The rate of VAT in Bulgaria is 20%, which is somewhat low compared to other countries from the CEE region. For example, the rate in Greece and Poland is 23%. The Bulgarian VAT Act provides for 9% reduced rate for hotel accommodation.
Which transactions are subject to VAT?
In general, subject to VAT in Bulgaria are the following transactions:
- supply of goods and services with a place of supply in Bulgaria
- intra-Community acquisition of goods
- import of goods in the country
What is the Bulgarian VAT regime for goods and their place of supply?
The place of the goods at the time of their supply determines their VAT treatment. For example, goods located in Bulgaria at the time of their supply will be subject of 20% Bulgarian VAT rate.
But if the goods are transported then the place of their supply is the location of the goods at the moment when their transportation starts.
The VAT act sets forth special treatment rules for the supply of electricity, gas, heat or cooling energy.
VAT regime for intra-Community supply of goods
Intra-Community supply is the supply of goods dispatched or transported from the territory of one Member State to the territory of another Member State in the EU. For instance, if a person registered for VAT purposes in Bulgaria sends off goods for consideration to another VAT registered person in an EU Member State, the transaction will be subject to zero VAT rate.
VAT regime for intra-Community acquisition of goods
The intra-community acquisitions are a mirror image of the intra-community supplies. A community acquisition is the acquisition and the actual receipt of goods, which are sent or transported to Bulgaria from another Member State where the supplier is a taxable person, registered for VAT purposes in that other Member State.
Import of goods to Bulgaria from non-EU states
Goods transported to the territory of the country from a non-EU state are subject to 20% VAT in Bulgaria. The goods border crossing by itself invokes a tax event for VAT purposes. Thus, the Bulgarian Customs are authorized to charge VAT immediately upon the goods entrance in the country.
Export of goods from Bulgaria to non-EU states
The export of goods to non-EU countries is subject to zero VAT in Bulgaria. The latter provision shall not apply to goods intended for loading, equipment and supply of vessels and aircrafts that are used for sports and recreational purposes or for personal needs.
What is the Bulgarian VAT regime for services and their place of supply?
The VAT Act differentiates between two main regimes. The first one concerns the supply of services between two taxable persons – B2B (business to business) regime. The second one stipulates the supply of services between a taxable and a non-taxable person – B2C (business to customer) regime.
VAT treatment of services under the B2B regime
Generally, the place of supply of services is the location where the recipient of the service is established or has an establishment at that location. Under a cross-border deal between two taxable persons located in two different EU states, VAT is commonly owed by the recipient of service. However, there are a number of exceptions to the latter rule. For example, the supply of services concerning real estate is due at place where the real estate is located.
VAT treatment of services under the B2C regime
In general the VAT on supply of services provided by a taxable to a non-taxable person is due by the supplier. There are again exceptions to the latter principle some of which involve services to real estate and scientific, educational, sporting events that take place in Bulgaria.
Which supplies are exempt from VAT in Bulgaria?
The following supplies are exempt from VAT:
- Supplies related to health and social security care
- Education and sport related supplies
- Supplies related to cultural events
- Religiously related and other non-profit supplies
- Supplies related to real estate and property
- Supplies of financial and insurance services
- Supply of gambling games under the Gambling Act
- Supplies related to postal services and stamps