The Tax System In Bulgaria – Brief Description – Part I

The Bulgarian tax system is famous as one of the most favourable and business friendly in Europe. Here we will list the rates and short descriptions of the main taxes due.

VAT LAW
In Bulgaria the companies’ VAT registration can be either compulsory or voluntary. Every company which have reached income of BGN 50,000 within the last 12 calednar months income are obliged to register within the next 14 days following the month reaching the limit.The companies can also register voluntary without incomes. The companies under VAT Law are:
1. Local companies registered in Bulgaria
2. Foreign companies operating in Bulgaria
3. Branch of foreign companies operating in Bulgaria
4. Offshore companies
5. Any other kind of company organization (local or foreign) operating in Bulgaria
In general under this law fall all companies that have income received for activity done on the territory of Bulgaria, no matter of their nationality or legal statute.
Once registered for VAT, companies are obliged to add 20% VAT on the selling price. Companies also have the right to deduct the VAT paid to the suppliers (only if the suppliers are registered for VAT). The difference between VAT paid and VAT received is owed to the state.
The rate of VAT in Bulgaria is 20% and for the tourism business is 7%.

Registration for VAT:
After registered for VAT companies are obliged:
1. To submit monthly report (up to 14th day of the following month) with all the documentation for the month – sales and expenses done in order to declare the owed (or due to be refunded) tax.
2. Submitting annual reports 15th of April for the VAT paid and received in the previous year
The companies already registered have the right within 3 days after registration to submit request for refunding of VAT paid for tangible assets and services received before the VAT registration.

Deregistration for VAT:
1. If within the last 12 months the turnover is less than BGN 50,000 the companies may deregister for VAT if they wish so.
2. If there is a court decision for closing the company.
Important condition for deregistration is that the companies have to pay back the VAT refunded from the state for tangible assets.
(to be continued)