Value-added tax - tax charging and tax rates
This article will consider the procedure according to which charging and payment of the tax as well as the tax rate under the Value Added Tax Act (VAT).
Obligation to charge the value added tax
As a rule, the tax is charged by a person registered under VATA. Any registered person, in respect of whom the tax has become chargeable, is obliged to charge the said tax and, to this end, must issue a tax document and indicate the tax on a separate line therein (invoice, notice or protocol) and indicate the said document in the purchase day book for the relevant tax period under the issued declaration (Art. 86 VATA). Where no such document has been issued or it has not been issued within the prescribed period, the tax is due for the tax period for which the tax became chargeable.
No tax is charged in the cases of effecting an exempt supply, an exempt intra-European Union acquisition, as well as in respect of any supply whereof the place of transaction is outside the territory of Bulgaria (Art. 86 (3) VATA).
Tax payers of the value added tax
In carrying out the taxable supply, the supplier is the tax payer.
There are several exceptions to this rule:
- Where the supplier is a taxable person who is not established in the country and the supply has its place of performance within the country and is taxable, the tax is chargeable from the recipient for supplies listed in Art. 82 (1), items 1, 2 and 3 regarding the supply of gas, of goods which are mounted or installed, and of supplies of services.
- The tax is chargeable from the recipient for triangular operations (Art. 82 (3) VATA)
- The tax is chargeable from the recipient who is a person registered under VATA for investment gold and gold material (Art. 82 (4) VATA).
- The tax is chargeable from the recipient - the person registered under this Act, in the cases of Article 163a, regardless of whether the supplier is a tax liable person or not (Art. 82 (5) VATA).
As a rule, import tax is chargeable from the importer.
The tax on intra-European Union acquisitions is due by the person carrying out the acquisition - Art. 84 VATA.
Charging of the tax
On the date of the chargeable event within the meaning of Art. 25 VATA, the tax under this Act becomes chargeable on the taxable supplies and the registered person becomes obligated to charge the same, or grounds arise for an exemption for the exempt supplies and those supplies with place of transaction outside the territory of the country.
When, before the chargeable event occurs, full or partial advance payment on the supply is made, the tax becomes chargeable upon receipt of payment (for the payment amount), excluding payments received in connection with intra-European Union supplies.
When a person unregistered under this Act shall receive an advance payment on the taxable supply and actually performs the said supply after the date of their registration under this Act, it is considered that the advance payment includes the tax that becomes chargeable on the date on which the tax becomes chargeable on the supply.
For periodically, phased or continuously carried out supplies, it is considered that the chargeable event occurs at the end of each calendar year, such that for the final calendar year of the supply the chargeable event occurs on the date of termination of supplies.
1. For intra-European Union supply of goods
Under Art. 51 (3) and (5), in cases of advance payment, the tax on an intra-European Union supply becomes chargeable on the 15th day of the month following the month during which the chargeable event occurs.
Under Art. 51 (4), the tax on an intra-European Union supply becomes chargeable on the date of issue of the invoice respectively the document under Article 168, paragraph 8, where the said invoice is issued before the 15th day of the month following the month during which the chargeable event occurs.
2. For intra-European Union acquisition of goods
Under Art. 63 (3) and (5) in cases of advance payment, 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.
Under Art. 63 (4), the tax becomes chargeable on the date of issue of the invoice, where the said invoice is issued before the 15th day of the month following the month during which the chargeable event occurs.
It is important to remember that the tax on intra-European Union acquisitions is chargeable by the person carrying out the acquisition.
Tax rate and tax amount
Art. 66 VATA provides for the following tax rates:
A standard 20% rate, which applicable to taxable supplies, except for those expressly specified as subject to a zero rate; the importation of goods into the territory of the country; the taxable intra-European Union acquisitions.
The tax applicable to accommodation provided at hotels and similar establishments, including the provision of vacation accommodation and letting out of places for camping sites or caravan sites, is 9 %.
The tax amount is determined by multiplying the taxable amount by the rate of tax (Art. 67 VATA).
Tax period, net tax period and payment of tax
Under Art. 87 VATA, tax period within the meaning given by this Act is the period of time the lapse of which a registered person must submit a VAT return showing the net tax for the same tax period.
The tax period is fixed as one month in respect of all registered persons, except in the cases under Chapter Eighteen of VATA.
The net tax for the tax period is the difference between the total amount of the tax chargeable from the person in respect of the said tax period and the total amount of the tax credit in respect of which the right to deduction has been exercised during the said tax period.