March 2020 / Bulgaria

On 18 March 2020, a bill proposing tax-related measures in response to the COVID-19 pandemic and state of emergency in Bulgaria was introduced to the National Assembly. The bill is available on the website of the National Assembly.

More specifically, the bill proposes the tax-related measures set out below.

Extension of deadlines for payment and reporting of taxes to 30 June 2020 The deadlines for filing and payment of the following taxes are extended to 30 June 2020:

• annual corporate income tax and one-off taxes on social and representative expenses  (from 31 March 2020);
• annual tonnage tax on the operating and management of vessels (from 31 March 2020);
• annual tax on the activities of publicly funded enterprises such as state and local authorities (from 31March 2020);
• annual personal income tax due by sole traders and farmers (from 30 April 2020); and
• tax on auxiliary activities under the Gambling Act (from 31 March 2020);

Еxtension of deadlines for publishing annual financial statements

Companies are granted an extension of the deadline for publishing annual financial statements for 2019 to 30 September 2020 (from 30 June 2020). Dormant enterprises should file their declaration for lack of economic activities by 30 June 2020 (from 31 March 2020).

Changes to advance CIT amount and relief from default interests on underpayment for the first half of 2020

Companies subject to advance CIT instalments must pay advance CIT during the first half of 2020 based on 50% of their 2018 taxable profits. No default interest will apply for underpayment of advance CIT for the period 16 July - 31 December 2020.

New powers of Customs Agency to donate confiscated health-protecting consumables and other goods

The Customs Agency is entrusted with the power to donate to hospitals, the Red Cross, kindergarten or schools confiscated goods that are useful in the preservation of public health.

5% Discount for prepayment of local real estate and vehicle tax

Taxpayers will receive 5% discount of the local real estate and vehicle tax if they prepay the annual tax due by 30 June 2020.

Mandatory paid leave

During the state of emergency, employers will be allowed to release their employees on paid leave without the consent of the employee as long as such leave does not exceed half of their annual paid leave.

Suspension of enforcement proceedings and the initiation of new enforcement proceedings

Enforcement proceedings for the collection of public liabilities such as tax and social securities will be suspended during the state of emergency. Default interest will continue to accrue during the suspension period. New enforcement proceedings will not be initiated during the state of emergency unless certain supervening circumstances arise. Such circumstances include but are not limited to protection of vital state or public interest or if any delay may significantly impede the collection of public liabilities.

Suspension of statute of limitations and certain statutory deadlines

The absolute 10-year statute of limitations for the collection of public liabilities will be suspended during the state of emergency. Certain deadlines for the initiation of enforcement proceedings such as in cases of insolvency, public tenders and others are also suspended.

The bill for tax measures will be introduced for discussion and a vote at first hearing in the National Assembly in the coming days.

On 24 March 2020, the National Revenue Agency published clarifications on the advance corporate income tax (CIT) instalments regime for 2020 which is part of the COVID-19 emergency tax measures promulgated in the State Gazette and published on 23 March 2020 (the official publication date is 24 March 2020). An overview of the clarifications that concern taxable persons who meet the criteria for payment of advance CIT instalments under the Corporate Income Tax Act (CITA) is set out below.

• Where the annual CIT return for 2019 is filed by 15 April 2020, the advance CIT instalments for 2020 shall be made in the amount declared.
• Where the annual CIT return for 2019 has not been filed by 15 April 2020, the advance CIT instalments must be declared by that date with the annual CIT return of which only the part relating to the declaration of advance CIT instalments for 2020 has to be completed. When, subsequently, by 30 June 2020, these persons file their CIT return for 2019, they will not complete the part relating to the declaration of advance CIT instalments for 2020.

For filings after 15 April 2020, adjustments (reduction or increase) of the advance CIT instalments declared with the annual CIT return for 2019 will be made with the declaration under Art. 88 of CIT Act. The adjustments of the advance payments made with the declaration under Art. 88 of the CITA will be used after the filing of the declaration.

On 20 March 2020, changes to the regulations for the application of the Value Added Tax (VAT) Act were published in the State Gazette. The amendments are effective as from 20 March 2020. The document is available here (in Bulgarian only).

More specifically, the amendments introduce the following changes:

• changes to the format and technical requirements for e-filing of the main VAT reporting documents - VAT returns, sales and purchases ledgers, and EC sales listing, i.e. VIES returns (effective from 29 February 2020);
• changes to the forms for application for VAT registration and deregistration (effective from 29 February 2020);
• new registers and electronic filing requirements for goods under the recently introduced call-off stock simplification (effective from 1 January 2020). The amendments introduce specific rules for declaring the call-off stock arrangement in the monthly VAT return and the sales and purchases ledger.

On 23 March 2020, the National Revenue Agency (NRA) published on its website clarifications regarding the amendments to regulations for the application of the VAT Act that were promulgated in the State Gazette on 20 March 2020. Below is a summary of the clarifications.

Changes to VAT reporting documents

The amendments to the regulations for the application of the VAT Act introduce changes to the VAT return and other VAT reporting documents. The first tax period for which the updated versions should be used will be April 2020 and in this respect the NRA informs that these versions will be published in April 2020.

The NRA Agency clarifies that the amendments to VAT reporting documents are related only to the introduction of the call-off stock arrangements from 1 January 2020. In this respect, the tax administration mentions that only taxable persons involved in call-off stock arrangements will be required to update their VAT reporting documents and other taxable persons will not be obliged to do so and can continue to use the current versions of their VAT return and other VAT reporting documents.

Other amendments

In the clarifications, the NRA outlines also other amendments which are considered important:

• amendments to the rules for documenting intra-Community supplies - it is now required that the VAT number of the recipients issued by other EU Member States is to be on the invoice issued by the Bulgarian supplier;
• changes to application forms for VAT registration/deregistration; and
• amendments to input VAT adjustment rules in the cases of subsequent expenses related to improvements of fixed assets.

The clarifications (in the Bulgarian language) are available here.

On 24 March 2020, the National Statistical Institute published a notification that the deadlines for submission of annual statistical reports will be extended as follows: Persons obliged to submit annual statistical reports for 2019 will have to file them not later than 30 June 2020 (the standard deadline is 31 March).

Entities that have to submit annual consolidated statistical reports for 2019 will have to file them not later than 30 September 2020 (the standard deadline is 30 June). Persons that did not perform activity during 2019 will have to file a declaration not later than 30 June 2020 (the standard deadline is 31 March). The above news (in Bulgarian language) is available here on the website of the National Statistical Institute. In respect of the above, an official order will be issued by the directors of the National Statistical Institute and the National Revenue Agency. Further developments will be reported when they occur.

On 24 March 2020, the National Revenue Agency (NRA) published on its website a special section dedicated to COVID-19 emergency tax measures promulgated in the State Gazette on the same day. The section includes information on the extended filing and payment deadlines as well as a Q&A part with frequently asked questions. The following important questions are explicitly clarified:

• the deadlines for submission of VAT returns and payment of VAT due will not be extended;
• similarly, the deadlines for payment of mandatory social security contributions will not be extended; and
• if a taxable person has already submitted its annual corporate income tax (CIT) return but has not paid yet the CIT due, the payment may be postponed until 30 June 2020.

The COVID-19 tax section is available here (in Bulgarian) on the NRA's website.

On 25 March 2020, the Council of Ministers decided to send a request to the European Commission for authorization to apply an exemption from customs duties and value added tax (VAT) on imports of medical products related to the fight against COVID-19.

The request will be sent to the European Commission by the Minister of Finance.