Refund of the value-added tax to persons not residing in Bulgaria
The foreign persons who in certain cases can have their VAT refunded include:
- persons, who are not established within the territory of the EU, but are registered for VAT purposes in another country - on a reciprocal basis (Ordinance № Н-10);
- non-taxable natural persons, who are not established within the territory of the EU, who have purchased goods for personal consumption, tax included - after leaving the territory of the country, provided that the goods exported remain intact (Ordinance № Н-12);
- taxable persons, who are not established within the territory of the country, but are established and registered for VAT purposes in another Member State for goods purchased thereby and services received in the territory of the country (Ordinance № Н-9).
Persons entitled to VAT refund
Under Art. 1 Ordinance № Н-10, the right to tax refund is enjoyed by foreign persons that are not established within the territory of the EU but are registered for VAT purposes in another country. For a person to qualify as such, the following conditions must be simultaneously fulfilled:
1. The person must have no seat and registered address, permanent establishment, permanent address or usual residence on the territory of the country;
2. The person must have not performed supplies of goods and/or provision of services with place of performance on the territory of the country in accordance with VATA, except for supplies of:
a) transportation services and services related to international transportation within the meaning of Art.30 and Art.31 VATA;
b) goods and services, with regard to which the tax is chargeable to the receiver under the supply in accordance with Art. 82 (2) VATA;
3. The country where the entity is established must be included in the list of the countries refunding value added tax or a similar tax to Bulgarian entities, this list being approved by the Minister of Finance and the Minister of Internal Affairs.
That person is entitled to refund of the value added tax charged by a supplier registered under VATA on goods and services received by such entity under a taxable supply and import made by such entity for the period that the refund claim under Art.3 (1), item 1 refers to, when:
- the goods and services are used for the purposes of the taxable supplies performed by such persons in the country where the same are established that would have entitled it to tax credit if performed on the territory of the state;
- the goods and services are used for the performance of supplies under Art.30 and Art.31 VATA.
The person may not have their tax refunded, where the value added tax charged by a supplier registered under VATA does not entitle to tax credit under the Value Added Tax Act.
Under Ordinance № Н-9 the right to tax refund is enjoyed by a taxable person, who is not established in the country and fulfils the following conditions:
- during the refund period, they have not had a seat, registered office or a permanent establishment or, where there are not such, permanent address or habitual residence in the territory of the country, and
- during the refund period they have not carried out any supplies with place of performance in Bulgaria, with the exception of supplies charged with zero-rate, and
- the person is registered for VAT purposes in the Member State where they are established.
The person is entitled to be refunded the VAT charged for goods purchased, services provided and import carried out by them within the territory of the country. The right to refund applies in those cases where the goods and services are used for supplies with place of performance outside the territory of the country, which would give the right of tax credit deduction, if the place of transaction was within the territory of the country, as well as for the supplies with place of transaction in the territory of the country pursuant.
The person is entitled to partial VAT refund when in the Member State of establishment they perform both supplies with the right of tax credit deduction and supplies with no such right. The amount of the partial tax refund is calculated on the basis of the applicable by the person coefficient for the right of partial tax credit.
Within the meaning of Ordinance № Н-12 a "foreign natural person" non-taxable natural person, who has permanent citizenship outside the territory of the European Union. Foreign natural persons in the meaning of this Ordinance, however, are not:
a) members of the diplomatic staff and administrative-technical staff, defined under Art. 1, letters "d" and "f" of the Vienna Convention on Diplomatic Relations and members of their families;
b) the consulate officials and consulate employees, defined under Art. 1, letters "d" and "e" of the Vienna Convention on Consulate Relations and members of their families;
c) members of the staff of the representations of inter-governmental organizations which function on the territory of the Republic of Bulgaria under an international agreement, signed by the Republic of Bulgaria with the relevant organization.
According to Art. 2 Ordinance № Н-12, Any foreign natural person shall have the right to request to have refunded the legally imposed and paid tax on the added value, included in a price of bought by him/her goods on the territory of the EU, where the following conditions are present:
- the foreign natural person is exporting the goods out of the territory of the EU, unchanged, not later than the last day of the third month, following the month, during which the invoice of the received delivery has been issued;
- the supplier of goods is a person, who at the date of issuance of the invoice has the right to carry out sales of goods with the right of refund of the VAT;
- the amount of the VAT in one invoice is equal or exceeds BGN 50 or its equivalence in EUR;
- the foreign natural person exercises this right not later than 6 months from the date of the invoice of the received supply.
The right to refund does not refer the following goods: alcohol drinks; tobacco and tobacco articles; liquid fuels.
Conditions for the exercise of the right
The tax refund is only exercisable upon fulfilling the necessary conditions and filing the respective documents required by statute. They differ according to the different categories of persons:
I. For a foreign person, who is not established in the territory of the EU - Ordinance № Н-10:
- VAT refund application form (Annex № 1 of Ordinance № Н-10);
- declaration that the prerequisites under Art.2 (1) of the Ordinance have been fulfilled;
- original certificate-form issued by the competent tax authority of the country where the entity is established and legalized translation of this certificate in Bulgarian;
- original tax documents for received supplies or documents for implemented import, with regard to which value added tax refund is claimed;
- written power of attorney.
II. For a taxable person who is not resident in the country but in another Member State of the EU - Ordinance № H-9:
The right of VAT refund shall be exercised by the persons by means of submitting refund application to the competent revenue body of the National Revenue Agency, via an electronic portal set up by the person’s Member State of establishment. Therein, the person must indicate:
- a description of their business activity
- the nature of the acquired goods and services
- besides the above information, the refund application should contain details of the invoices or import documents
The right a VAT refund charged for goods and services received by the person can be exercised in person or by proxy.
Receipt of the application by the NRA is certified by sending an email confirmation to the Member State by establishment of the person.
III. For a non-taxable natural person, who is not resident in the EU - Ordinance № Н-12:
Any foreign natural person can exercise their right to VAT refund by producing to the agent or the goods supplier the documents in Art. 4 (1) Ordinance H-12. The documents necessary to refund the tax are the following:
- first and second copy of a request for refund of VAT according to a form, signed personally by the foreign natural person and certified by the customs authorities;
- original of an invoice or another similar document for the received goods, which will be exported out of the EU territory and for which refund of the VAT is requested, certified by the customs authorities.
The request for refund of the paid VAT by the foreign natural person must contain:
- full name, number of passport, full address of the foreign natural person;
- identification number of VAT, name and address of the supplier;
- date of issuance of the invoice;
- exact and clear description of the type and quantity of the exported goods;
- value of each of the exported goods; total value and total imposed tax of the exported goods; signature of the foreign natural person.
Time limit for the exercise the right to VAT refund
- Foreign persons, who are not established within the territory of the EU can exercise their right to VAT refund until 30 June of the year following the calendar year when the right to refund of the tax arose - Art.3 (2) - (6) Ordinance № H-10;
- The time limit to exercise the right of VAT refund of foreign natural persons, who are not resident in the EU, is 6 months from the date of the invoice of the received supply - Art. 2 (1), item 4 Ordinance H-12;
- As regards a taxable person who is not resident within the country, but in another Member State of the EU, the VAT refund right needs to be exercised no later than 30 September of the calendar year following the year during which the right of tax refund has arisen – Art. 5 (4) - (6) Ordinance № H-9.
The period of refund is a calendar quarter and/or a calendar year.
Competent authority and tax refund procedure
I. Procedure for tax refund to foreign persons who are not established within the European Union.
The general rule in tax refund is that the competent authority shall refund the respective amount into a bank account specified in the request for recovery, based on the documents submitted within 6 months of receipt of the refund application. The costs of transferring the refunded tax refunded are borne by the person.
Wrongfully refunded tax must be reimbursed by the person together with the due legal interest.
II. The tax refund to a non-taxable natural person, who is not established in the EU is carried out by the customs authorities at the request of the foreign natural person by validating in a special order all copies of the documents submitted along with the refund application.
III. Tax refund to a taxable person, who is not established in the country but is established in another Member State of the EU.
The competent authority shall refund the tax based on the received request. Within 4 months of receiving the refund application the revenue authority electronically notifies the person of its decision to approve or reject all or part of the application. The refundable tax must be refunded to the person no later than 10 working days from the deadline into a specified bank account.
Wrongfully refunded tax must be reimbursed by the person together with the due legal interest within 3 days.
The right to VAT refund is exercisable by individuals through electronic submission of the refund application, signed with a qualified electronic signature through the designated web-based application found on the NRA website.