The value-added tax in Bulgaria
VAT taxation under Bulgarian tax law is regulated by VATA, the Regulation for the Application of VATA (RAVATA) and Directive 2006/112.
This type of indirect tax is payable monthly for all supplies of goods or services for any intra-European Union acquisition whose place of performance is within the country, carried out by a registered person, as well as for importation of goods. VAT is a tax levied on newly created value during the implementation process of goods or services. The tax is levied on the consumption thereof and the group of turnover taxes. The VAT model under Bulgarian law follows the common VAT regime within the EU model, where personal expenses are taxable by applying the credit (invoice) method. According to this method, each stage of production of goods or services and the implementation thereof to end users is chargeable with VAT on the entire value of the supply, such that through the mechanism of tax credit the final price of the goods or services includes a single VAT charge in the amount of the respective tax rate.
Taxable persons under VATA
A taxable person is any person who independently carries out an economic activity, whatever the purpose and results of that activity, as well as any person who performs accidental onerous intra-European Union supplies of new transport vehicles. „Independent economic activity” are the activities of producers, traders and persons supplying services, including mining and agriculture, as well as the practice of a liberal profession, including as private enforcement agents and notaries. Any remunerative activity, carried out on a continuing basis or as a regular occupation or business on a professional basis for the purpose of obtaining income therefrom, including the exploitation of tangible and intangible property, shall also be considered an independently carried out economic activity.
Independent economic activities do not include activities carried out by natural persons under an employment relationship or equivalent legal relationships, nor activities of natural persons concerning the management and control of a legal entity.
Non-taxable are the State, state and municipal authorities for activities performed in such capacity, except for the activities listed in Art. 3 (5), item 1 (‘electronic communications services; supply of water, gas, electricity or steam; transport of goods: port and airport services; passenger transport; sale of new goods manufactured for sale; supplies effected for the purpose of intervention on the market in agricultural products; organizing or running of trade fairs, exhibitions; warehousing; the activities of commercial publicity bodies, advertising services, including rental of advertising space; tourist services; running of shops, industrial canteens and other commercial outlets, the letting of buildings, parts of buildings and sales areas, as well as granting of concession for construction, service or extraction/mining; activities of radio and television bodies of a commercial nature; services provided by a public enforcement agent’), as well as activities damaging to competition, regardless of whether or not they are performed by state or municipal bodies.
Registration under VATA
In order for a taxable person to be part of the taxation procedure under VATA, the same needs to be registered for VAT purposes. VAT registration and its termination are regulated in Arts. 94 - 111, as well as in Arts. 132-135. This registration forms part of the general tax registration under TIPC. Until registered, a taxable person has no rights and obligations under VATA.
VAT registration can be compulsory , voluntary and on the initiative of the revenue administration, such that the law outlines several situations where specific registration and deregistration apply. Special cases of compulsory registration are separately provided for.
Termination of registration is also either initiated by the revenue authority or voluntarily. The grounds for compulsory registration are contained in Art.107, and those for voluntary deregistration - in Art.108.
Objects of VAT taxation: objects of taxation are supplies of goods and services; intra-European Union acquisitions; importation of goods.
1. any onerous taxable supply of goods and services: the legal definition of goods is contained in Art. 5 („ ‘gooods’ within the meaning given by this Act, shall be any movable and immovable thing, including electric current, gas, water, heat or refrigeration and other such, as well as standard software”), and of service – in Art.8 („ ‘services’ within the meaning given by this Act, shall mean everything which has a value and which is other than goods, money in circulation and foreign currency used as legal tender”). Supply of goods is defined in Art.6 -„ ‘supply of goods’ within the meaning given by this Act, shall be the transfer of the right of ownership or another right in rem to goods”), and of service – in Art.9 („ ‘supply of services’ shall be any performance of services”). The supply of goods or services must be onerous and taxable. Equal to an onerous supply of goods or services are the release or delivery of goods or services for personal use or consumption of the taxable natural persons, of the owner, their workers and employees or of third persons, provided that the manufacture, importation or acquisition thereof is partially or completely deducted tax credit; also equal is the gratuitous transfer of property or other right over property of any third persons, provided that the manufacture, importation or acquisition thereof is partially or completely deducted tax credit.
Taxable are those supplies, which are carried out by a taxable person within the territory of the country , as well as zero-rated supplies, unless otherwise provided by the Act (Arts. 38-50 contain an exhaustive list of exempt supplies and acquisitions). Non-taxable are those supplies which lack one of the taxation formulation elements, unlike the exempt supplies, namely the ones listed in Arts. 38-50.
2. intra-European Union acquisition: acquiring ownership of goods and the actual receipt of goods which are dispatched or transported to the territory of the country from that of another MS, where the supplier is a taxable person who is registered for VAT purposes in another MS. Cases of non-intra-European Union acquisitions are listed in Art.13 (4).
3. Imports: introduction of non-European Union goods - import of goods and placing goods in free circulation after outward processing. As import of goods is also considered any other event resulting in a customs duty.