Value-added tax on new transport vehicles in Bulgaria
The new transport vehicles are the subject of separate situations outlining the VATA regime on intra-European Union supplies and intra-European Union acquisitions.
According to Art. 7 (2) of the Value Added Tax Act (VATA), any supply of a new means of transport, dispatched or transported by or for the account of the supplier or of the recipient from the territory of the county to the territory of another Member State, regardless of whether the recipient is a taxable person or a non-taxable person, shall also be considered Intra-European Union supply of goods.
According to Art. 13 (2) VATA, the acquisition of a new means of transport, which is dispatched or transported to the territory of the country from the territory of another Member State, regardless of whether the supplier is a taxable person for VAT purposes in another Member State, shall also be considered an intra-European Union acquisition.
Moreover, Art. 3 (4) VATA stipulates that any person, who from time to time effects an intra-European Union supply for consideration of a new means of transport, shall also be regarded as a taxable person, and Art. 2, item 3 VATA states that each intra-European Union acquisition of new means of transport effected for consideration, whereof the place of transaction is within the territory of the country is subject to VAT.
In this respect the legislature has provided special provisions for intra-European Union supplies and acquisitions of new transport vehicles, carried out by unregistered persons, which are the subject of this article.
New transport vehicle. Definition
The definition of a new transport vehicle in the context of intra-European Union transactions can be found in § 1, item 17 VATA, such that the concept includes vessels, aircraft and vehicles whose characteristics are described in detail in that paragraph of the Act.
Item 18 of the same paragraph defines in what circumstances a "passenger car" is an automobile, namely when it is designed to seat no more than 5 persons (excluding the driver). Any automobile intended to carry cargo or any passenger car with permanently in-built technical equipment for the purposes of the activities carried out by the registered person is not be treated as a passenger car.
This definition, however, is a speculation, as it is subject to interpretation and abusive practices. Because when a passenger car is acquired, imported or rented, which unquestionably meets the above definition and is not used solely for the services referred to in Art. 70 (2), there is no right of tax credit deduction.
Special provisions for intra-European Union supply of a new vehicle
Art. 168 VATA and Art. 101 RAVATA stipulate that any unregistered person under this Act who carries out occasional intra-European Union supply of a new vehicle is obliged to declare the same within 14 days from the expiration of the tax period, during which the tax has become chargeable under Art. 51 VATA. The said obligations also apply to persons registered under Art. 97a (for the supply of services for which the tax is chargeable on the recipient) and under Art. 99 (for intra-European Union acquisitions).
The declaration is made by submitting a declaration at the territorial directorate of the National Revenue Agency where the person is registered or is subject to registration under the Tax-Insurance Procedure Code. It should be borne in mind that failure to submit a declaration pursuant to Art. 184 VATA is punishable with a penalty/sanction from BGN 1000 to BGN 10,000 for a first offence and from BGN 5,000 to BGN 20,000 for a repeated offence.
The tax rate on intra-European Union supplies is zero.
Important is the fact that when the person carrying out an intra-European Union supply of a new vehicle, they are entitled to a refund of the tax paid by him for the acquired vehicle, subject to certain conditions (Art. 168 (5) VATA).
Special provisions for intra-European Union acquisition of a new vehicle
Art. 2, item 3 VATA stipulates that subject to VAT is also any intra-European Union acquisition of a new vehicle, regardless of whether the person acquiring the said vehicle is registered or unregistered. This means that if public authorities, local authorities etc. as well as natural persons acquire a new vehicle, this acquisition is treated as an intra-European Union acquisition and is charged with 20% VAT.
There are several cases in which no VAT is payable on the acquisition of a new vehicle: No VAT is payable for an acquisition from the EU of a new vehicle by diplomatic missions, consulates, representative offices of international organizations or their staff.
According to Art. 99 (5) VATA, the persons who are not registered under the Act, including natural persons acquiring new vehicles, are not required to register for an intra-European Union acquisition. The only obligation on them imposed by the Act is to declare the acquisition and pay the tax.
Buyers of new cars from another Member State of the EU do not owe VAT in the country from which they bought the car. They must declare to the supplier that the vehicle will be used and registered in another Member State. If the buyer failed to disclose such circumstances and the seller has charged VAT on the transaction, buyers can turn to the supplier of the new vehicle for a refund of the tax paid. In any case the obligation to declare and pay the tax is borne by the buyer of a new vehicle not registered under VATA, such that the tax must be submitted in Bulgaria.
The form, place of submission and the time limits for submission of the declaration are the same as above for intra-European Union supplies. For intra-European Union acquisitions of a new vehicle by a non-registered person, there is no requirement to issue a protocol, as opposed to the procedure for registered persons.
The tax due on the intra-European Union acquisition is paid by the person within 14 days of the expiration of the tax period in which the tax became chargeable on the acquisition (Art. 101 RAVATA) into the State budget by crediting the account of the territorial directorate of the National Revenue Agency where the person is registered or is subject to registration under the Tax-insurance Procedure Code.