The Ministry of Finance has published a clarification explaining that central heating should be considered a continuous supply for VAT purposes. As such, the taxable event is considered to arise on the date when the payment becomes due. Therefore, compensation payments which are due after 9 July 2022 should be subject to the reduced 9% VAT rate regardless of the fact that they are related to periods before that date.
As of 9 July 2022, Bulgaria introduced, as a temporary measure, a reduced 9% VAT rate for central heating (among others). However, central heating companies continued issuing invoices for compensation payments related to periods before 9 July 2022 by applying the standard 20% VAT rate. In this respect, the Ombudsman of the Republic of Bulgaria sent a request for clarification to the Ministry of Finance as to whether a 9% or 20% VAT rate should be applied to the customers.
Lastly, the clarification provides that the invoices issued incorrectly with 20% VAT rate should be cancelled and new invoices with 9% VAT rate should be issued instead.
The full text of the announcement, issued on 26 August 2022, is available here (in Bulgarian only).