When and how to ask for Bulgaria tax refund

When it comes to tax refund, Bulgaria makes things easy. Let’s explain how.

As a European country, Bulgaria has a tax called Value Added Tax or VAT for short. This tax is applied to almost all services and products bought and sold in the EU and while there are European rules for VAT, each country may execute these rules slightly differently.

In Bulgaria, VAT is generally 20%, with some exceptions where VAT is 9%, such as:

• accommodation provided at hotels or similar establishments, 
• baby food and hygiene products, 
• books and physical or electronic periodicals. 

Moreover, there are also some exemptions, like: 

• intra-Community supplies, 
• exporting goods to countries outside the European Union, 
• the international transport of goods, 
• the transport to or from countries outside of the EU, 
• supplying of goods and services related to aircraft and vessels.

If you are interested in learning more about Bulgarian tax system, you can rely on a tax advisor in Bulgaria like Accountancy Bulgaria, the accounting company that has supported Bulgarian companies for over 30 years.

VAT-registered companies must report the positive or negative balance between the output VAT charged and the input VAT paid for a particular month, resulting in a VAT payable or VAT refundable situation. 

VAT payable must be paid by the 14^th of the month following the respective month.

VAT refundable is offset to any VAT payable for the following two months, and the rest is recovered in the 30 days after this period. 

Read also: Does Bulgaria tax foreign income?

When and how is VAT refunded?

Value Added Tax in Bulgaria is subject to refund in certain cases. What is called the right to tax credit is the possibility to deduct the VAT paid for the supplies received against the VAT payable calculated on the basis of the taxable supplies sold.

The right to tax credit is only valid when the supplies for which the company has paid VAT are directly related to the economic activity carried out by that company, resulting in taxable supplies sold. This means that products bought for personal use or that do not match these conditions, are not eligible for VAT refund in Bulgaria. 

The amount of the VAT that is to be refunded is calculated as the difference between the amount of the VAT paid on the supplies received and the amount of the VAT due on the supplies made by the person within three consecutive months.

If the result of these three consecutive periods is VAT refundable, the revenue authorities will issue a check that is paid into the bank account of the registered person or company.

The authorities are also entitled to request an array of documents to prove this credit and the status of the person or company, to confirm that it has the right to receive a refund. 

How to apply for a VAT refund?

Persons who are not registered for Bulgarian VAT are not eligible for tax refunds. However, a foreign national can ask for a VAT refund on products bought in places offering the Tax-Free Bulgaria label. The minimum is 50 BGN per invoice presented. At the time of exiting the EU, this person can fill out the VAT Return Form, which is in turn stamped by customs.

Those taxable persons who are registered for VAT in a different EU Member State are eligible for a VAT tax refund on products paid for or services received in Bulgaria, under certain conditions.

The taxable person claiming the VAT refund should not be registered in Bulgaria, nor can they have a permanent economic activity in the country, or use it as a place of business or residence. The person claiming the refund also should not have had any goods or supplies made within Bulgari in the specific period. 

To apply for a VAT refund, the foreign taxable person can do it directly by applying on the website of the Tax Agency in the European country they are registered in. In the same way, Bulgarian taxpayers can use the Bulgarian portal to apply for refunds in other EU countries. Supporting documentation may be required. 

Read also: Bulgaria Salary Tax Calculator: what you need to know

Conclusion

If certain conditions are met, taxable payers registered in Bulgaria or registered in other EU countries, may be entitled to a VAT refund. The best way to make sure you as a tax-paying person, or your company registered in Bulgaria, can benefit from this is to have a company advisor in Bulgaria, as they will be best suited to advise you and fill out any necessary paperwork. 

Choosing a reliable accountancy company in Bulgaria is the wisest step towards maximizing profitability, and there is no looking further than Accountancy Bulgaria, a company with years of experience making sure companies can focus on their business, while they take care of their accounting and financial needs.