Taxation: VAT refund regime in Bulgaria

VAT in Bulgaria is accounted for monthly, over one calendar month, which means that persons must determine their result each month. VAT accounting may result in tax being payable (if the VAT charged by the business exceeds the input tax credit used, in which case the tax is paid by the 14th of the following month) or in a tax refund (if the input tax credit used exceeds the VAT charged on supplies).

If the taxable person is entitled to recover VAT based on the results for the current month, the amount to be recovered must be deducted over the following two months from the VAT payable for those periods.

The remaining recoverable VAT must be refunded within 30 days of submission of the final VAT return for the deduction period, after offsetting any other tax liabilities due.

A taxable person or company that has generated more purchases/costs/revenue over a period of three consecutive months is entitled to a VAT refund. The company may then apply for a VAT refund procedure. For this purpose, the tax authorities conduct a review or accounting audit of the applicant.

Yes. According to the

, VAT may be refunded to a taxable person by a Member State in which that person is not established, provided that the person is registered in another Member State.

For this purpose, the person must submit an application to the Member State of refund through an electronic portal set up by the Member State in which that person is established. The refund application must be submitted to the Member State of establishment no later than 30 September of the calendar year following the refund period. The Member State of refund notifies the applicant of its decision to approve or reject the refund application within four months of receiving it.

1. The foreign person has no business establishment or registered office, fixed establishment, domicile or habitual residence in the Member State from which the refund is requested; 2. The person has not supplied goods and/or services deemed to have been supplied in the Member State of refund under the VATA, except for the following transactions: (a) supplies of transport services and services related to international transport within the meaning of Articles 30 and 31 of the VATA; (b) supplies of goods and services to a person liable to pay VAT under Article 82(2) of the VATA; 3. The person's country of establishment is included in the list of countries eligible for VAT refunds.

Where a person supplies goods from one EU Member State to another, and both supplier and recipient are registered for VAT in their respective Member States, an intra-Community supply (ICS) takes place. In an ICS, the goods leave the territory of the country from which they are dispatched. Unlike exports, where goods are supplied to countries outside the EU, in an ICS both supplier and recipient are registered for VAT in two different Member States.

Intra-Community supplies are similar to exports because the goods leave Bulgaria and no VAT is paid, as a zero rate applies; the tax is payable by the recipient.

If a company provides services and the recipient is a taxable person (VAT registered), the place of supply is the state where the recipient is established — so-called “business-to-business supplies”. If the service is provided by a permanent establishment located outside the supplier's state of establishment, the place of supply will be the state of that fixed establishment. In these cases, the supplier must assess VAT at the tax rate of the state where the supplier is established (or has a permanent establishment), meaning that the recipient is not obliged to self-assess VAT in its own country.

An exception to this latter rule arises where the recipient — a taxable person — is established outside the EU and the services supplied are of a so-called intellectual nature, such as consultancy, advertising, transfers of rights, patents and licences, software development or data processing. In those cases the place of supply is the recipient's state, meaning that the supplier must not charge VAT and the recipient will self-assess VAT if required by local law.

The above rules for determining the place of supply according to the recipient's status do not apply to the following groups of services:

• Provision of a service connected with immovable property;
• Passenger transport;
• Services connected with cultural, artistic, sporting, scientific and similar events;
• Provision of restaurant and catering services;
• Short-term vehicle hire for no more than 30 days.