I. The VAT Framework
Bulgarian VAT is governed by the VAT Act (Закон за данък върху добавената стойност, ЗДДС), which implements EU VAT Directive 2006/112/EC. The standard VAT rate is 20%, applicable to most supplies of goods and services. A reduced rate of 9% applies to hotel accommodation services. Certain supplies are zero-rated (including exports and intra-EU supplies of goods) and certain supplies are exempt (including financial services, insurance, healthcare, and, subject to conditions, real property transactions). Bulgaria is a member of the EU's One Stop Shop (OSS) scheme for digital services and distance selling.
II. Mandatory Registration Threshold
A person established in Bulgaria — whether an individual trader or a legal entity — is required to register for VAT when their taxable turnover from supplies made in Bulgaria reaches €51,130 within a calendar year. The obligation to submit a registration application arises within seven days of the end of the month in which the threshold is reached or exceeded. Registration takes effect from the date specified by the National Revenue Agency in the registration certificate, which may not be later than fourteen days after the submission of a complete application.
A person who fails to register when required bears VAT liability from the date on which the registration obligation arose — meaning they must account for and pay VAT on all supplies made from that date, even if they did not charge VAT to their customers. The failure to register is also a tax infringement subject to administrative penalties.
III. Mandatory Registration Regardless of Threshold
Certain categories of transaction trigger a mandatory VAT registration obligation regardless of turnover. These include: intra-EU acquisitions of goods exceeding €10,226 in a calendar year; the receipt of services from foreign suppliers where the reverse charge mechanism applies (for example, digital services, consulting, or professional services received from non-Bulgarian EU or non-EU providers); and the making of intra-EU supplies of goods. A Bulgarian company that receives a single invoice from a foreign supplier for services subject to the reverse charge — such as Google Ads, software licences, or consulting fees — may thereby trigger a VAT registration obligation even if its own turnover is below the €51,130 threshold.
IV. Voluntary Registration
A person may register for VAT voluntarily at any time, regardless of their turnover. Voluntary registration is advantageous where the business makes significant purchases from VAT-registered suppliers — registration allows the recovery of input VAT on those purchases, reducing the effective cost. It is particularly beneficial for companies in the early stages of operation that are making capital investments or incurring significant start-up costs before their revenue reaches taxable levels.
V. Registration of Foreign Companies
A foreign company that makes taxable supplies in Bulgaria — for example, by selling goods to Bulgarian customers or providing services with a place of supply in Bulgaria — may be required to register for Bulgarian VAT even if it has no physical presence in Bulgaria. The registration threshold applicable to foreign companies with no Bulgarian establishment is zero: any single taxable supply in Bulgaria triggers a registration obligation. A foreign company registered for VAT in Bulgaria must appoint a Bulgarian tax representative (данъчен представител) — a Bulgarian-resident person who assumes joint liability with the foreign company for the company's Bulgarian VAT obligations.
VI. VAT Obligations of a Registered Person
A VAT-registered person in Bulgaria must: charge VAT on all taxable supplies at the applicable rate; issue VAT invoices within five days of the supply; submit monthly VAT returns and VIES declarations (for intra-EU transactions) by the 14th day of the following month; pay the VAT due by the same deadline; maintain VAT records (purchase and sales ledgers) in the prescribed format; and submit an annual VAT reconciliation. Non-compliance with these obligations — including late filing, late payment, and failure to issue invoices — is subject to administrative penalties that can be substantial, particularly for systematic violations.