports facility usage will maintain the 9% VAT rate until June 30, 2024, again extended from the original end date of December 31, 2023.
- A zero VAT rate will apply to bread and flour until June 30, 2024, extended from December 31, 2023.
3. Deferred VAT payment on imports: The law now allows deferred VAT payment for imports under centralized clearance, specifying conditions, reporting, and payment requirements.
4. Increased VAT registration threshold: From January 1, 2025, the VAT registration threshold for Bulgarian entities has increased from BGN 100,000 (€51,129) to BGN 166,000 (€84,874).
5. Tax document issuance for late VAT registration: Taxpayers who delay compulsory VAT registration can now issue tax documents and charge VAT for the period after the registration obligation arose, allowing their clients to deduct input VAT.
6. Simplified OSS scheme for non-EU taxpayers: Non-EU taxpayers using the One-Stop Shop (OSS) scheme are no longer required to have a fiscal representative, simplifying the procedure.
7. Appeal procedure for bad-debt relief: The law clarifies the process for appealing against the tax authorities' rejection of bad-debt relief applications. For relief above BGN 100,000, prior notification to tax authorities is required. The authorities' refusal to grant permission can be appealed.
8. Reduced additional collateral requirements: Additional collateral, beyond the annual requirement, is reduced to 10% (previously 20%) of the tax bases of taxable supplies, acquisitions, or the value of received liquid fuels for the previous tax period, harmonizing with the standard collateral amount.
Frequently asked questions
What are the main changes introduced in Bulgaria’s VAT Act?
The amendments align Bulgaria’s VAT law with EU standards, extending reduced VAT rates, raising the VAT registration threshold to BGN 166,000 (from 2025), and allowing deferred VAT payment on imports.
How do the changes affect businesses handling unused goods or delayed VAT registration?
Businesses no longer need to adjust VAT for destroyed or scrapped goods with no business use. Those who register late for VAT can now issue tax documents retroactively, enabling their clients to deduct input VAT.
What simplifications were introduced for non-EU businesses?
Non-EU taxpayers using the One-Stop Shop (OSS) scheme no longer require a fiscal representative, streamlining cross-border VAT compliance.
