On 27 November 2018, a proposal for amendments to the Value Added Tax (VAT) Act was gazetted. The most important details are summarized below.
Introduction of threshold for digital services
A threshold of BGN 19,558 (EUR 10,000) is introduced regarding the place of supply of digital services by EU suppliers to non-taxable persons established in other EU Member States. Under the new rule, if the supplies of telecommunication, broadcasting and electronically supplied services in the current and/or previous calendar years are below this threshold, their place of supply will be where the supplier is established, provided that it is established in only one EU Member State. This amendment implements the provisions of Directive (EU) 2017/2455.
New VAT rules for vouchers
In line with the provisions of Directive (EU) 2016/1065, detailed rules are introduced regarding the VAT treatment of single-purpose and multi-purpose vouchers. However, it is specifically stated that the new VAT rules for vouchers will not be applicable to:
- instruments that entitle the owner to receive a discount when receiving goods/services;
- tickets for travelling, cinema, museums and other, as well as postal stamps, etc.; and
- food vouchers issued by a person with a permit issued by the Minister of Finance.
Postponed accounting of import VAT
Currently, VAT on importation must be effectively paid to the customs authorities upon importation of goods; self-assessment by the taxable person is allowed only in very limited cases (e.g. for large investment projects). As from 1 July 2019, the possibility of VAT self-assessment in the VAT return will be extended to importers of goods such as aluminium, nickel, sulfur, tin, lead, zinc and organic chemical products. In addition, certain criteria are introduced, for example, each of the imported goods declared in the customs document must have a customs value of at least BGN 50,000, and the importer must have no unsettled tax and social security liabilities.
Longer period for application of domestic reverse charge rules for grain and technical crops
The period for the application of the domestic reverse charge rules for grain and industrial crops is extended to 30 June 2022.
Register of e-shops to be created by tax authorities
E-shops will be required to register in a special register to be set up and maintained by the National Revenue Agency.
Abolishment of the minimum collateral for trading liquid fuels
Currently, in certain cases, suppliers and recipients of liquid fuels are required to provide, to the tax authorities, collateral at an amount of 20% of the taxable base of the supply but not less than BGN 50,000. Under the amendments, the minimum required amount of BGN 50,000 will be abolished.
Extension of the list of VAT zero-rated supplies
The following supplies will be subject to 0% VAT:
- supplies for immediate needs of qualifying vessels and aircraft; and
- intermediary services related to international adoption under the Family Code.
Amendments to VAT deregistration rules
The requirement for mandatory VAT deregistration upon initiation of a company's liquidation proceedings is abolished. Instead, companies will have an opportunity to remain VAT registered until the end of the liquidation proceedings.
The following administrative simplifications are introduced:
- an opportunity for VAT deregistration within 12 months after the beginning of the year following the voluntary VAT registration (currently, this period is 24 months); and
- e-shops will be allowed to issue and send electronically fiscal receipts in cases where there is no physical contact between the seller and the buyer. It is envisaged that the rules for issuing of electronic fiscal receipts will be provided in Ordinance N-18 of 2006 issued by the Ministry of Finance.
The above amendments will enter into force on 1 January 2019, with the exception of the new rules for postponed accounting of import VAT, which will be applicable as from 1 July 2019.