Issuing Invoices in Bulgaria: Mistakes to Avoid 

Issuing invoices is a critical aspect of the financial management of any company. It might seem like a simple and repetitive task, but it plays a fundamental role in ensuring that the company’s revenue is accurately recorded and managed. This is essential for the proper functioning of the company, including the timely payment of salaries to employees. This process gains additional importance in the context of establishing a business in Bulgaria, where adherence to strict tax regulations requires meticulous attention to detail and a high level of accuracy.

All economic actors in Bulgaria, regardless of their field of activity—whether it be commerce, agriculture, self-employment, or private negotiations—must comply with billing regulations. These rules apply equally to companies, whether VAT registered or not. Understanding and adhering to these rules is critical for anyone wanting to start a company in Bulgaria and maintain financial integrity and legal compliance.

In this detailed exploration, we will examine the most common pitfalls associated with issuing invoices in Bulgaria and provide strategies to avoid them, thus improving the financial operations of your company.

Common Mistakes in Issuing Invoices in Bulgaria

As per Article 112, paragraph 1 of the Bulgarian VAT Law, recognized fiscal documents include the invoice, the invoice notice, and the protocol. Article 113, paragraph 1, obligates each taxable person or supplier to issue an invoice for any goods or services provided, or in the case of advance payment, unless the transaction is documented with a protocol as specified by Article 117. Article 114 specifies situations in which an invoice should not be issued and outlines the specific details that it must contain.

Read also: Corporate Income Tax and Dividends: How It Works in Bulgaria

Issuing Invoices in Bulgaria: Mistakes to Avoid to Maintain Accounting Integrity

Here are some common mistakes to avoid:

• Lack of essential details: An incomplete invoice can lead to misunderstandings and require additional communication between supplier and customer. Details such as the invoice number, date of issue, demographic and contact information of the supplier and customer, a description of the goods or services provided, the quantity, unit price, taxable amount, VAT rate, and the date of the fiscal event or payment must be clearly specified. This ensures clarity and prevents potential issues during tax audits or when claiming tax credits.
• Errors in supplier or customer data: Incorrect or incomplete contact or identification details can cause confusion about the identities of the parties involved, jeopardizing the ability to use tax credits. Ensuring the accuracy of these details is crucial for the transparency and integrity of the billing process, guaranteeing that both transactions and communications are clear and unequivocal.
• Retroactive billing: It is essential to issue invoices on time. If necessary, it is preferable to issue an invoice with the current date rather than retroactively altering dates, a practice that can lead to penalties. Careful management of the billing calendar prevents legal complications and maintains a healthy business relationship with customers and suppliers.
• Interruption of invoice number sequence: In case of a missed number, it is advisable to cancel it and continue with the next. Reusing a number with a later date can cause confusion and errors in accounting records. Maintaining a precise numerical sequence is crucial for financial organization and traceability, also facilitating any inspections or accounting reviews.
• Cancellation of invoices without notice: Cancelling invoices without informing customers can avoid VAT payment but also trigger tax audits if the VAT credit has not been regularly declared. Open and transparent communication with customers when cancelling invoices helps build trust and prevent misunderstandings that could lead to legal disputes.

Read also: Reverse Charge VAT: Why It’s Important for Businesses in Bulgaria

Conclusions

In conclusion, correct invoice issuance is not just a procedural task but a pillar of effective business management that requires attention and precision. For companies operating in Bulgaria, turning to professionals like Accountancy Bulgaria, accountancy company in Bulgaria, can ensure compliance with local regulations and help navigate the complexities of Bulgarian tax legislation. Collaborating with experts not only helps avoid common pitfalls but also improves the efficiency of accounting processes, ensuring robust and law-compliant financial management.