Deregistration under the Value Added Tax Act
The process of deregistration under the Value Added Tax Act (VATA) is regulated in Chapter Ten therein. This is a procedure pursuant to which after the date of deregistration the person may not charge a tax or deduct tax credit unless otherwise provided by the Act. In general, the deregistration may be carried out in two ways - - on the initiative of the taxable person or on the initiative of the revenue authority.
On the initiative of the revenue authority, deregistration under VATA is exercisable when:
- grounds for compulsory deregistration exist;
- the revenue authority ascertains that the person has failed to fulfil in due time the obligation thereof to submit an application for deregistration under Art. 109 (1) VATA - Art. 110 (1), item 2 VATA;
- the registered person cannot be reached at the mailing address named thereby according to the procedure established by TIPC;
- the registered person has changed their mailing address and does not provide notification according to the established procedure;
- the registered person fails systematically to fulfil the obligations thereof under this Act;
- the registered person incurs public liabilities collected by the National Revenue Agency the total value exceeds the value of the assets thereof less the liabilities thereof;
- the registered person fails to indicate an e-mail address for a period of more than three months as from the date of occurrence of the obligation to notify;
- the registered person fails to submit or provide access to original accounting documents issued or drawn up thereby, which have been required by the revenue authority, unless the documents are lost or destroyed and the person has notified the revenue authorities thereof - Art. 176 VATA.
Grounds for compulsory deregistration and Procedure
The grounds are contained in Art. 107 VATA. Importantly, under VATA decline in the taxable turnover is not grounds for compulsory deregistration, rather for optional deregistration.
Grounds for compulsory deregistration are:
- death of the natural person;
- death of the natural person - sole proprietor, with or without removal from the commercial register;
- in those scenarios provided by Art. 107 (3) VATA - expungement of the sole proprietor in the commercial register
- dissolution of the person in the event of:
a) dissolution of the legal entity which is a trader, with or without liquidation;
b) dissolution of the cooperative;
c) dissolution of the legal person which is not a merchant;
d) dissolution of the unincorporated association or the social insurance fund.
In the cases under Arts. 3 and 4 the person needs to submit a request for deregistration in the relevant territorial directorate of NRA within 14 days of the occurrence of the situation in question (Art. 109 (1) VATA).
On the initiative of the revenue authority the registration is terminated when tax infringements under Art. 176 of the Act are established - Art. 110 (1), item 3 VATA. In this case the date of deregistration is the date delivering the act of deregistration.
In turn, the opportunity provided by Art. 176 for withdrawal or termination of registration in connection with tax infringements, which the revenue authorities have in place in order to prevent tax fraud, is supplemented with Arts. 176a and 176b regarding the possibility of collateral.
Grounds for optional deregistration and Procedure
Pursuant to Art. 108 (1) VATA, grounds for optional deregistration arise:
- in respect of any person registered pursuant to Arts. 96, 97 (3) (compulsory registration) or Art.100 (1) VATA (optional registration), upon the lapse of the relevant grounds for compulsory registration (it should be noted that the persons exercising optional registration according to Art. 100 may not cancel their registration earlier than 24 months from the beginning of the calendar year following the year of registration - Art. 108 (2) VATA).
- in respect of any person registered for remote sales (Article 98 (2) or Article 100 (3) VATA), where:
a) the sum total of the taxable amounts of the supplies effected under the terms of distance selling within the territory of the country (excluding the supplies of excisable goods) does not exceed BGN 70,000 for each of the two calendar years preceding the current year, and
b) at the date of submission of the application for deregistration, grounds for compulsory registration do not exist;
- in respect of any person registered for intra-European Union acquisition (Art. 99 and Art. 100 (2) VATA), where:
a) the sum total of the taxable amounts of the taxable intra-European Union acquisitions, with the exception of new means of transport and excisable goods, does not exceed BGN 20,000 for the preceding calendar year, and
b)at the date of submission of the application for deregistration, grounds for compulsory registration do not exist.
- in respect of any person registered under Article 97a, where the conditions for compulsory deregistration do not exist as at the date of the application for registration.
Any persons who have opted for optional deregistration have discretion to decide when to submit an application for deregistration to the competent National Revenue Agency territorial directorate in the cases referred to in Art. 108 VATA. The application must state the grounds for deregistration. Documents specified in the Regulations for Application of this Act shall be attached to any such application.
Лицето има право на дерегистрация по избор, ако са изминали 12 последователни месеца след месеца на регистрацията по реда на чл. 132, ал. 1 от ЗДДС, при условие че не подлежи на задължителна регистрация - чл. 77, ал. 6 от ППЗДДС.
Within 7 days after receipt of the application, the revenue authority needs to verify the grounds for deregistration.
Within 7 days after completion of the verification, the revenue authority needs to issue an act whereby it shall effect the deregistration or shall refuse to effect the deregistration, stating reasons for such refusal.
Date of deregistration - in the cases where the person has ceased to exist, or has discontinued their activity, the date of deregistration is the date of occurrence of the respective circumstance, and for all other cases of deregistration the general principle applies - the date of deregistration is the date of delivery of the deregistration act - Art. 109 (6)-(7) VATA.
- Termination of registration of a foreign person who is not established within the country
The registration of a foreign person registered under Art. 133 of the Act is terminated when the general conditions for deregistration under the Act are present.
If the foreign person does not designate a new accredited representative within the time limit under Art. 133 (4) (14 days), their registration may be terminated on the initiative of the revenue authority by issuing a deregistration act. In those cases the act need not be given to the person, and the date of deregistration is the date on which the time limit under Art. 133 (4) VATA expires.
In the above cases of deregistration, the foreign person is assumed to be carrying out supplies as per Art. 111 VATA.
- Termination of special registration for persons performing electronically supplied services and are not established within the European Union (Art. 152 VATA).
According to Art. 153 VATA, this registration can terminate on the initiative of the person when:
- the person terminates their activity under this Chapter;
- the person no longer fulfils the conditions under Article 152 (1) VATA.
In order to terminate the registration, the person needs to file a request to terminate the registration electronically at the territorial directorate under Art. 152 (2) VATA. According to Art. 95 (2) RAVATA, The requisites, the format and the manner of sending electronic applications are announced on the website of the NRA. (www.nap.bg).
The registration under Art. 152 VATA may be terminated on the initiative of the revenue administration when:
- the administration ascertains that the activity of the person has been terminated, or
- the person does not fulfil the conditions under Article 152 (1) VATA, or
- the person systematically fails to comply with the provisions of this Chapter.
In these cases the territorial directorate needs to inform the person that the registration has been terminated, also indicating the date of termination of the registration.
In the cases in Art. 152 (1) VATA the registration is terminated at the date on which the request is filed.
In those cases where the deregistration is done on the initiative of the revenue administration, the registration is terminated at the date of the notification.