VAT in Bulgaria. Calculation and rates (2025)

In Bulgaria, value added tax (VAT) is a key component of the tax system that affects both businesses and end users. Regulated byThe VAT Act, current as of 2025., it plays a major role in the economy, forming a significant part of state revenues and financing public services. Understanding VAT is essential for anyone who carries out a business, since the correct calculation and reporting of this tax directly affects the financial results of companies and compliance with legal requirements.

In this regard, many businesses and accountants are often asked:

• How much is VAT in Bulgaria in 2025?
• What will be the amount of VAT in Bulgaria in 2025?
• What does the VAT Law 2024 say and what changes are expected in the VAT Act in 2025?
• How is VAT charged and what are the rules for its application?
• How is import VAT calculated and what formulas and calculators can be used?
• How is VAT calculated on an invoice and what examples can be given for different situations?
• How to deduct VAT from an amount and what are the most commonly used methods?
• What is the VAT accrual table and how to use it correctly?
• What are the conditions for the reduced rate of 9 percent VAT for restaurants in 2025?
• Which goods and services fall under the 9% VAT list in 2025?
• What is the VAT registration threshold in 2025 and when is registration mandatory?
• What are the rules for filing a VAT return in 2025?
• What changes are introduced in the Regulations for the Implementation of the VAT in 2025?

This article will examine all these issues in detail, providing up-to-date information, practical examples and guidelines for the correct application of VAT in Bulgaria in 2025.

What is VAT (Value Added Tax)?

Value added tax (VAT) is a relatively modern type of indirect tax that is applied in almost all developed economies of the world. His concept was first introduced in France in 1954 by economist Maurice Lore. The main reason for its creation is the need for a fairer and more efficient tax system that avoids the disadvantages of turnover tax. Prior to the advent of VAT, countries used trade and turnover taxes, where taxation was made on the full value of each sale, regardless of whether the product or service had already been taxed at an earlier stage. This led to the so-called “tax cascade effect”, in which each subsequent taxation would burden the final price of the product, distorting the market and reducing the competitiveness of firms.

VAT solves this problem through a mechanism whereby only the value added at each stage of the production process is taxable. After France implemented this system, it quickly found application in many other countries of the world, especially in Europe. In 1977 The European Economic Community (now the European Union) adopts Directive 77/388/EEC, which lays down the general principles for VAT in the Member States. Bulgaria introduced VAT in 1994, and in 2007, with its accession to the EU, the national legislation was brought into line with Directive 2006/112/EC. Since then, tax rates and the VAT regulatory framework in the country have been periodically updated to meet the economic conditions and legislative requirements of the Union.

How VAT works — principles and mechanism of taxation

VAT is indirect tax, which means that it is not directly deducted from the income of taxable persons, but is charged on the goods and services they consume. It is collected in stages — at each stage of the supply chain, with the final consumer being the one who actually bears the tax burden.

The basic mechanism of operation of VAT is based on the principle of tax credit. Any taxable person who carries out a taxable activity and is registered for VAT charges this tax on his sales (output VAT). At the same time, it has the right to deduct the VAT it paid on purchases of goods and services necessary for its economic activity (input VAT). At the end of each reporting period, the difference between outgoing and incoming VAT is declared and entered into the state budget or, in case of excess of incoming VAT, can be reimbursed by the National Revenue Agency (NRA).

For example, if a trader buys goods for BGN 1000 (including VAT of BGN 200) and sells them for BGN 1500 (with VAT of BGN 300), he will pay the difference of BGN 100 (BGN 300 — BGN 200) to the budget. Thus, in reality, the tax is due only on the value added — in this case 500 BGN.

VAT is applicable to:

• Supply of goods and servicescarried out by taxable persons in the country for consideration;
• Imports of goods from third countriesto ensure that imported goods do not gain a competitive advantage over domestic products;
• Intra-Community acquisitionswhen goods are acquired from other EU Member States.

The law provides for different VAT rates depending on the type of good or service. In Bulgaria, the standard rate is 20%, and there are reduced rates — for example 9% for certain categories, such as books, hotel services and restaurants.

Object of taxation — what exactly is 'value added'?

The essence of VAT is that it taxes added value, which represents the difference between sales revenue and the cost of purchased materials, labor and other expenses. This means that the tax is not charged on the entire value of the finished product, but only on the increased value that is created at each stage of the production and distribution chain.

Let's look at a practical example:

1. A furniture manufacturer buys timber worth 1000 BGN including VAT of 200 BGN.
2. After processing the wood and producing furniture, he sold them to a dealer for 2000 BGN including VAT of 400 BGN. The manufacturer has already paid 200 BGN. VAT on raw materials, so it only brings into the budget the difference of BGN 200. (400 — 200).
3. The retailer sells the furniture to the final customer for BGN 3000 including VAT of BGN 600. He also deducts BGN 400 of input VAT which he has already paid to the producer and pays the difference of BGN 200. (600 — 400).
4. The end user pays the full price of 3000 BGN, including 600 BGN. VAT, but there is no right to deduct this tax, which means that it is he who actually bears the burden of VAT.

This taxation mechanism ensures that the State collects VAT evenly and fairly, without allowing the same product to be taxed repeatedly.

Amount of VAT in Bulgaria

The amount of VAT in Bulgaria in 2025 is determined according to the current provisions of the Law on Value Added Tax (VAT). Tax rates are divided into standard, reduced and zero rates depending on the type of supplies and the legal regime that covers them.

Standard VAT rate

According to Art. 66, para. 1 of the Value Added Tax Act (VAT), the standard VAT rate in Bulgaria in 2025 is 20%. It applies to all taxable supplies of goods and services, imports of goods and intra-Community acquisitions which do not fall within the scope of the reduced rate of 9% or the zero rate.

The application of the standard VAT rate includes the following categories:

1. Sale of goods and services on the territory of Bulgaria
   All supplies of goods and services carried out in the territory of the country are taxed at 20%, unless they are expressly indicated as taxable at another rate or exempt. This includes:
   • Sale of clothing, electronics, household appliances, furniture, cars and other goods;
   • Services such as repairs, legal, marketing, transportation services (except international transportation, which falls under the zero rate).
2. Imports of goods from third countries
   Imports of goods from non-EU countries are taxed at the standard rate of 20%. This means that upon customs clearance of the goods, the importer owes VAT on their taxable value, which includes customs duties, excise duties and other charges.
3. Intra-Community acquisitions
   When a Bulgarian company registered for VAT purchases goods from another EU Member State, it is obliged to charge 20% VAT under the self-charging mechanism. For example, if a Bulgarian company purchases machinery from Germany, it must report 20% VAT on the purchase value in its VAT return.
4. Sale of services in Bulgaria
   All services that do not fall within the scope of the reduced rate (e.g. hotel accommodation) or the zero rate (international transport services) are subject to 20% VAT. This includes services such as:
   • IT services and software development;
   • Advertising and marketing services;
   • Consulting services;
   • Educational courses that do not fall under the exemptions for exempt supplies.
5. Food, beverage and alcohol supplies
   Food products such as meat, dairy products, bread, confectionery, carbonated drinks, coffee and tea are taxed at the standard rate of 20%, unless they fall under a specially reduced rate (for example, baby foods, which are at 9% VAT). All alcoholic beverages, including in restaurants, are also taxed at 20%.
6. Sale of real estate and construction activities
   • The sale of newly built buildings (as opposed to the sale of old buildings, which is exempt from VAT) is subject to taxation at the standard rate of 20%;
   • Construction and repair services related to the construction of new buildings are also subject to 20% VAT.
7. Automotive sector
   • The sale of new and used cars (if it does not fall under a special regime of taxation with a profit margin);
   • Car leasing services;
   • Fuels and energy products (excluding certain supplies for international transport).
8. Financial and insurance services (if not exempted under Art. 46 of the VAT Act)
   While most financial services such as loans and insurance are exempt from VAT, fees for financial intermediation, certain banking services and the management of investment funds are subject to a 20% tax.

Reduced VAT rate

According to Art. 66a of the Value Added Tax Act (VAT), the reduced VAT rate in Bulgaria is 9%. It applies to certain supplies of services and goods related to tourism, culture, social care and food products for young children. The reduced rate was introduced as a temporary anti-crisis measure in 2020, but was subsequently extended for some categories.

1. Hotel and tourist services
According to Art. 66a, item 1 of the ZDDS, the reduced rate of 9% applies to the supply of accommodation services in hotels and similar establishments, including:

• provision of holiday accommodation;
• rental of camping sites or caravans, where the place of performance is within the territory of the country.

2. Books and periodicals
According to Art. 66a, item 2 of the ZDDS, 9% VAT is applied on the supply of:

• bookson physical media or carried out electronically (including textbooks, knowledge books, study kits, children's books with illustrations, for drawing or colouring, printed or handwritten sheet music);
• newspapers and magazineson physical media or in electronic format, unless they are wholly or principally intended for advertisingor do not contain basic video and audio-music content.

3. Baby food and hygiene products
According to Art. 66a, item 3 of the ZDDS, at a reduced rate, the following shall be taxed:

• foods suitable for babies and young children;
• baby diapers and similar hygiene articlesspecified in Appendix No. 4 to the VAT.

In addition to the categories referred to in Article 66a, §15e of the Supplementary Provisions of the VATextends the application of the reduced rate for certain services until 31 December 2024, including:

1. Restaurant and catering services— according to §15e, para. 1, item 2 of the VAT Act, the rate of 9% shall apply to:
   • Delivery of prepared or unprepared food, including takeaway food.
   • Exception:reduced rate does not apply to the supply of beer, wine and spiritswhich remain at 20% VAT.
2. Tourist services— according to §15e, para. 1, item 5 of the VAT Act, 9% VAT applies to:
   • General tourist service under Art. 136 of the ZVAT;
   • Excursions organized by tour operators and travel agents with occasional bus transportation of passengers, but only until June 30, 2024
3. Sports services— according to §15e, para. 1, item 6 of the VAT Act, a reduced rate applies to the use of sports facilities, but only until June 30, 2024

Temporary changes in §15e, para. 3 of the VAT Actallow until 31 December 2024apply 9% VAT to delivery of bread and flour. According to §15e, para. 5 of the VAT Act, 'bread' is defined as a product produced by baking a dough containing wheat or other cereal flour, water, salt and sourdough, and “flour” — as a product of the grinding of bread wheat.

Zero VAT rate

According to Art. 28 — Art. 36 of the Value Added Tax Act (VAT), the zero rate of VAT applies to a number of specific supplies that relate to international trade, transport, the supply of certain institutions and specific economic activities. In these supplies, the tax is not charged, but the supplier retains the right to deduct the tax credit. In order for the zero rate to be applied, each delivery must meet the strict requirements provided by law.

1. Pursuant to Article 28 (1) of the VAT, the supply of goods which are dispatched or transported from a place in the territory of the country to a third country or territory by or at the expense of the supplier is taxable at zero rate.This means that when goods leave Bulgaria as part of a commercial transaction carried out by a Bulgarian supplier, they are taxed at zero rate, as long as there is sufficient evidence of their transport outside the territory of the European Union.

2. Pursuant to Article 28 (2) of the VAT Code, the supply of goods which are sent or transported from a place in the territory of the country to a third country or territory by or at the expense of the recipient, if the recipient is a person who is not established in the territory of the country, is taxable at zero rate.Unlike the previous case, here the supplier may not arrange the transport, but if the consignee, who is not established in Bulgaria, ensures the transport of the goods to a third country, the zero rate is again applicable. An exception to this rule is made for goods intended for loading, equipping and supplying vessels and aircraft which are used for sporting and recreational purposes or for personal use which cannot benefit from the zero rate.

3. Pursuant to Article 29 (1) of the ZVAT, the carriage of passengers is taxable at zero rate when the carriage is carried out from a place in the territory of the country to a place outside the country, from a place outside the country to a place in the territory of the country, or between two places in the territory of the country when it is part of a transport that begins or ends outside the country.This means that international passenger transport, whether by air, sea or land, is subject to a zero rate.

4. Pursuant to Article 30 (1) of the VAT, the carriage of goods is taxable at a zero rate when the carriage takes place from a place in the territory of the country to the territory of a third country or territory, from the territory of a third country or territory to a place in the territory of the country, or between two places in the territory of the country, when it is part of a transport referred to in the preceding two points.This includes international freight transport, which also includes domestic transport when it is part of a longer international route.

5. According to Article 31 of the VAT, the supply of goods for the supply of spare parts, fuels and lubricants, food, beverages, water and other supplies intended for consumption on board aircraft used by an aviation operator operating mainly international flights is taxable at zero rate.This means that all supplies that are made for the needs of international air transport are taxed at a zero rate as long as they are intended for on-board consumption and are used by qualified aviation operators.

6. According to Article 31, item 2 of the VAT, the supply of goods for the supply of spare parts, fuels and lubricants, food, beverages, water and other supplies intended for consumption on board vessels intended and used for the carriage of goods or passengers on the high seas, as well as the vessels used for commercial, industrial or fishing activities.This provision ensures that international maritime transport can also benefit from tax breaks for its core operations.

7. Under Article 53 of the VAT Code, the intra-Community supply of goods with a place of performance in the territory of the country is taxable at zero rate if the purchaser is a VAT registered person in another Member State.This rule applies to trade between EU Member States, ensuring that supplies between taxable persons are VAT free but eligible for a tax credit.

8. According to Article 173 of the ZVAT, the supply of goods and services with a place of performance in the territory of the country worth more than BGN 400, the recipients of which are the institutions of the European Union, the European Central Bank and other EU bodies, are taxable at zero rate.This applies to all supplies made to official bodies and institutions of the EU, as long as they are provided in the framework of their official functions.

9. Pursuant to Article 34 of the VAT Act, the supply of gold other than investment gold within the meaning of the law is taxable at zero rate when the recipient is the Bulgarian National Bank or the central bank of another Member State.This means that the supply of gold for the needs of state financial institutions is exempt from taxation, but the supplier retains his right to a tax credit.

10. According to Art. 35 of the VAT, the sale of goods in duty-free trade establishments is taxable at zero rate, when the sale is considered to be an export within the meaning of the Duty Free Trade Act.This includes sales in stores at airports and other duty-free objects, where goods are sold without charging VAT.

11. Pursuant to Article 36 (1) of the VAT Code, zero-rate is the supply of services provided by agents, brokers and other intermediaries when they are connected with zero-rate supplies.This means that if an agent or broker mediates a transaction that is itself subject to a zero rate (for example, the export of goods or international transport), his commission or brokerage service will also be taxed at zero rate. This ensures tax neutrality and prevents VAT cascading in international transactions.

12. Pursuant to Article 36a, paragraph 1 of the VAT Act, the supply of import-related services, such as commission, packaging, transport and insurance, is taxable at zero rate when their value is included in the tax base under Art. 55.This means that all services which directly affect the customs value of a good and are included in its taxable value on importation are not subject to VAT on a separate basis, since they are already included in the calculation of the common taxable amount for import duties and VAT.

13. Pursuant to Article 36a, paragraph 2 of the VAT Act, the supply of a processing, processing or repair service is taxable at zero rate when it forms the taxable amount under Article 55, paragraph 3, in the case of importation of goods temporarily exported from the territory of the country to a third country under the customs procedure of passive refinement and imported back into country.This means that if a Bulgarian company sends goods for repair or processing to a third country and then returns them to Bulgaria, the value of the service performed will be taxed at zero rate, provided that the requirements for customs control on the passive processing regime are met.

14. Pursuant to Article 36b (1) of the VAT Act, the supply of COVID-19 vaccines and services directly related to these vaccines, as well as the supply of in vitro diagnostic medical devices intended for the diagnosis of COVID-19, and services directly related to these devices, are taxable at zero rate.This provision was introduced as part of the measures to deal with the pandemic and aims to facilitate the supply of vaccines and diagnostic tools, while reducing costs for health institutions and end users.

15. According to Article 64a of the VAT, intra-Community acquisitions of goods with a place of performance in the territory of the country are taxable at zero rate, where the corresponding supply of those goods in the territory of the country would also be taxable at the zero rate under Article 36b.This means that when vaccines or diagnostic medical devices are purchased from another EU Member State, they are also subject to a zero rate if the same goods would be exempt from taxation if they were purchased in Bulgaria.

16. According to Art. 66b of the ZVAT, a zero rate of tax is applied when making supplies with a place of performance in the territory of the country, referred to in Chapter Three, Art. 53, Art. 64a, Art. 140, Art. 146 and Art. 173.This brings together different cases of zero-rate supplies, including intra-Community supplies, tourism services and special tax regimes.

17. Pursuant to Article 140 of the VAT Code, the supply of a general tourist service is taxable at zero rate if the supplies of goods and services directly benefiting the traveller have a place of performance in third countries and territories.This means that when a Bulgarian tourist operator organizes trips outside the EU, a zero rate applies to them, since the actual consumption of the tourist services takes place outside Bulgaria and the EU.

18. According to Article 146 of the ZVAT, the supply of goods under the special margin scheme is taxable at zero rate, when the conditions of art. 28.This means that in certain cases, when goods are sold under this specific tax regime, a zero rate may apply if they meet the export criteria.

19. Pursuant to Article 173, paragraph 1, of the VAT, taxable at zero rate are supplies which are exempt from value added tax by virtue of international treaties, agreements, agreements, conventions or other similar acts to which the Republic of Bulgaria is a party, ratified and promulgated in the appropriate manner, provided that the Council has obtained the authorization of of the European Union.This applies to various international arrangements, including those that regulate the tax status of international organizations and diplomatic missions.

Calculation of VAT. VAT Accrual Table

The calculation of Value Added Tax (VAT) is an essential part of business operations for companies registered under VAT. VAT is an indirect tax levied on the consumption of goods and services, which companies collect from their customers and then contribute to the state budget. In Bulgaria, this process is regulated in Value Added Tax (VAT) Act.

In this section, we will consider the main methods of calculating VAT, formulas for converting prices with and without VAT, as well as practical examples.

1. How to deduct VAT from an amount

If a price already includes VAT and we need to calculate the value withoutVAT, we use the following formula:

Formula:

Amount excluding VAT= Total amount incl. VAT÷ (1 + (VAT rate ÷ 100))

Example:

If the final price of a product is 120 BGN(including 20% VAT) to calculate the value excluding VAT:

Amount excluding VAT= 120 ÷ 1.20= 100 BGN

The amount of VAT itself is calculated as the difference between the final price and the value excluding VAT:

VAT= 120 - 100= 20 BGN

According to Art. 26, para. 2 of the ZDDS, the taxable amount includes all amounts received by the supplier as remuneration, excluding VAT.

2. How to calculate VAT on an invoice

When an invoice is issued, VAT is charged on the tax base. According to Art. 113 of the ZDDS, each invoice must contain the tax base, the VAT rate and the VAT itself.

Formula:

VAT= Tax basis× (VAT rate ÷ 100)

Example:

If you sell goods for 500 BGN without VATand you need to charge 20% VAT, the calculation is:

VAT= 500 × 0.20= 100 BGN

The final price including VAT will be:

Price incl. VAT= 500 + 100= 600 BGN

3. How to calculate the price without VAT

If we have price incl. VATand we want to calculate the value without VAT, we use the following formula:

Formula:

Tax basis= Price incl. VAT÷ (1 + (VAT rate ÷ 100))

Example:

If a product is purchased for 240 BGN(including 20% VAT), the calculation of the price excluding VAT is:

Tax basis= 240 ÷ 1.20= 200 BGN

The amount of VAT:

VAT= 240 - 200= 40 BGN

4. How to calculate VAT with a calculator

You can calculate VAT in two ways, depending on the available values:

If you have the value excluding VAT:

• Multiply the value by the VAT rate.
• Add the resulting result to the original value.

Example:
Price without VAT= 500 BGN
VAT= 500 × 0.20= 100 BGN
Price incl. VAT= 500 + 100= 600 BGN

If you have the value with VAT:

• Divide it into 1 + (VAT rate ÷ 100).

Example:
Price incl. VAT= 600 BGN
Price without VAT= 600 ÷ 1.20= 500 BGN
VAT= 600 - 500= 100 BGN

5. How is VAT calculated on importation

At import of goods from third countries, VAT is calculated on customs value, which includes:

• The value of the goods themselves
• Duties and excise duties (if applicable)
• Transport costs and insurance to the first place of arrival in the EU

According to Art. 55 of the ZDDS, the tax base on importation includes all expenses until arrival in the country.

Formula for calculating VAT on import:

VAT on import= (Customs value+ Mita+ Taxi+ Transport costs) × (VAT rate ÷ 100)

Example:

If you import goods with the following characteristics:

• Customs value: 10 000 BGN
• Duty: 5%of the customs value = 500 BGN
• Transport costs: 300 BGN
• VAT rate: 20%

Common tax base= 10 000 + 500 + 300= 10 800 BGN

VAT= 10 800 × 0.20= 2 160 BGN

6. How to calculate the final price with VAT

The final price that the customer pays includes the value of the product or service plusaccrued VAT.

Formula:

Price incl. VAT= Tax basis+ VAT

Example:

If the goods cost 200 BGN without VAT, the final price with 20% VATwill be:

VAT= 200 × 0.20= 40 BGN

Price incl. VAT= 200 + 40= 240 BGN

VAT Accrual Table

This table presents common VAT rates applicable to various activities in Bulgaria. It is important to note that rates may vary depending on the specific conditions and exceptions specified in the legislation. Applying the correct VAT rate is essential to accurately calculate the tax and avoid errors in tax returns.

List of goods with 9% VAT: Examples and criteria for taxation

The reduced VAT rate of 9% in Bulgaria was introduced in order to support certain sectors of the economy and reduce the financial burden on final consumers for important products and services. This rate applies to a specific set of goods and services, each category has its own specific criteria for taxation. Here is an overview of the main groups of goods and services that are subject to the reduced VAT rate, as well as the criteria that determine this taxable amount:

1. Accommodation services

• Scope: Accommodation services provided in hotels, motels, campsites and other similar establishments, including holiday accommodation and rental of camping sites or caravans.
• Taxation criteria: All accommodation services that are performed on the territory of Bulgaria.

2. Delivery of books and printed publications

• Scope: Includes books on physical media or provided electronically, textbooks, knowledge books, study kits, children's books, sheet music, as well as periodicals such as newspapers and magazines.
• Taxation criteria: Excludes publications intended for advertising and those composed mainly of video or audio-music content.

3. Supply of food and baby products

• Scope: Foods suitable for babies or toddlers, baby diapers and other hygiene products.
• Taxation criteria: The goods must comply with the requirements set out in Annex No. 4 to the VAT.

4. Restaurant and catering services

• Scope: Services that involve the delivery of prepared or unprepared food, including take-away.
• Taxation criteria: Does not apply to services involving the delivery of alcoholic beverages. It is important to note that this reduced rate is a temporary measure valid until December 31, 2024.

5. Other specific services

• Scope: Includes the provision of a general tourist service, services for the use of sports facilities, as well as excursions organized by tour operators.
• Taxation criteria: The validity of the reduced rate for these services is also limited in time.

This reduced VAT rate of 9% is an important step towards supporting critical sectors of the economy and providing incentives for the consumption of cultural and educational products, as well as basic goods for children. It reflects the aspiration of the state to encourage the development of certain economic activities and to offer relief to families with young children, thus contributing to a broader social and economic impact.

Zero VAT rate: Terms, examples and detailed consideration

The zero rate of VAT is a mechanism provided for in the Value Added Tax Act (VAT), which allows certain supplies of goods and services to be taxed at 0% VAT. This means that although these supplies are taxable, the tax that is levied on them is zero. It is key to note that in zero-rate deliveries the use of a tax credit is allowedfor related incoming goods and services.

List of goods with 0% VAT

Examples of goods and services that may be taxed at zero rate include:

• Delivery of goods sent or transported outside the territory of the European Union;
• International passenger transport;
• International transport of goods, including international transport of natural gas and electricity;
• Delivery related to international transport;
• Delivery related to international freight traffic;
• Delivery by processing of goods;
• Supply of gold to central banks;
• Delivery related to duty-free trade;
• Delivery with a recipient person managing an electronic interface;
• Supply of services provided by agents, brokers and other intermediaries when related to the above supplies, including the supply of an intermediary service, brokerage service, courier service and postal services, where these are related to the international transport of goods;
• Supply of import-related services;
• Delivery of COVID-19 vaccines and of in vitro diagnostic medical devices intended for the diagnosis of COVID-19.

ATTENTION:

In cases where for the supplies of the services listed above, as well as those referred to in Article 23, paragraphs 3 and 4 of the VAT Act (Regulations for the Application of the Law on Value Added Tax), the tax is chargeable to the recipient, since the supplier is a taxable person who is not established in the territory of the country and the supply has a place of execution on the territory of the country, they are taxable at a zero rate (Art. 38b of the PPZVAT).

In such cases, the consignee should have at his disposal the documents relating to him under Chapter Four of the VAT Act certifying the circumstances of the zero-rate supply.

This rule shall also apply to services received relating to the handling of a vessel or the handling of an aircraft carried out at ports or airports outside the territory of the country.

Applicability of the zero rate

The zero rate of VAT represents a significant fiscal policy that is applied in a variety of scenarios, especially in the context of international trade and services. It aims to stimulate exports, international transport services and related activities, while creating favourable conditions for business on a global scale. The consideration of the applicability of the zero rate is based on the following main aspects:

Delivery of goods exported outside the EU

• Grounds for application: Goods that are transported or dispatched outside the territory of the European Union are subject to zero VAT. This covers a wide range of products and materials intended for export.
• Fiscal benefits: The application of a zero rate stimulates export activity by providing tax relief to exporters and facilitating their competitiveness in international markets.
• Documenting: In order to apply the zero rate, it is necessary to present appropriate documents that certify the export of the goods, such as customs declarations and transport documents.

International transport

• Types of transport: Covers the international transport of passengers and goods, including natural gas and electricity, making them vital to international trade.
• Zero-rate taxation: Transport services related to international transport are taxed at a zero rate to promote international logistics and delivery.
• Evidentiary documents: For the application of the zero rate, the provision of a license to carry out international transportation is required, as well as other documents that certify the nature of the transport.

International transport related services

• Categories of services: Includes a wide range of services, such as forwarding, courier and customs services, which are directly related to the maintenance of international transport and logistics.
• Fiscal Incentives: Providing a zero rate for these services relieves the financial burden on companies involved in international transport and facilitates international trade.
• Terms of application: In order to benefit from the zero rate, the providers of these services must provide appropriate documentation that confirms that the services are related to international transport.

Documenting zero-rate deliveries

Documenting zero-rate supplies is a critical aspect of the process of applying tax breaks for goods and services that are subject to international trade. This documentation serves as the basis for taxation and is key to proving the legality of the application of a zero rate of VAT. Let's take a closer look at what types of documents are needed and how they certify the relevant deliveries.

Documents required to prove

• Licences for international transport: These documents are necessary to certify the right of the company to carry out international transportation of goods or passengers. They serve as evidence of the international nature of the activity.
• Customs documents: Include customs declarations and other documents that certify the export or import of goods. These documents demonstrate that the goods have passed customs control and are intended for international transportation.
• Invoices: The invoices must contain complete information about the supply, including the value of the goods or services, the details of the supplier and the recipient, as well as a specific note that the supply is taxable at zero VAT rate.

Specific examples and details

Delivery of goods for international transport

• Examples of goods: Includes fuels, food, beverages and spare parts intended for consumption or use on board aircraft or sea-going vessels in the process of international transport.
• Documentation: For such supplies, customs documents must clearly show that the goods are for export or are intended for use within the framework of international transport.

Services related to international transport

• Examples of services: Construction, maintenance, repair and other services for aircraft and ships that are actively engaged in international transport.
• Documentation: Invoices for these services must include details that certify that the services are provided in support of international transport, for example a licence for international transport or a contract for the service of vessels/means engaged in international transport.

For all cases of zero-rate deliveries, it is critically important to prepare and submit all necessary documents that prove the legality of the application of the zero rate. This practice ensures transparency and helps to avoid tax irregularities.

VAT on intra-Community transactions

Intra-EU transactions are an essential part of trade within the European Union, and each requires a precise understanding and application of VAT rules. Against this background, key aspects such as VAT numbers, the validity of these numbers, and the consequences of an invalid VAT number in cross-border transactions are of particular importance.

What is a “VAT number”?

A VAT number is a unique identification number issued to any person or company registered for VAT purposes in an EU Member State. This number is key for the administration of VAT on cross-border transactions, as it facilitates the identification of commercial entities and their tax liability.

In Bulgaria, the VAT identification number usually begins with the prefix BG, followed by a single identification code or other type of identifier, depending on the type of registered person.

Valid against invalid VAT number

• Valid VAT numbermeans that the entity is actively registered for VAT purposes at the time of the transaction and can participate in intra-Community supplies and acquisitions using a zero VAT rate for cross-border transactions.
• Invalid VAT numbermeans that the entity is not registered or its registration is not active at the time of the transaction. In this case, the zero rate of VAT cannot be applied, and the supply may be subject to standard VAT.

Consequences of an invalid VAT number

If the customer's VAT number is invalid at the time of the transaction, it means that the supply cannot be treated as intra-Community and the zero VAT rate does not apply. As a result, the supplier may be obliged to charge and pay VAT in the country from which the supply takes place.

Checking the VAT number

In order to verify the validity of the VAT number of EU customers, it is important to carry out a check through the VIES system (System for Exchange of Information on VAT) of the European Commission. This system allows traders to check the validity of the VAT numbers of their counterparties in real time, which is critical for the implementation of the correct tax regime.

Intra-Community supplies and acquisitions

• Intra-Community supply (VOD)is considered as such when the goods are transported from one EU Member State to another, and both parties to the transaction are VAT registered persons.
• Intra-Community Acquisition (IP)occurs when a recipient of the goods in the transaction, based in one Member State, acquires goods from another Member State within the EU.

In order to ensure the correct taxation of cross-border transactions within the EU, it is essential that traders understand and correctly apply VAT rules, including the requirements for the validity of VAT numbers and the specifics of intra-Community supplies and acquisitions.

You can read more about the taxation of international transport with VAT, incl. also in the conditions of intra-Community acquisition here!