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January 5, 2023

Bulgaria amends VAT legislation

  • The Bulgarian National Assembly has adopted long-awaited amendments to the Value Added Tax (VAT) Act.

  • The amendments introduce requirements of European legislation and bring the national legislation into line with the case law of the Court of Justice of the European Union (CJEU) as well as addressing some practical issues.

  • This Alert summarizes the amendments that cover, among others, the introduction of VAT bad debt relief and special rules for reporting exports in cases where the supplier is not established in the territory of the European Union (EU).

The Bulgarian National Assembly has adopted long-awaited amendments to the VAT Act.

The amendments, summarized below, introduce requirements of European legislation and bring the national legislation into line with the case law of the CJEU as well as addressing some practical issues.

Introduction of VAT bad debt relief

The right to adjust the taxable base in the case of total or partial non-payment of the supply by the customer (bad debt relief) has been introduced. This will allow a supplier who has not received payment from its customer to refund the tax charged and paid to the budget for the supplied goods or services. The new provisions regulate the rules for documenting the adjustment of the taxable base, the conditions for such an adjustment, exceptions, as well as the procedure for adjusting the tax credit deducted by the recipient.

Extension of the application of reduced VAT rates

  • A 9% VAT rate applied to the supplies of books and other publications listed in the VAT Act, as well as to baby food and hygiene products is now permanent.

  • Supplies of tourist, restaurant, and catering services, as well as those for the use of sports facilities, will continue to be subject to 9% VAT until 31 December 2023 (instead of until 31 December 2022).

  • The zero VAT rate for bread and flour will apply until 31 December 2023 (instead of until 1 July 2023).

Introduction of special rules for reporting export in cases where the supplier is not established in the territory of the EU

Special rules are provided for the declaration of the export of goods by a supplier not established in the EU. Due to the inability to meet some technical requirements, such suppliers have previously risked the non-application of the zero VAT rate to the export of their goods.

Introduction of rules for the deduction of VAT related to the correction of a tax document

  • The prerequisites are specified for the deduction of a tax credit in the case of the correction of tax documents or in the case of such a correction as a result of the wrong tax treatment of the supply, established by an audit act that has entered into force.

  • It is envisaged that an obligation for adjustment of the tax credit deducted will not be imposed upon the expiration date of a product, which, in addition to being established by a normative act (as before), can also be provided in a company standard where no normative act is in force.

Introduction of new reporting obligations for payment services providers

  • Obligations are introduced for payment service providers in relation to cross-border payments. These obligations will enter into force on 1 January 2024.
  • Certain provisions are supplemented and clarified relating to deregistration under the VAT Act, to application of the One Stop Shop (OSS) regime and the exemption from VAT of supplies under international treaties.
    • In terms of VAT deregistration, the amended provisions clarify that changes in the status of the taxable person not only as stated in the Commercial register but also in the Register of non-profit legal entities may lead to an obligation for VAT deregistration.
    • In terms of the OSS regime, the new provisions clarify in which cases the OSS rules are applicable and in which cases the general rules of the law or the domestic rules of the jurisdiction where the supplier is established shall apply.

Amendments in certain rules concerning the provision of collateral for supplies of liquid fuels

Some deadlines in relation to the provision of collaterals for supplies of liquid fuels are changed. It is also envisaged that taxpayers who meet certain conditions shall provide a reduced amount of collateral, 10% (instead of 20%), of the tax bases of the taxable supplies, acquisitions, or the value of the received liquid fuels released for consumption for the previous tax period.


For additional information with respect to this Alert, please contact the following:

Ernst & Young Bulgaria EOOD, Sofia


The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.


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