VAT for an IT company in Bulgaria: when registration is mandatory and when you can operate without VAT

Quick table: is VAT registration required?

Important: the table gives a guideline for standard IT services. For a final conclusion you need to check the contract, the client’s status, the country where the client is established and the nature of the service.

VAT for an IT company in Bulgaria: what you need to know before the first invoice

Bulgaria is convenient for IT specialists who want to register their own company and work with clients from different countries. But right after registering an EOOD (single-member LLC) or OOD (LLC), a practical question arises: do you need to obtain a VAT number if the company will receive payment for IT services from abroad?

The mere fact that money comes in from abroad does not automatically create an obligation to register for VAT. For the purposes of the VAT Act, what matters is not the bank or the currency of the payment, but the specific transaction: who the client is, where they are established, whether they act as a taxable person, what service is supplied and where its place of supply is.

1. The client is a company from another EU country

If a Bulgarian company supplies typical B2B IT services to a taxable person established in another EU country, the general rule for determining the place of supply of B2B services applies. In a standard situation, the place of supply is at the client’s location.

For the Bulgarian supplier this, as a rule, means mandatory registration under Art. 97a, para. 2 of the VAT Act. The National Revenue Agency (NAP) states that the application must be filed no later than 7 days before the date on which the tax on the supply becomes chargeable — including taking into account an advance payment or a tax event.

Key point: there is no general turnover threshold of 51,130 euros for registration under Art. 97a. Therefore the obligation may arise already before the first relevant service.

On the invoice the Bulgarian supplier usually does not charge 20% Bulgarian VAT: the tax is accounted for by the recipient in their own country under the reverse charge mechanism. Such transactions may also give rise to VIES reporting obligations.

2. The client is a company from the USA, the United Kingdom, Israel or another country outside the EU

If the client is a business and the general B2B rule applies to the service, the place of supply is usually where the client is established. Therefore the sale of such an IT service to a company from a third country usually does not create an obligation to register under Art. 97a, para. 2, since that provision covers the relevant services with a place of supply in another EU member state.

For example, a Bulgarian EOOD (single-member LLC) may receive monthly payments from a US company and not be required to register for VAT solely because of these receipts. However, it is necessary to check whether another ground exists: turnover in Bulgaria, foreign services purchased, other types of transactions, or voluntary registration.

3. Clients are located in Bulgaria

For a person established in Bulgaria, from 1 January 2026 the national threshold for mandatory registration under the general procedure is 51 130 euro of annual turnover in the country. The National Revenue Agency (NAP) explains that once the threshold is exceeded, the application is filed within 7 days, and the date of registration is deemed to be the day following the day on which the threshold was exceeded.

Until the threshold is reached, the company may apply the exemption regime for small enterprises in the country, if the conditions of the law are met and at the same time no other independent ground for registration has arisen, for example under Art. 97a.

4. If the client is an individual

B2B rules cannot be automatically transferred to B2C. For services provided to individuals, the place of supply is determined by separate rules. For certain electronic and other services supplied to end consumers in other EU countries, special rules and the OSS regime may apply.

That is why the phrase “the client is abroad, so there is no Bulgarian VAT” is unsafe. First you need to qualify the service itself and the status of the recipient.

5. A hidden reason for registration: foreign services and subscriptions

An IT company may not have a single client in the EU and still fall under Art. 97a. The reason is the services it purchases itself from foreign suppliers.

If a Bulgarian company receives a service with a place of supply in Bulgaria on which the tax must be charged by the recipient under Art. 82, para. 2 of the VAT Act, a ground for registration under Art. 97a, para. 1 arises. In practice you need to check, for example, foreign advertising, SaaS, cloud, hosting and other professional online services — but the conclusion always depends on the specific supplier and service.

After such registration, the company charges VAT itself on the relevant services received through the reverse charge mechanism. NAP separately states that registration solely under Art. 97a does not grant the ordinary right to deduct input tax credit on goods and services received.

6. Registration under Art. 97a and full registration are not the same thing

Special registration under Art. 97a does not mean that the company must automatically charge 20% VAT on all its sales. But it does create reporting obligations: monthly VAT reporting and, for the relevant supplies within the EU, VIES.

If a ground for general mandatory registration subsequently arises, or the company chooses voluntary full registration, the regime changes. That is why it is important to determine the correct ground for registration before filing the application.

7. Practical examples

A developer works through a Bulgarian EOOD with a German company.

Even the first invoice for 1 000 euro may require registration under Art. 97a, para. 2. In a standard B2B situation, the invoice is issued without Bulgarian VAT, with reverse charge.

A DevOps specialist works through a Bulgarian EOOD only with a company from the USA.

This sale in itself usually does not create an obligation to register under Art. 97a, para. 2. The company’s other transactions need to be checked.

The company works only with the USA but purchases foreign SaaS or an advertising service.

If the tax on this service is chargeable in Bulgaria from the recipient, registration under Art. 97a, para. 1 may be required before the first relevant transaction.

An IT company provides services to Bulgarian clients and exceeds 51 130 euro of annual turnover in the country.

An obligation to register under the general procedure arises under Art. 96 of the VAT Act.

8. What to check before starting work

• Who your client is: a company, a sole trader or an individual.
• In which country the client is established and whether it acts as a taxable person.
• How exactly the service is worded in the contract.
• Where the place of supply of the service is for VAT purposes.
• Whether there will be advance payments before the first invoice.
• Which foreign SaaS, advertising, cloud and other services the company will pay for.
• What turnover will be generated with a place of supply in Bulgaria.
• Whether special registration under Art. 97a or full registration under the VAT Act is required.

Conclusion

For an IT business in Bulgaria, the need for VAT registration cannot be determined solely by the amount of income or by the country from which the bank transfer comes. Two companies with the same turnover may have completely different VAT obligations: one may operate without general registration, another must register under Art. 97a even before its first transaction, and a third must move to full registration.

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Sources and legal basis

• National Revenue Agency (NAP): “Registration under the VAT Act” (Регистрация по ЗДДС) — clarifications on Art. 96 and Art. 97a of the VAT Act, including the national threshold of €51,130 and the registration deadlines.
• NAP: “Application for registration” (Заявление за регистрация) — rules for registration under Art. 97a, paras. 1 and 2, and the deadline of no later than 7 days before the tax becomes chargeable.
• NAP: clarifications on the small enterprise regime from 01.01.2026 — national threshold of 51 130 euro and the exemption regime.
• NAP: clarifications on received intermediary/foreign services — reverse charge, reporting and the absence of the right to a tax credit when registered only under Art. 97a.
• Value Added Tax Act (Закон за данък върху добавената стойност, ЗДДС): Art. 21, Art. 82, Art. 96, Art. 97a, Art. 100 and the applicable special regimes.

Note: This material is for information purposes. The VAT regime should be determined according to the actual business model and the specific contracts.