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VAT Registration in Bulgaria. Calculation and rates (2024)

VAT in Bulgaria

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In today's dynamic economic environment, understanding value added tax (VAT) is becoming increasingly essential for both businesses and individual consumers. In Bulgaria, as well as throughout Europe, VAT accounts for a significant share of state revenues, supporting various public services and infrastructure projects. With this article we aim to provide a comprehensive and up-to-date guide on VAT in Bulgaria in 2024, paying special attention to the sizes, rates, calculation methods and specific conditions under which the different rates apply.

The main objective of this material is to enrich readers' knowledge about VAT in Bulgaria by providing detailed information about its characteristics, application and impact on daily economic activity. Also, the article is tasked with clarifying some of the most common questions about VAT, including who is obliged to pay it, how it is calculated and how we can benefit from reduced rates or zero rate under certain conditions.

Through this guide, we aim to prepare readers to successfully navigate the sea of tax regulations related to VAT by providing useful and practical information that can be used for both personal and professional development. From the current VAT rates for 2024, through the list of goods and services taxable at a reduced rate, to practical steps for calculating the tax - this article covers all the key aspects that every person or organization operating in Bulgaria needs to know.

This article is your complete guide to value added tax:

  • What is VAT:Definition, objectives and functions.
  • Current rates:20%, 9% and zero rate (as of 2024).
  • List of goods with 9% VAT:Examples and criteria for taxation.
  • Zero rate:Terms, examples and detailed consideration.
  • Calculation of VAT:Practical steps, examples and tables.
  • Registration, declarations, VAT in the EU:Additional topics.
  • Sources:NRA, Ministry of Finance, NRA Electronic Services.

Who is it intended for?

  • Business owners.
  • Accountants.
  • Entrepreneurs.
  • Anyone who wants to understand the VAT system.

Benefits of the article:

  • Understanding the functioning of VAT.
  • Correct calculation of VAT.
  • Compliance with tax laws.
  • Optimization of VAT payments.

Keywords:VAT Bulgaria, VAT amount, VAT rates, list 9% VAT, zero VAT rate, VAT calculation, VAT registration, VAT declarations, VAT EU, NRA, Ministry of Finance.

What is VAT (Value Added Tax)?

Each of us, making a purchase or using a service, has come across the concept of VAT - the tax that accompanies us daily. In Bulgaria, it is currently fixed at 20% of the value of most goods and services, visibly reflected in the receipts we receive. Despite its frequent occurrence in our lives, many are still not fully aware of the essence and functioning of this important tax. The purpose of this article is to distinguish and explain VAT in a simpler and understandable language, going beyond the framework of complex legislative terminology.

VAT, first introduced in France in April 1954, has had a long historical path of development. The idea of its introduction dates back to 1918, when an improvement in the model for charging sales tax was proposed in Germany, aimed at avoiding the cumulative effect and giving businesses the opportunity to deduct the tax already paid. Although this idea does not initially find legislative application, it lays the foundation for the modern VAT mechanism.

In Bulgaria, VAT was introduced in April 1994 with an initial rate of 18%. After several changes, in 1999 the rate was set at 20% and remains so to this day, representing a significant part of state revenues.

Nature and functioning of VAT

VAT is an indirect tax that is applied to the consumption of goods and services. It is charged at each level of production and distribution, with the ultimate goal being for this tax to be paid by the consumer. The peculiarity of VAT is that it is deducted from the tax on incoming goods and services, which prevents the effect of double taxation and the accumulation of tax liabilities.

For businesses, especially those that are registered for VAT, this mechanism allows deducting the amounts paid in tax from their tax liabilities. This means that although the seller is the one who imports the tax to the State, the economic burden is effectively transferred to the final consumer. Thus, VAT functions as a transparent and efficient revenue collection instrument, which at the same time helps to regulate the market.

Importance and benefits of VAT

The introduction and proper application of VAT are important for the economy of any country. It not only provides a significant part of budget revenues, but also helps to create a level playing field for all participants in the economy. The VAT system contributes to transparency and fairness in taxation, thereby supporting and stimulating legitimate economic activity.

In conclusion, understanding VAT and its role in the national economy is essential for every citizen and business. Through detailed acquaintance with this tax, its history, mechanism of operation and application, we can assess its importance and better understand how it affects our daily life and economic environment in Bulgaria.

Amount of VAT in Bulgaria

Understanding the structure and amount of VAT in Bulgaria is key for anyone involved in the country's economic activity. In 2024, the VAT system in Bulgaria continues to be guided by three main rates: the standard rate of 20%, the reduced rate of 9% and the zero rate. Each of these rates has a specific application and conditions that contribute to their different impact on the economy and consumers.

Standard VAT rate

The standard VAT rate of 20% applies to most goods and services offered on the territory of Bulgaria. This rate is the basis of the VAT system and provides a significant part of state revenues. It covers a wide range of taxable supplies, imports of goods and intra-Community acquisitions, with the exception of those expressly defined by the VAT law for taxation at zero or reduced rate.

Reduced VAT rate

The reduced rate of 9% was introduced as a measure to support certain sectors and consumer groups. It applies to:

  • Accommodation services;
  • Supplies of books, textbooks, printed and electronic periodicals;
  • Baby food, baby diapers and hygiene products;
  • Restaurant and catering services, with the exception of alcoholic beverages, until the end of 2024;
  • Services for the use of sports facilities and general tourist service, until mid-2024.

Zero VAT rate

The zero rate of VAT is designed to stimulate certain economic activities and facilitate international trade. It applies to:

  • Making deliveries with a place of performance in Bulgaria, which are expressly specified in the legislation;
  • Deliveries of bread and flour by mid-2024;
  • International transport of passengers and goods;
  • Services related to international transport and supplies related to international trade.

Historical changes and their impact

Changes in VAT rates over the years reflect the Bulgarian government's desire to respond to economic conditions and social needs. For example, the temporary application of a reduced rate for restaurant and catering services is a measure aimed at supporting tourism and the food industry in the face of economic challenges. These changes are often linked to specific economic objectives, such as boosting consumption in certain sectors or easing the financial burden on consumers.

The amount and application of different VAT rates have a direct impact on the economy by influencing consumer behaviour, the business environment and overall government revenues. The correct understanding and application of these rates is essential for all economic agents in the country, helping to carry out correct pricing, accounting and tax planning.

Calculation of VAT. VAT Accrual Table

The calculation of VAT (value added tax) is an essential part of business operations, especially for entrepreneurs and firms that are obliged to charge and declare this tax. Understanding the correct method of calculating VAT, as well as the ability to convert a price with VAT to a price without VAT, are key skills for managing finances and avoiding tax inconsistencies. This section provides practical steps, examples and tables that illustrate how to subtract VAT from an amount, how to calculate VAT on an invoice, and how to calculate the price without VAT.

Basic concepts and formulas

  1. How to deduct VAT from an amount: To subtract VAT from a total amount, it is necessary to know the VAT rate that is applicable to your good or service. The formula is: Amount excluding VAT = Total amount/(1 + (VAT rate/100)).
  2. How to calculate VAT on an invoice: The VAT on the invoice is calculated by multiplying the tax base (the price without VAT) by the VAT rate. The formula is: VAT = Tax base* (VAT rate/100).
  3. Examples of VAT calculation: If you have a product with a price of 120 BGN including VAT at a rate of 20%, the VAT amount is 120 BGN. /1.20 = 100 BGN (excluding VAT), therefore the VAT amount is 20 BGN.
  4. How to calculate the price without VAT: Use the formula given in the first point.
  5. How to calculate VAT with a calculator: You can use a VAT calculator by entering the total amount and the applicable VAT rate to get the amount excluding VAT and the amount of VAT itself.
  6. How is VAT calculated on importation: Import VAT is calculated on the basis of the customs value of the goods plus any duties, charges and transport costs to the place of importation.
  7. Formula for calculating the tax base: Tax base = Price with VAT/(1 + (VAT rate/100)).
  8. Price incl. VAT: Price with VAT is the final price that customers pay, including the value of the product or service plus the VAT charged.

VAT Calculator

Price without VAT:
VAT Rate (%):

VAT Accrual Table

Activity VAT Rate
Domestic sale of goods 20%
International transport of goods and services 0% (Zero)
Tourist services 9%
Electronic services from abroad 20%
Food products 9%
Books and periodicals 9%
Real estate related services 20%
Export of goods outside the EU 0% (Zero)
Supplies within international waters and airspace 0% (Zero)
Supplies of gold to central banks 0% (Zero)

This table presents common VAT rates applicable to various activities in Bulgaria. It is important to note that rates may vary depending on the specific conditions and exceptions specified in the legislation. Applying the correct VAT rate is essential to accurately calculate the tax and avoid errors in tax returns.

List of goods with 9% VAT: Examples and criteria for taxation

The reduced VAT rate of 9% in Bulgaria was introduced in order to support certain sectors of the economy and reduce the financial burden on final consumers for important products and services. This rate applies to a specific set of goods and services, each category has its own specific criteria for taxation. Here is an overview of the main groups of goods and services that are subject to the reduced VAT rate, as well as the criteria that determine this taxable amount:

1. Accommodation services

  • Scope: Accommodation services provided in hotels, motels, campsites and other similar establishments, including holiday accommodation and rental of camping sites or caravans.
  • Taxation criteria: All accommodation services that are performed on the territory of Bulgaria.

2. Delivery of books and printed publications

  • Scope: Includes books on physical media or provided electronically, textbooks, knowledge books, study kits, children's books, sheet music, as well as periodicals such as newspapers and magazines.
  • Taxation criteria: Excludes publications intended for advertising and those composed mainly of video or audio-music content.

3. Supply of food and baby products

  • Scope: Foods suitable for babies or toddlers, baby diapers and other hygiene products.
  • Taxation criteria: The goods must comply with the requirements set out in Annex No. 4 to the VAT.

4. Restaurant and catering services

  • Scope: Services that involve the delivery of prepared or unprepared food, including take-away.
  • Taxation criteria: Does not apply to services involving the delivery of alcoholic beverages. It is important to note that this reduced rate is a temporary measure valid until December 31, 2024.

5. Other specific services

  • Scope: Includes the provision of a general tourist service, services for the use of sports facilities, as well as excursions organized by tour operators.
  • Taxation criteria: The validity of the reduced rate for these services is also limited in time.

This reduced VAT rate of 9% is an important step towards supporting critical sectors of the economy and providing incentives for the consumption of cultural and educational products, as well as basic goods for children. It reflects the aspiration of the state to encourage the development of certain economic activities and to offer relief to families with young children, thus contributing to a broader social and economic impact.

Zero VAT rate: Terms, examples and detailed consideration

The zero rate of VAT is a mechanism provided for in the Value Added Tax Act (VAT), which allows certain supplies of goods and services to be taxed at 0% VAT. This means that although these supplies are taxable, the tax that is levied on them is zero. It is key to note that in zero-rate deliveries the use of a tax credit is allowedfor related incoming goods and services.

List of goods with 0% VAT

Examples of goods and services that may be taxed at zero rate include:

  • Delivery of goods sent or transported outside the territory of the European Union;
  • International passenger transport;
  • International transport of goods, including international transport of natural gas and electricity;
  • Delivery related to international transport;
  • Delivery related to international freight traffic;
  • Delivery by processing of goods;
  • Supply of gold to central banks;
  • Delivery related to duty-free trade;
  • Delivery with a recipient person managing an electronic interface;
  • Supply of services provided by agents, brokers and other intermediaries when related to the above supplies, including the supply of an intermediary service, brokerage service, courier service and postal services, where these are related to the international transport of goods;
  • Supply of import-related services;
  • Delivery of COVID-19 vaccines and of in vitro diagnostic medical devices intended for the diagnosis of COVID-19.

ATTENTION:

In cases where for the supplies of the services listed above, as well as those referred to in Article 23, paragraphs 3 and 4 of the VAT Act (Regulations for the Application of the Law on Value Added Tax), the tax is chargeable to the recipient, since the supplier is a taxable person who is not established in the territory of the country and the supply has a place of execution on the territory of the country, they are taxable at a zero rate (Art. 38b of the PPZVAT).

In such cases, the consignee should have at his disposal the documents relating to him under Chapter Four of the VAT Act certifying the circumstances of the zero-rate supply.

This rule shall also apply to services received relating to the handling of a vessel or the handling of an aircraft carried out at ports or airports outside the territory of the country.

Applicability of the zero rate

The zero rate of VAT represents a significant fiscal policy that is applied in a variety of scenarios, especially in the context of international trade and services. It aims to stimulate exports, international transport services and related activities, while creating favourable conditions for business on a global scale. The consideration of the applicability of the zero rate is based on the following main aspects:

Delivery of goods exported outside the EU

  • Grounds for application: Goods that are transported or dispatched outside the territory of the European Union are subject to zero VAT. This covers a wide range of products and materials intended for export.
  • Fiscal benefits: The application of a zero rate stimulates export activity by providing tax relief to exporters and facilitating their competitiveness in international markets.
  • Documenting: In order to apply the zero rate, it is necessary to present appropriate documents that certify the export of the goods, such as customs declarations and transport documents.

International transport

  • Types of transport: Covers the international transport of passengers and goods, including natural gas and electricity, making them vital to international trade.
  • Zero-rate taxation: Transport services related to international transport are taxed at a zero rate to promote international logistics and delivery.
  • Evidentiary documents: For the application of the zero rate, the provision of a license to carry out international transportation is required, as well as other documents that certify the nature of the transport.

International transport related services

  • Categories of services: Includes a wide range of services, such as forwarding, courier and customs services, which are directly related to the maintenance of international transport and logistics.
  • Fiscal Incentives: Providing a zero rate for these services relieves the financial burden on companies involved in international transport and facilitates international trade.
  • Terms of application: In order to benefit from the zero rate, the providers of these services must provide appropriate documentation that confirms that the services are related to international transport.

Documenting zero-rate deliveries

Documenting zero-rate supplies is a critical aspect of the process of applying tax breaks for goods and services that are subject to international trade. This documentation serves as the basis for taxation and is key to proving the legality of the application of a zero rate of VAT. Let's take a closer look at what types of documents are needed and how they certify the relevant deliveries.

Documents required to prove

  • Licences for international transport: These documents are necessary to certify the right of the company to carry out international transportation of goods or passengers. They serve as evidence of the international nature of the activity.
  • Customs documents: Include customs declarations and other documents that certify the export or import of goods. These documents demonstrate that the goods have passed customs control and are intended for international transportation.
  • Invoices: The invoices must contain complete information about the supply, including the value of the goods or services, the details of the supplier and the recipient, as well as a specific note that the supply is taxable at zero VAT rate.

Specific examples and details

Delivery of goods for international transport
  • Examples of goods: Includes fuels, food, beverages and spare parts intended for consumption or use on board aircraft or sea-going vessels in the process of international transport.
  • Documentation: For such supplies, customs documents must clearly show that the goods are for export or are intended for use within the framework of international transport.
Services related to international transport
  • Examples of services: Construction, maintenance, repair and other services for aircraft and ships that are actively engaged in international transport.
  • Documentation: Invoices for these services must include details that certify that the services are provided in support of international transport, for example a licence for international transport or a contract for the service of vessels/means engaged in international transport.

For all cases of zero-rate deliveries, it is critically important to prepare and submit all necessary documents that prove the legality of the application of the zero rate. This practice ensures transparency and helps to avoid tax irregularities.

VAT on intra-Community transactions

Intra-EU transactions are an essential part of trade within the European Union, and each requires a precise understanding and application of VAT rules. Against this background, key aspects such as VAT numbers, the validity of these numbers, and the consequences of an invalid VAT number in cross-border transactions are of particular importance.

What is a “VAT number”?

A VAT number is a unique identification number issued to any person or company registered for VAT purposes in an EU Member State. This number is key for the administration of VAT on cross-border transactions, as it facilitates the identification of commercial entities and their tax liability.

In Bulgaria, the VAT identification number usually begins with the prefix BG, followed by a single identification code or other type of identifier, depending on the type of registered person.

Valid against invalid VAT number

  • Valid VAT numbermeans that the entity is actively registered for VAT purposes at the time of the transaction and can participate in intra-Community supplies and acquisitions using a zero VAT rate for cross-border transactions.
  • Invalid VAT numbermeans that the entity is not registered or its registration is not active at the time of the transaction. In this case, the zero rate of VAT cannot be applied, and the supply may be subject to standard VAT.

Consequences of an invalid VAT number

If the customer's VAT number is invalid at the time of the transaction, it means that the supply cannot be treated as intra-Community and the zero VAT rate does not apply. As a result, the supplier may be obliged to charge and pay VAT in the country from which the supply takes place.

Checking the VAT number

In order to verify the validity of the VAT number of EU customers, it is important to carry out a check through the VIES system (System for Exchange of Information on VAT) of the European Commission. This system allows traders to check the validity of the VAT numbers of their counterparties in real time, which is critical for the implementation of the correct tax regime.

Intra-Community supplies and acquisitions

  • Intra-Community supply (VOD)is considered as such when the goods are transported from one EU Member State to another, and both parties to the transaction are VAT registered persons.
  • Intra-Community Acquisition (IP)occurs when a recipient of the goods in the transaction, based in one Member State, acquires goods from another Member State within the EU.

In order to ensure the correct taxation of cross-border transactions within the EU, it is essential that traders understand and correctly apply VAT rules, including the requirements for the validity of VAT numbers and the specifics of intra-Community supplies and acquisitions.

You can read more about the taxation of international transport with VAT, incl. also in the conditions of intra-Community acquisition here!

Tax and accounting services in Burgas, Bulgaria and current prices for 2024
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Frequently Asked Questions

Why is it necessary to know the territorial scope of the Member States of the European Union for VAT purposes?

Knowledge of the territorial scope of the EU Member States is important because it determines how VAT is applied to the movement of goods and services between different countries. The territory of a Member State covers the regions to which EU VAT rules apply, excluding those which are part of the customs territory but are excluded for VAT purposes. This information is critical for the correct application of the mechanisms of taxation of intra-Community supplies and acquisitions, as well as for supplies to and from third countries.

Do I have to pay VAT at the “border” when trading goods between EU Member States?

No, when goods are traded between EU Member States, VAT is not charged and paid at the “border”. Instead, the system of self-assessment of the tax on intra-Community acquisitions is applied. This means that when goods move from one EU Member State to another, the seller does not charge VAT, and the buyer, registered for VAT purposes in his country, charges VAT on the acquisition himself and benefits from the corresponding tax credit according to local VAT rules.

Do the deliveries I make to a Member State of the European Union continue to be called “exports”?

No, deliveries between EU Member States are not considered “exports” in the traditional sense. In the EU context, these supplies are treated as intra-Community supplies (IORs). The term 'export' applies only to supplies of goods which are transported from the territory of a Member State to a place outside the European Community. The difference in terminology reflects the different mechanism of taxation, with intra-Community supplies applying the VAT self-charging mechanism, while exports are taxed at zero rate and VAT is not refunded to the exporter.

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