Zero-rate tax of the value-added tax

The Value Added Tax Act (VATA) provides for supplies liable to a 0 % rate tax. This article will examine precisely the different types of such supplies.

1. Supply of goods

Supplies liable to zero-rated tax are the supplies of any goods dispatched or transported from a place within Bulgaria to a destination in a third country or territory, however, not to the territory of a Member State of the EU - Art. 28.
Where the goods are dispatched or transported to a third country, to prove the supply the supplier must be in possession of the following documents: a written customs declaration or another document certifying the exportation in those cases where there is no need to submit a customs document; an invoice on the supply; a document for the transportation of the goods.
Where the goods are dispatched or transported to a third territory, to prove the supply the supplier must be in possession of the following documents: a document for the transportation of the goods; a written confirmation by the recipient certifying that the goods have arrived on the territory - Art.21 RAVATA.

VATA provides for other - specific types of supplies and the required documents thereto, for instance Supply of gold to central banks (Art. 34 VATA), Supplies linked to duty-free trade (Art. 35 VATA), Supply of goods provided by agents, brokers and other intermediaries, acting on behalf of or at the expense of another person, when linked to these supplies(Art. 36 VATA).

2. International transport of passengers

The international transport of passengers is a supply liable to a zero-rated tax where the transport, regardless of whether the passengers are transported within or outside the EU- Art. 29. To prove international transport of passengers, the supplier must hold a license for international carriage of passengers and a document certifying international transport of passengers, stating the identification number of the vehicle.

3. International transport of goods

The international transport of goods, as well as goods related thereto, is liable to a zero-rated tax only where the transport is effected from Bulgaria to a third country or territory, or to the islands making up the autonomous regions of the Azores and Madeira and back, as well as between two locations within the territory of the country where the transport is part of such international transport.
To prove international transport of goods, the supplier must comply with numerous conditions referred to in VATA in detail, specific to each type of supply.

4. Supplies linked to international transport

To prove a supply linked to international goods traffic with place of performance on the territory of the country, the supplier must be in possession of the customs documents certifying that the goods are non-European Union; customs documents evidencing that the date on which the tax becomes chargeable, the goods have the status of goods in temporary storage or placed in a free zone or a free warehouse or under the customs arrangements; invoice on the supply.
To prove supply of services directly related to the supply of such goods with place of performance on the territory of the country, the supplier must be in possession of the following documents: a written declaration by the person - holder in which it is declared that as of the date on which the tax for the supply of the service becomes chargeable, the appropriate circumstances have been fulfilled; invoice on the supply.

5. Supply of import-related services

Taxable at zero rate is the supply of import-related services, such as commission, packing, transport and insurance, when their value is included in the basis of taxation under Art. 55 VATA.
Taxable at zero rate is the supply of service regarding processing or repair when the same form the basis of taxation under Art. 55 (3) for the importation of goods which are temporarily exported from a location within country to a location outside the EU under the outward processing regime and are subsequently reimported in the country.

Tax regime of supplies liable to zero-rated tax

As a rule, these supplies are deemed as taxable supplies for which the legislature has defined a specific tax rate of 0%. Accordingly, persons registered under the Act are entitled to a full tax credit in the cases specified by the Act.
According to Art. 92 (3) VATA, the input tax claimable under Article 88 (3) of the Act is refunded within 30 days after submission of the VAT return, where the person has effected supplies liable to tax at the zero rate during the 12 months last preceding the current month at a total value exceeding 30 per cent of the total value of all taxable supplies, including zero-rate supplies and there are no unpaid tax obligations that have been established.
The importance of the supplies liable to zero-rated tax also concerns the determination of the revenue necessary for compulsory registration under VATA. The taxable turnover includes the aggregate of the bases of taxation of the taxable supplies carried out by the person, including those subject to the zero tax rate.