European Union programs - taxes, customs duties and other charges

The article will examine the projects funded by EU programs, as well as the taxes, customs duties and other charges that are associated with them.

In order to ensure consistency between the programs supported by various European structural and investment funds, especially so as to ensure the contribution to the strategy of the Union for smart, sustainable and inclusive growth, it is necessary to establish common minimum requirements regarding the content of the programs that may be supplemented with rules for the individual funds tailored to the specific nature of each of the EU structural and investment funds.

Exemption from VAT for the supply of goods and services

According to Art. 173 (1) of the Value Added Tax Act (VATA), any supplies, which are exempted from value added tax by virtue of international treaties, agreements, accords conventions or other such whereto the Republic of Bulgaria is a party, which are ratified and promulgated according to the relevant procedure, shall be liable to tax at the zero rate, including on the part of the supply which is financed by resources of the executive budget or the municipal budgets or by loans guaranteed by the Government.

In some cases, when contracts are concluded for the implementation of projects under international treaties, there is no supply as there is simply a gratuitous awarding of funds to a certain person (as a donation). In these cases, no VAT obligation arises in connection with the funds received and is therefore not possible to apply an exemption from these obligations.

Procedures for the exemption of goods upon importation under international treaties

Where an international treaty whereto the Republic of Bulgaria is a signatory, ratified and promulgated according to the relevant procedure, provides for exemption of the importation from taxes, customs duties or other charges having an effect equivalent to an indirect tax, including where such treaties are financed by resources of the executive budget or the municipal budgets or by loans guaranteed by the Government, exemption shall be granted by means of a written confirmation by the authority coordinating the performance of the contract to the regional customs directorate in whose structure the customs office carrying out the customs clearance of the specific supply is - Art. 105 (1) RAVATA.

The written confirmation must contain:

1. the name, date of promulgation and date of entry into force of the international treaty, agreement, accord, convention, etc., in connection with which a contract is entered into with the importer, and the grounds for exemption;
2. the name of the programme or project financed with funds in implementation of the international treaty under item 1;
3. the number, date and subject of the contract entered into for implementation of the international treaty and according to which the person under item 4 is the importer, and the assignor is the coordinating authority under Art. 105 (1) VATA;
4. the company name, registered address, registered office, identification number (for a foreign person - identification number in the country in which it is a resident person) of the importer under the contract referred to in item 3;
5. type, quantity and value of the imported goods in connection with the performance of the contract referred to in item 3;
6. information about the persons authorized to sign contracts or effect payments with funds granted under the international treaty - Art. 105 (2) RAVATA.

Copies of all documents necessary for the customs clearance of the goods must be enclosed to the written confirmation under Art. 105 (1) RAVATA - Art. 105 (3) RAVATA.

The director of the regional customs directorate must make inspection on compliance with the requirements for tax exemption on the basis of the relevant written confirmation - Art. 105 (5) RAVATA.