Accounting for legal entities in Bulgaria is kept in accordance with the international GAAP system. Some taxes (for example, corporate tax or payroll tax) are paid by all companies. Value added tax (VAT, or ДДС in Bulgarian), which is 20%, is paid by companies that are registered for VAT.
Payments are made on assets, on services provided within Bulgaria, and on goods imported into the country. Exports of goods and services provided outside Bulgaria are not subject to this tax.
VAT registration of a company is mandatory only in certain cases, for example, if the company’s annual turnover exceeds EUR 20,000. Taxable turnover includes the tax bases of taxable supplies carried out, regardless of whether they were paid for by the recipient.
Once such an annual turnover is reached, the legal entity is required to register as a VAT payer. Registration is carried out in accordance with the VAT Act (Закон за Данък върху добавената стойност).
Important! You do not need to wait for the end of the calendar year to register. If over a period of 12 consecutive months the turnover has exceeded the stated amount, you must register for VAT, and must do so within two weeks after the end of the tax period.
In addition, such registration is indispensable if the company operates internationally and has dealings with counterparties from other countries.
If there are no mandatory grounds for VAT registration, it can be done voluntarily. Usually there is no need for this, since more taxes have to be paid, and they must be paid every month rather than once a year. At the same time, it becomes possible to recover the VAT spent if the planned income is not received. A VAT refund is practically a free loan of funds that are returned into circulation for a certain time.
VAT payers are recorded in a special register of the National Revenue Agency (NAP). Each company included in this register is assigned a unique number (VAT number).
Thereafter the tax is paid monthly, within 10 days after the end of the reporting period. If the company is not registered for VAT, taxes are paid once a year.
Working out the finer points of Bulgarian taxation on your own can be difficult, and there is no point in it — it is better to consult professional accountants, who will assess whether VAT registration of the company is necessary and explain all the advantages and disadvantages of such registration in each specific case.
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