Taxation regime of imports in Bulgaria
Importation of goods
Goods within the meaning of Art. 5 VATA are any movable and immovable thing, including electric current, gas, water, heat or refrigeration and other such, as well as standard software. Importation of goods taxable with VAT and within the meaning of Art. 16 VATA comprises:
- the introduction of non-European Union goods into the territory of the country.;
- the release of goods for free circulation after placing under the outward processing procedure;
- the introduction of EU goods into the territory of the country from third countries or territories which form part of the customs territory of the EU.
Importation furthermore means any other event from which a customs debt arises. No tax is owed when completing the customs formalities for declaring free movement of goods where the following conditions are simultaneously fulfilled:
- at the time of declaration the goods are under customs regime or inward customs warehousing under a suspension system, "temporary importation with total or partial exemption from duty" or have the status of goods in temporary storage or placed in a free zone or free warehouse, or
- simultaneously with the declaration:
a) the goods leave the territory of the country to a third country
b) the goods placed under "temporary importation fully exempt from customs duties" leave the territory of the country to the Member State from which they were exported and the recipient is the person who exported them.
Taxation of imports
The importation of goods is a taxable supply. Any importation performed is subject to VAT at a rate of 20%.
The chargeable event for importation of goods occurs and the tax becomes chargeable on the date on which the obligation to pay import duty within the territory of the country arises.
Where an obligation to pay import duty within the territory of the country does not arise, the chargeable event occurs and the tax becomes chargeable on the date on which the customs formalities are completed.
The taxable amount upon importation of goods is the value for customs purposes credited with:
- Taxes, customs duties and fees due outside the territory of the country, as well as customs duties, excise duties and other charges due in connection with the importation of the goods within the territory of the country;
- The expenses incidental to the importation, such as commission, packing, transport and insurance costs, incurred up to the first place of destination of the goods within the territory of the country.
When goods have been temporarily exported from the territory of the country to a place outside the territory of the EU for processing or repair under the outward processing procedure and are re-imported into the territory of the country, the taxable amount is the value of the processing or repair, credited according to the procedure outlined above.
The formed basis of taxation does not include the trade discount or rebate, if allowed to the recipient not later than the date of occurrence of the chargeable event.
The tax upon importation is charged by the customs authorities. The charge can also be carried out by the importer, if they are a person registered under VATA. A person is allowed to apply the special charging procedure for the taxation of imports or tax recovery within a 30-day term if the said person is registered under VATA; implements an investment project approved by the Minister of Finance; has no pending obligations to the NRA and fulfils the conditions for providing de minimis aid. If the importer has fulfiled these conditions and declares that this procedure will be applied, they may charge the tax by protocol.
The tax on imports is chargeable by the importer. Where, in accordance with customs legislation two and/or more persons are jointly liable for customs duties, the said persons are also jointly liable to pay the tax due.
The importer of goods under Art. 90 (1) VATA shall pay the tax effectively charged by the customs authorities into the State budget.
In order to secure the tax collection, the customs authorities release the goods after payment. A prohibition is also established against the revenue authorities or the customs authorities to offset the tax due with other obligations.
When the importation of goods has been carried out, the person is entitled to a tax credit. Tax credit is the amount of tax which a registered person is entitled to deduct from their tax obligations under this Act for the importation of goods carried out by the said person. The right to tax credit arises for the importer and can be duly exercised, if the registered person has an document of importation, specifying him as a receiver or importer, and stating the amount of VAT due or enabling the calculation of the said amount. After amendments were made to VATA there is now the possibility to exercise the right to tax credit for tax paid on the importation of goods also on the basis of a document other than a customs declaration. This document is usually a decision of the customs authorities.
In certain cases, the registered person is entitled to a partial tax credit - the right arises for the imported goods received by the registered person when the same will be used for both supplies for which the person is entitled to deduct tax credit and supplies or activities for which the person has no such right and the receipt of the goods or services cannot determine how much of them will be used for carrying out taxable supplies and how much - for exempt supplies. The amount of the partial tax credit is determined by the amount of the tax credit multiplied by the coefficient obtained as a ratio between the turnover relating to the supplies for which the person is entitled to deduct tax credit, and the turnover relating to all supplies and activities performed by the person.
Importation of goods exempt from tax
According to Art. 58, exemption from tax shall be granted in respect of the importation of:
- goods imported by:
a) diplomatic missions, consulates or members of their staff
b) the European Union, the European Atomic Energy Community, the European Central Bank, the European Investment Bank or by the authorities of the European Union, to which the Protocol of Privileges and Immunities of the European Union applies
c) international organisations other than those specified in letter "b", recognized as such by the public authorities of the host member state or effected by members of such organisations
- dental prostheses imported by doctors of dental medicine or dental mechanics;
- textbooks and teaching aids;
- sea fishing products;
- goods, when the importation is followed by an intra-European Union supply;
- gold by the Bulgarian National Bank;
- aircrafts and vessels;
- investment gold;
- gas through a natural gas system;
- goods that have been temporarily exported for repair;
- goods that are being returned by the person-exporter while preserving the condition thereof;
- motor vehicles subject to misappropriation or theft and for which the import duties due have been repaid or remitted according to the procedure established by customs legislation, etc.
The importation of goods within the permitted duty-free import shall be exempt from tax when:
- goods of a total value not exceeding BGN 30 are being imported;
- small consignments are received of goods of non-commercial nature, sent by a third party from one natural person to another natural person within the country, without the latter person having paid for them, of a total value up to but not exceeding the BGN equivalent of EUR 45;
- personal items received as inheritance are being imported;
- used personal items of natural persons who relocate their usual place of residence in the European Union are being imported;
- property in connection with marriage is being imported;
- used household utensils are being imported after the termination of a temporary stay outside the European Union;
- orders, medals and honorary awards and prizes are being imported;
- goods intended for the victims of natural and other calamities are being imported;
- materials for burial purposes are being imported;
- documentation is being imported;
- school aids, educational materials etc. are being imported;
- seeds, fertilizers and products for cultivating the soil and crops are being imported
- video and audio materials of educational, scientific or cultural nature are being imported;
- items from collections and works-of-art of educational, scientific or cultural nature are being imported;
- reference substances for the quality control of medicinal products are being imported;
- pharmaceutical products used for international sports events are being imported;
- goods are being imported by state organizations, charitable or philanthropic organizations and the said goods have been received by the said entities free of charge;
- goods are imported by institutions or organizations and are received free-of-charge for providing aid and assistance to blind people and other handicapped and disabled people;
- printed advertising materials and articles of advertising nature are being imported, etc.