July 2018 / Bulgaria

On 9 July 2018, the National Revenue Agency published the 2018 version of the manual on personal income taxation on its website. The manual provides a detailed overview of applicable legislation as well as numerous examples with comments from the authorities.

On 19 July 2018, the Ministry of Finance launched a public consultation by suggesting amendments to Ordinance N-18 from 13 December 2006 concerning registration and reporting of sales on commercial sites through fiscal devices. The main suggestions concern the following topics:

• new requirements for cash receipts and information to be submitted to the tax authorities in the case of sale/refuelling of liquid fuels;
• a proposal for adjustments of cash receipts in such cases as return of goods, mistake by the operator or decrease of the taxable base to be performed through fiscal devices. Currently, such adjustments are performed via cancellation cash receipts on paper;
• introduction of requirements for sales management software on commercial sites as well as for producers, distributors and users of such software; and
• a new obligation for persons performing sales through e-shops to submit information to the tax administration on the owner of the shop, goods/services sold, hosting and maintenance of the website, software used, etc.

Further developments will be reported as they occur.

On 22 June 2018, on a taxpayer's request, the National Revenue Agency (NRA) issued a letter concerning the VAT aspects of the activity of the Bulgarian branch of an Italian company. (a) Facts. An Italian company involved in machine building registered a Bulgarian branch. The head office sent materials to Bulgaria, and the branch manufactured cranes, which were dispatched only to the principal in Italy. The head office and the branch were registered for VAT purposes in Italy and Bulgaria, respectively. (b) Questions. The company raised a question regarding the right to deduct input VAT by the branch if the branch provides services only to the head office and does not perform sales to third parties. In addition, the company asked about the VAT aspects of the transfer of goods to and from Bulgaria. (c) Comments. The NRA commented that, based on article 3(3) of the Regulations for Application of the VAT Act (RAVATA), the transfer of goods between the head office in Italy and the branch in Bulgaria should be considered as taxable supplies subject to the general VAT rules. Therefore, the transfer of goods from Italy to Bulgaria should be reported as an intra-Community acquisition by the Bulgarian branch, and the transfer from Bulgaria to Italy should be considered as an intra-Community supply. With regard to the right to input VAT deduction, the NRA considered that, because the branch is performing taxable supplies to its head office in Italy, it should be allowed to deduct input VAT on its purchases.

On 20 June 2018, on a taxpayer's request, the National Revenue Agency (NRA) issued a letter concerning the application of self-invoicing rules when the supplier and the recipient are established in two different EU Member States. (a) Facts. A Bulgarian company involved in freight road transport concluded an agreement for self-invoicing with its client from another EU Member State. The Bulgarian company received invoices issued on its behalf with numbers that differed from its own numbering. (b) Question. The company raised a question whether, in the case of self-invoicing when a foreign client is issuing the invoices, the Bulgarian company must issue and report duplicates of the invoices that have already been issued on its behalf by the client. (c) Comments. The National Revenue Agency confirmed that, based on article 79b of the Regulations for Application of the VAT Act (RAVATA), self-invoicing is also possible in cases when the supplier and the recipient are established in two different EU countries. Furthermore, according to article 79b(5) of the RAVATA, when the service has a place of supply in another EU Member State, and the recipient is also established in another EU Member State, the supply should be documented according to the rules of the country where the place of supply is. The NRA therefore determined that the documents issued by the foreign client should be valid for Bulgarian VAT purposes and should be reported in the sales ledger and in the VAT and VIES returns of the Bulgarian supplier. The NRA also noted that the Bulgarian VAT legislation does not envisage a possibility for issuing invoices by the supplier in the case of a self-invoicing arrangement.