VAT Registration

Home
Accounting Services
VAT Registration

VAT Registration: When is it necessary?

VAT registration (Value Added Tax) is the process by which taxable individuals engaged in economic activities subject to VAT register as taxpayers with the National Revenue Agency (NRA).

What is VAT?

VAT stands for Value Added Tax, a tax system applied in many countries worldwide, including Bulgaria and the European Union. The primary concept of VAT is to tax goods and services on their added value, with the tax included in the final price paid by the end consumer.

Key characteristics of VAT include:

Value-added principle: VAT is applied to the value added at each stage of production and distribution.
Input-output system: VAT-registered companies can use the input VAT (tax on purchases) to reduce the amount payable to the NRA based on their sales (output VAT).
Taxable transactions: Any business exceeding a certain turnover threshold is required to register for VAT and remit VAT on its sales.

When is VAT registration required?

VAT registration can be mandatory or voluntary. Mandatory registration occurs when the maximum turnover threshold is reached, while voluntary registration is connected to the planned growth of activities.

Reaching the turnover threshold:
Businesses and sole proprietors (SPs) that exceed a turnover of 100,000 BGN over the past 12 months are required to register for VAT in Bulgaria.
Voluntary registration:
Even without reaching the threshold, businesses may voluntarily register for VAT, especially if they anticipate significant purchases with VAT they intend to reclaim.

What does the VAT registration process involve?

The VAT registration process consists of several key steps, which must be completed by the individual or company seeking registration. In Bulgaria, this process is conducted by submitting an application to the NRA.

Submitting the registration application:

The application can be submitted at the nearest NRA office or online through the NRA’s electronic system (E-Admin).
The application must include all required details about the individual or company, including contact details and business activities.

2. Completing the registration

After submission, the NRA reviews the application and supporting documents.
If all conditions are met, the applicant receives a notification or certificate confirming VAT registration.

3. Paying VAT

After registration, the entity is obligated to pay VAT within the deadlines specified by the NRA.

What is included in the taxable turnover for VAT registration?

Taxable turnover includes:

Taxable supplies, including those at zero rate;
Supplies of financial services under Article 46;
Supplies of insurance services under Article 47.
Advance payments received for supplies, except those before the taxable event under Article 51, paragraph 1, are also included.

Specific cases requiring VAT registration:

Registration for ICA (Intra-Community Acquisition) in Bulgaria:

When is ICA registration required?
- Individuals or entities importing goods from other EU member states whose turnover from such intra-community acquisitions reaches or exceeds a specific threshold must register for ICA in Bulgaria. The registration thresholds are determined by the National Revenue Agency (NRA) and are updated periodically.
ICA Registration Procedure:
- Submitting an application for registration to the NRA.
- Providing documents that confirm business activities and the necessity for ICA registration.
- Receiving a VAT registration certificate from the NRA.
Specifics of VAT for ICA:
- Intra-community acquisitions are exempt from VAT, but registration for VAT in Bulgaria is required.

Consulting a professional accountant or visiting the NRA website is highly recommended for up-to-date requirements.

VAT registration for foreigners supplying goods with installation and assembly in Bulgaria is conducted under specific rules applicable to such cross-border services. In cases of goods supplies with installation and assembly, it is important to consider the following aspects:

Definition of the Service: Supplies of goods with installation and assembly are considered a composite service, where the main focus is on the provision of goods but also includes their on-site installation or assembly.
Place of Taxation: The place of taxation (which determines the country collecting VAT) is a key factor for supplies of goods with installation and assembly. If the service is performed in Bulgaria, meaning the goods are installed or assembled on Bulgarian territory, this typically indicates that these services are subject to Bulgarian VAT.
VAT Registration: Foreigners conducting such supplies in Bulgaria and exceeding the VAT registration threshold (the current threshold can be confirmed with the National Revenue Agency) are required to register as VAT taxpayers in Bulgaria. Registration involves submitting an application to the NRA and providing the necessary documents that verify their business activities and taxable turnover.
VAT Declaration: After registration, the foreign entity must regularly declare and remit VAT charged on these services within the deadlines established by Bulgarian legislation.

For precise information and advice on specific cases, it is recommended to consult a professional accountant or tax advisor experienced in international cross-border supplies and VAT.

VAT Registration Due to Transformation

Transformation of Entities (Merger, Division, Change of Legal Form):
When two or more legal entities (companies) undergo a merger, division, or transformation into another legal form, resulting in the creation of a new legal entity or a change in the form of an existing legal entity, the new or transformed entity may be required to register for VAT.
Change of Legal Entity:
If the status or legal form of an existing legal entity is altered, resulting in the creation of a new legal entity, the new entity may require VAT registration depending on the circumstances of the change.

Assistance with VAT Registration from a Competent Accountant

Your accountant can significantly help with VAT registration by providing specialized support and advice in several key areas:

Determining the need for registration: The accountant will review your current business activities and turnover to establish whether you are required to register for VAT under Bulgarian law. This includes analyzing your sales, imports, and other taxable operations.
Document preparation: The accountant will assist you in gathering and preparing the necessary documents for VAT registration, including the registration form and other identification documents.
Filing the application with the NRA: The accountant will submit the VAT registration application to the National Revenue Agency (NRA) on your behalf, ensuring all required documents are included and the application is correctly completed.

Advice on compliance with tax legislation

Communication with the NRA: The accountant can handle all communication with the NRA to clarify any questions or provide additional documents that may be required for your VAT registration.
Advice on compliance with tax legislation: The accountant will provide advice on your obligations and responsibilities as a registered VAT payer. They will inform you about declaration requirements, VAT payment deadlines, and ways to optimize your tax burden.

Support and consultations:Beyond registration assistance, your accountant will be available for any questions you have regarding VAT and tax compliance in the future. They can provide consultations on all aspects of tax law that affect your business.

Choosing a competent accountant is a crucial step for successful VAT registration and ensuring compliance with tax regulations and requirements in Bulgaria.

Make an Inquiry Now!