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VAT Returns & Recovery in Bulgaria

Bulgarian VAT law mandates that taxable individuals must submit their VAT returns electronically every month, regardless of whether they have made any sales or received any goods or services during that period. The deadline for filing the VAT return is the 14th day of the following month.

This requirement applies to all taxable individuals, regardless of their size or turnover. In addition to the VAT return, certain supporting documents must be submitted along with it.

Read more about VAT recovery and VAT returns in Bulgaria in our comprehensive guide below.

VAT-country-guide-Bulgaria

VAT Returns in Bulgaria

Electronic Filing

Digital Submission In Bulgaria: VAT returns along with sales and purchase ledgers, and related documentation, must be submitted electronically. A legitimate electronic signature is required for these online submissions.

Payment Due Date

Any outstanding Bulgarian VAT should be paid by the deadline set for taxable entities to file their VAT return for the respective tax period. The Bulgarian VAT due should be transferred into the NRA’s bank account via a bank transfer, which can be initiated from a Bulgarian or international bank account.

Interests and Penalties

In Bulgaria, if VAT payments are not made on time, interest at a rate of 10% above the base rate set by the Bulgarian National Bank will be charged until the full payment is made.

Further, failing to register for VAT within the required timeframe could lead to penalties including an administrative fee between 500 and 5,000 levs and a fine equivalent to 100% of the uncharged VAT due to the late registration, with a minimum penalty of 500 levs.

Correction of Return

An error on a VAT return can be remedied by resubmitting it (within the original deadline) or by notifying the NRA.

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VAT Recovery in Bulgaria

Taxable individuals can typically deduct the input VAT paid on the purchase, importation, or intra-Community acquisition of goods or services received from the VAT that they are required to pay. This also applies to imports of goods and situations where the reverse charge has been applied. Zero-rated transactions are treated similarly to taxable transactions for the purpose of VAT deduction.

Conditions for deductibility:

  • As per Article 71 of the VAT Law, taxable entities are required to demonstrate that the input tax was applicable to supplies of goods and services that they have actually received, intra-community acquisitions, or imports of goods that they have utilized or will utilize in their economic operations.
  • In order to file an input VAT claim, a tax invoice for the tax relevant to the goods or services delivered to them, as well as intra-community acquisitions carried out by them, must be submitted.
  • Prior to filing an input VAT claim, a document of importation, identifying the taxable entity as an importer concerning import tax, is required.

Mixed Transactions The right to input tax credit for taxable entities with respect to a supply provided to them in Bulgaria is contingent on that supply being used to create their own taxable supplies. Consequently, an individual who solely provides exempt supplies is not eligible for any input tax refund.

Timing for Deductions

Under the Bulgarian VAT system, the right to VAT recovery is granted when the VAT becomes chargeable. Generally, the input tax credit should be claimed within the same tax period as the corresponding supply or within one of the subsequent twelve tax periods. However, in certain cases, VAT paid on supplies made before the date of VAT registration might be eligible for an input tax credit.

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VAT Refunds in Bulgaria

Resident Taxable Persons

In instances where the VAT credit gained surpasses the tax liability owed, the residual excess can be claimed as a refund for Bulgarian VAT purposes. However, the actual process of VAT refund, as outlined in Article 92 of the Bulgarian VAT Law, involves a series of sequential stages before an actual cash reimbursement can be made.

  • Tax and social security obligations that were due at the time of submitting a tax return are first deducted.
  • If there is any remaining excess, it is carried forward and offset against tax liabilities due in the subsequent two tax reporting periods (in the following two months, since VAT returns must be submitted monthly).
  • Any remaining surplus can then be subtracted from public receivables collected by the NRA or refunded, typically within 30 days of filing the final tax return.

Consequently, the maximum period for securing a refund is 90 days (three tax reporting periods).

Foreign Taxable Persons

As per Bulgarian Regulation H-10 of August 24, 2006 (“Regulation H-10”), which incorporates the 13th Directive of the European Union, VAT refunds are made available to taxable entities not domiciled in Bulgaria or any other EU Member State.

 

Refunds under Regulation H-10 are subject to the principle of reciprocity. This implies that a foreign business is only eligible to seek a VAT refund in Bulgaria if it is situated in a country that offers VAT or analogous tax refunds to Bulgarian taxpayers.

 

Refunds to Non-registered Persons (Domestic and Foreign)

Individuals who have not registered for Bulgarian VAT are not entitled to tax credits or refunds. However, a foreign natural person can secure a VAT refund on goods purchased from businesses operating under the Tax-Free Bulgaria scheme as per Regulation H-12. The minimum amount reclaimable for each invoice is BGN 50 or its equivalent in euros. Upon departure from the EU, the refund is made on the VAT Refund Form, which is validated by Customs and handed over to a tax-free agency. It’s important to note that alcoholic beverages, tobacco, and liquid fuels are excluded from the refund.

 

VAT Refunds—Customs Unions

Taxable entities, registered for VAT in another EU Member State (including Northern Ireland), are entitled to a refund of Bulgarian VAT incurred on goods bought, services received, and imports conducted in Bulgaria, provided certain conditions are fulfilled.

 

Typically, a claimant should not be registered or required to register in the Member State where the refund is sought. Moreover, they shouldn’t have a fixed establishment, economic activity hub, place of business, or other residence there. Additionally, during the refund period, the claimant must not have made any supplies of goods or services in the Member State from which the refund is being claimed (with certain exceptions).

 

The taxable person or a designated individual can apply directly for a refund of Bulgarian VAT using a web portal in the Member State where the taxpayer is established. Applications and any supporting documentation can be submitted in either Bulgarian or English. Bulgarian taxpayers can use the Bulgarian web portal to seek refunds in other EU Member States through a similar process. Original invoices and an official certificate in a regulated form may be required.

 

 

Last Updated: 18/10/2023

 

Disclaimer

The information provided by Global VAT Compliance B.V. on this webpage is intended for general informational purposes only. Global VAT Compliance B.V. is not responsible for the accuracy of the information on these pages, and cannot be held liable for claims or losses deriving from the use of this information. If you wish to receive VAT related information please contact our experts at support@gvc.tax

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