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Intra-European Union acquisition

For the purposes of VAT taxation the trade carried out between Member States of the EU, the term "import" has been replaced with "intra-European Union acquisition".

In order to be subject to taxation, the supply of goods or services must be carried out in return for consideration and taxable. Thirdly, the place of transaction of the goods or services must be within the territory of the country.

Intra-European Union acquisition of goods exists where the goods are dispatched or transported from the territory of another Member State of the EU to the territory of Bulgaria in one of the following scenarios:

  • acquisition of the right of ownership thereof and the supplier is a taxable person registered under VATA in another Member State;
  • actual receipt of the goods and the supplier is a taxable person registered under VATA in another Member State;
  • acquisition of a new means of transport, regardless of whether the supplier is a taxable person for the purposes of VATA in another Member State;
  • receipt of goods, which will be used for the purposes of the economic activity of the said person and the goods are dispatched or transported by or for the account of that person from the territory of another Member State where the said person is registered for VAT purposes.

The following are not intra-European Union acquisitions:

  1. the acquisition of any goods to which the supplier applies special arrangements for taxing of second-hand goods, works of art, collectors' items and antiques, as regulated in the legislation of the relevant Member State;
  2. the acquisition of any goods which are assembled or installed by or for the account of the supplier;
  3. the acquisition of any goods on board of vessels, aircraft and trains;
  4. the acquisition of any goods related to the international transport and acquisition of gold where the recipients are the Bulgarian National Bank or the Central Banks of any other Member State;
  5. the acquisition of natural gas through a natural gas system situated on the territory of the European Union or through a network connected to such a system, the acquisition of electricity or of heating or cooling energy through district heating or cooling networks;
  6. the acquisition of any goods by a person registered under this Act who is an acquirer in a triangular operation from an intermediary in a triangular operation;
  7. the acquisition of any goods dispatched or transported from the territory of another Member State for the purpose of distance selling whereof the place of transaction is within the territory of the country, where selling is effected under the supplier's identification number referred to in Art. 94 (2);
  8. the receipt of any goods dispatched or transported from the territory of another Member State to the territory of the country for the purpose of valuation or work on the said goods;
  9. the receipt of any goods dispatched or transported from the territory of another Member State to the territory of the country for the purpose of use of the said goods for the purposes of the supply of services within the territory of the country, provided that the said goods are re-dispatched to the sender within the territory of that other Member State after supply of the services;
  10. the receipt of any goods dispatched or transported from the territory of another Member State to the territory of the country, if the following conditions are simultaneously fulfilled:

а) the import of the same goods from the territory of the country would be eligible for the arrangements for temporary importation with total exemption from customs duty;

b) the goods are re-dispatched to the sender within the territory of another Member State within a period not exceeding 24 months after their dispatch.

 

Place of transaction of intra-European Union acquisitions

The rules for determining the place of transaction are set out in the provisions of Arts. 17 to 24 incl. VATA. Different rules apply to supplies that are carried out on vessels, trains, aircrafts etc. There is a difference depending on whether the recipient is a person registered for VAT purposes, whether they are established within the European Union, etc.

The place of transaction is the territory of Bulgaria, when:

  • the goods arrive and the transportation thereof terminates on the territory of Bulgaria, or
  • the person acquiring the goods is registered under VATA and has carried out the acquisition under an identification number issued in Bulgaria.

Regarding triangular operations, the place of transaction is the territory of the Member State, where the goods arrive or where the transport thereof terminates, if all of the following conditions are simultaneously fulfilled:

  • the intermediary in a triangular operation acquires the goods under an identification number having a prefix ''BG'';
  • the intermediary effects a subsequent supply of the goods to the acquirer in the triangular operation;
  • the intermediary issues an invoice on the supply to the acquirer in the triangular operation, satisfying the requirements of Art. 144 VATA and containing the words "Art. 141 2006/112/EC" the intermediary declares the supply to the acquirer in the triangular operation in the VIES return for the relevant tax period.

 

Regime of taxation of intra-European Union acquisitions. Chargeable event and Basis of taxation of intra-European Union acquisitions

The chargeable event upon an intra-European Union acquisition occurs on the date on which the chargeable event would have occurred upon a supply within the territory of the country (Art. 63 (1) VATA).

For continuous supplies of goods under Art. 13 (1) - (3) VATA lasts for a period longer than one calendar month, the chargeable event occurs at the end of each calendar month.

The basis of taxation for an intra-European Union acquisition where the said goods are dispatched or transported by or for the account of a taxable person from the territory of another Member State in which the person is registered for VAT purposes and where the said goods were produced, extracted, processed, purchased, acquired or imported thereby within the framework of the economic activity thereof, is equal to the basis of taxation formed for the purposes of the intra-European Union acquisition in the Member State from which the goods were dispatched or transported - Art. 64 (2) VATA.

The taxable amount for an intra-European Union acquisition of excisable goods also includes the excise duty due or paid on the goods. If after the acquisition the excise duty is refundable to the recipient, the basis of taxation is debited according to the procedure established in Art. 19 RAVATA. Where the excise duty due or paid on the goods in the Member State from which they were dispatched or transported has been refunded, the basis of taxation is debited with the amount of the excise duty refunded. The basis of taxation is debited by issuing a protocol under Art. 117 (4) VATA. The said protocol must be issued within 15 days from the last day of the tax period during which the person obtained the document.


Chargeability of the tax

The tax upon an intra-European Union acquisition becomes chargeable on the 15th day of the month following the month during which the chargeable event occurs. (Art. 63 (3) VATA). Where the said invoice is issued before the 15th day of the month following the month during which the chargeable event occurs, the said tax becomes chargeable on the date of issue of the invoice (Art. 63 (4) VATA).
In practice, cases often emerge related to the chargeability of the tax and the incurring of a liability to tax on invoices issued by the supplier before the chargeable event occurs.

In cases where the invoice issued in connection with an advance payment, chargeability occurs on the 15th day of the month following the month in which the chargeable event occurs. However, where the invoice is issued in connection with payment effected before the date of occurrence of the chargeable event, Art. 63 (4) does not apply before the chareable event occurs.

 

Tax rate

According to Art. 66 VATA, intra-European Union acquisitions are taxed at a 20% rate, with the exception of the exempt intra-European Union acquisitions. These also include intra-European Union acquisitions with place of transaction the territory of the country, which satisfy the following conditions:

  • goods received by institutions of the EU, the armed forces of foreign states, command/headquarters of the North Atlantic Treaty, diplomatic and consular missions and their staff members, international organisations and members of such organisations. The condition is that Bulgaria is not host to the said persons.
  • goods received by any persons covered under Art. 174 (1) VATA;
  • goods, the importation of which into the territory of Bulgaria would be exempted from tax according to the procedure established by Art. 58 VATA, with the exception of the importation of goods under Art. 58 (1), item 6 VATA;
  • goods received by institutions of the EU, European Atomic Energy Community, ECB, EIB or by the authorities of the EU to which the Protocol of Privileges and Immunities of the European Union is applicable;
  • goods received by an intermediary in a triangular operation, who is a person registered for VAT purposes in another Member State.


Charging of the tax

The acquisition of goods within the country from a supplier registered for VAT purposes in another EU Member State must be declared in the accounting registers and the VAT return submitted under VATA. The person registered under VATA who is a recipient of the supply under an intra-European Union acquisition needs to issue a protocol pursuant to Art. 117 VATA.

According to Art. 84, the tax for intra-European Union acquisitions is chargeable by the person making the acquisition.
The tax is charged by entering the protocol drawn up by the recipient Protocol in the sales log for the tax period in which the tax became chargeable.

 

Right to tax credit

The NRA guidelines specifically state that levying VAT on intra-European Union transactions is done in the country of consumption of the goods, which means that the recipient of the delivery charges the tax at the standard rate of their Member State.

Compliance with this taxation mechanism requires the person registered under VATA not only to "reverse charge" the VAT through the issuance of protocol according to Art. 117 VATA, but also to include this document in a sales log for the period in which the tax became chargeable.