December 9 2020

Bulgaria Officially Implements New VAT Regime for Distance Sales

Source: IBFD Tax Research Platform News

On 8 December 2020, Bulgaria officially implemented the new EU value added tax (VAT) rules concerning distance sales provided in Council Directive (EU) 2017/2455 of 5 December 2017 amending Directive 2006/112/EC and Directive 2009/132/EC regarding certain VAT obligations for supplies of services and distance sales of goods. The new rules for distance sales will be applied as from 1 July 2021. Below is an overview of the main amendments to the VAT Act.

Application of 9% reduced VAT rate for take-away food

Take-away food provided by restaurants will be subject to a reduced 9% VAT rate applicable temporarily for the period from 1 December 2020 until 31 December 2021. Currently, such supplies are subject to the standard 20% VAT rate.

Amendments to the VAT exemption for insurance and re-insurance services

Currently, in order to be eligible for an exemption from VAT, suppliers of insurance and re-insurance services must perform such transactions in accordance with the conditions of the Insurance Code. As from 1 January 2021, the nature of the transactions will be the only criterion for the exemption and, following the amendment, the VAT Act provides that the provision of insurance and re-insurance services, including related services provided by insurance brokers and agents, is exempt from VAT.

Tax relief for persons using approved software

Persons using approved software for the management of sales on commercial sites will benefit from faster VAT refunds.

The official text of the amendments is available here (in Bulgarian only).