What is the procedure for VAT refund in Bulgaria?

The procedure for VAT refund in Bulgaria is an important topic for many businesses, both for those operating in the country and for foreign companies that carry out activities on the territory of Bulgaria. VAT refunds can be a complex process that requires precision and attention to detail, especially when it comes to meeting deadlines and requirements.

Our clients often ask us questions such as: “What is the standard procedure for VAT refund in Bulgaria?” or “What happens if we miss the deadline to request a VAT refund?” These questions are not accidental, because ignorance of the details can lead to financial losses or even penalties from the tax authorities. Questions also arise about specific cases, such as: “What are the consequences if the unclaimed VAT refund is not claimed on time?” or “Can we use a VAT refund calculator to calculate the exact amount we are owed?”

Elan Consulting has an expert team that can help you not only with the clarification of these issues, but also with the entire process of filing a claim for a VAT refund, as well as with the tax deduction in case of uncollected debts. We work with Sofia companies as well as with companies from Burgas, Pomorie, Karnobat, Sunny Beach, Aytos, Nessebar, Sozopol, Primorsko and other parts of the country, offering a comprehensive service that includes consulting, accounting services and legal support.

The topics that we will consider below will provide you with complete information about “Examples of VAT refund”, how to deal if you “missed the VAT refund procedure”, and what are the “VAT refund deadlines”. We will also discuss the details around what the standard “VAT Refund Procedure” includes and how to use the “VAT Refund Calculator” to make sure you don't miss a single step in the process. If you have encountered problems, such as “Unclaimed VAT refund”, we will show you how to approach and defend your rights before the tax authorities.

With Elan Consulting, you get not just information, but real solutions to help you optimize your financial processes and avoid unnecessary complications.

Who and when is entitled to claim a VAT refund?

Anyone who is registered under the Value Added Tax Act (VAT) has the right to claim a VAT refund, provided that they meet certain conditions. The right to a refund arises for taxable persons who have made taxable supplies, including intra-Community acquisitions and imports of goods on which VAT has been charged. In order to exercise this right, it is necessary that the taxable person is registered under the VAT Act on grounds other than Article 97a and Article 99 of the Act.

Pursuant to Article 68 (1) of the VAT Act, the taxable person has the right to deduct a tax credit for the goods purchased and the services received if they are intended for use in his taxable activity. In this sense, the right to a refund of VAT is directly linked to the exercise of the right to a tax credit. The conditions for the use of the tax credit are specified in Article 69, paragraph 1 of the ZVAT, and it is required that the tax be charged for supplies that are taxable and for which the person holds a tax document in which the tax is indicated in a separate line.

The right to a refund of VAT arises during the tax period in which the right to the tax credit is exercised and can be exercised within the following twelve tax periods. That is, the person must include the tax document (invoice, customs declaration or protocol) in the logbook of purchases in the period of occurrence of the right or in one of the following twelve periods.

If the taxable person fails to exercise the right to a refund of the VAT within the specified period, he can claim a refund by adjusting the tax base or by submitting a request to the National Revenue Agency (NRA). In such cases, it is important to consult an expert, as missing the deadline may result in the loss of the right to a refund.

In practice, VAT refund is a procedure that requires compliance with certain formalities and deadlines to ensure that the person will receive the tax paid back. According to Art. 92 of the VAT Code, the refund of VAT is made within 30 days from the submission of a tax return for the tax period in which the right to refund arose, provided that the person has fulfilled all the requirements for the use of a tax credit.

In cases where the taxable person has outstanding obligations to the State, the refund of VAT may be offset against those obligations. This is a process that is regulated by the provisions of the DOPC (Tax and Social Security Procedure Code).

What is the procedure for VAT refund in Bulgaria?

The procedure for VAT refund in Bulgaria is clearly regulated in the Law on Value Added Tax (VAT) and related by-laws. In order for VAT to be successfully refunded, the taxable person must comply with certain conditions and follow a specific procedure that includes several steps.

The refund of VAT is linked to the right to deduct a tax credit which arises for taxable persons when making taxable supplies, intra-Community acquisitions and imports of goods. This right is exercised by filing a reference-declaration for the relevant tax period. Pursuant to Article 68 (1) of the VAT Act, the taxable person has the right to deduct a tax credit for the goods and services used for the purposes of his taxable activity. In order to exercise this right, there must be a tax document in which VAT is indicated in a separate line.

The first step in the refund procedure is the submission of a reference-declaration and a logbook for purchases in the relevant tax period. This document reflects all purchases for which the person is entitled to a tax credit. According to Article 88, paragraph 3 of the VAT Code, if after deduction of the tax credit there remains an amount to be recovered, it must be declared as a request for a refund of VAT.

The term for VAT refund is 30 days from the date of submission of the report-declaration, if all the requirements for the use of a tax credit are met and there are no outstanding obligations to the state. In the case of existing liabilities, the refund amount may be offset against these liabilities, and this is regulated by the provisions of the Tax and Insurance Procedure Code (DOPC).

When there is doubt or discrepancy in the declared data, the NRA may carry out an inspection or audit before proceeding with a VAT refund. In such cases, according to Article 92, paragraph 2 of the VAT Code, the refund period may be extended until the completion of the inspection or revision, but not more than 6 months.

If the taxable person has outstanding obligations to the state, the amount of the refund may be offset against these obligations. In these cases, the offsetting is carried out in accordance with Article 128, paragraph 1 of the DOPC, and the recovery procedure is suspended until the full offsetting of the obligations.

In case of refusal by the NRA to refund the VAT, the taxable person has the right to appeal the decision to the administrative court. It is important to note that the right to a VAT refund is not lost, even if the decision of the NRA is challenged, but is applied according to the final decision of the court.

How does the VAT refund take place in the event of a commissioned audit or inspection?

In cases where a VAT refund check has been ordered, the tax is offset or refunded within a 30-day period. However, if an audit is assigned, the recovery procedure is somewhat more complicated. In this case, the tax shall be offset or refunded in whole or in part also within 30 days of the service of the revision order. The amount of tax refunded is defined as the difference between the tax refund declared and the taxes and compulsory insurance contributions that are reasonably expected to be established in the audit. This means that the NRA can withhold part of the amount that is recoverable until the audit is completed and the exact amount of the liabilities is established.

If, at the time of the revision, the refund of VAT is refused or the refund is partial, the taxable person has the right to appeal the act of the NRA. The appeal procedure follows the procedure provided for in the Tax and Insurance Procedure Code (DOPC), analogous to the appeal of precautionary measures.

In cases where the person is subject to an audit, the period for the refund of VAT corresponds to the period for issuing the revision act. However, if the taxable person provides security — whether in cash, government securities or a bank guarantee with a duration of not less than 6 months — the period for the refund of the tax may be accelerated, irrespective of the duration of the audit. This security provides the tax authorities with a guarantee that the obligations will be covered, allowing a faster recovery of the remaining VAT.