Resources Taxing and accounting VAT registration in Bulgaria

VAT registration in Bulgaria

VAT registration is one of the most common procedures for companies owned by foreign citizens in Bulgaria since having a VIES number in practice a prerequisite for the conduct of trade relations in the European union. Companies registered under the VAT act have the obligation of charging their customers with VAT (flat 20% in Bulgaria) and depositing it on a monthly basis in the National revenue agency. In Bulgaria there are two types of VAT registration:

1. Voluntary VAT registration;
2. Mandatory VAT registration

Voluntary VAT registration

The procedure applies mostly to newly registered companies in Bulgaria. It can be conducted when the conditions for mandatory registration are not met. The voluntary procedure is a fairly simple one which lasts ~2 weeks. The institution which should be addressed with a registry application is the National revenue agency. At the end of the procedure the company will be issued a VIES number which is basically the symbols ‘BG’ followed by the company unique identification code (issued to the company upon the registration in the Commercial register).

Mandatory VAT registration

In certain conditions the company has no choice but the register under the Bulgarian VAT act. There are two different cases of mandatory registration:

1. The company reaches a total revenue threshold of BGN 5000 (€ 25000);
2. The company receives B2B services from a foreign company based in the EU

In order for the first condition to be satisfied the company must reach a total revenue of at least BGN 50 000 for a period no longer than 12 months. Once this threshold is reached the company must file an application for VAT registration.

The second condition applies to the reverse VAT charge mechanism of the European union. If for example a local company uses advertising services from Google or Facebook (based in Ireland) it is obligated to charge itself VAT and deposit it locally. For this case there is a simplified registration procedures and companies registered under this procedure do not need to charge their own customers in Bulgaria VAT.

The article was first published at Advokatami.bg