Accounting and consulting company “Elan Consulting” offers professional assistance and advice in the field of VAT taxation when buying and selling cars in Bulgaria. In this guide, we will consider all the important aspects related to VAT in car transactions, both for individuals and legal entities. Customers often ask us questions such as: “How is VAT charged when selling a car with a used tax credit?” and “How do I buy a car without VAT?” These issues are of great importance, because the correct implementation of VAT legislation can significantly reduce costs and prevent legal problems. They are also often interested in specific cases such as “VAT on the sale of a truck” and “Models of cars with a tax credit”.
For individuals wishing to buy or sell a car, there are numerous questions about “the need for a notary when selling a car” and “what are the new rules when buying a car”. Firms, in turn, face issues such as “adjustment of tax credit when selling a car” and “invoicing when selling a car.” In addition, topics such as “VAT refund for a car” and “VAT taxation of 7-seater cars” are also often asked by customers.
Elan Consulting has many years of experience in providing advice and services related to “writing off a car on sale” and “buying a company car”, as well as on issues such as “charging VAT when selling a used car” and “selling a car from a company to an individual”. Our specialists are available in Sofia, Burgas, Pomorie, Karnobat, Sunny Beach, Aytos, Nessebar, Sozopol, Primorsko and the whole of Bulgaria to provide competent assistance and answer all your questions.
Whether it is an “invoice for the sale of a car” or a “purchase and sale of a vehicle without a notary”, our team is ready to help you understand the complex aspects of VAT legislation and find the best solutions for your needs. Check out our guide for more detailed information and discover how Elan Consulting can be your reliable partner in VAT on cars in Bulgaria.
Issuing an invoice when buying or selling a car is a key point in the process of documenting and reporting for tax purposes. According to Art. 113 (1) of the Value Added Tax Act (VAT), the taxable person is obliged to issue an invoice for each taxable supply made, including when buying or selling a car. Where the supply does not count as intra-Community, the invoice is necessarily issued no later than 5 days from the date of occurrence of the tax event for the supply, and in the case of advance payment - no later than 5 days from the date of receipt of payment. In the case of Community supplies, the invoice must be issued no later than the fifteenth day of the month following the month in which the taxable event occurred.
The tax event when selling a car occurs on the date of transfer of the right of ownership of the car. This means that if the car is sold on January 10th in Bulgaria, the invoice must be issued no later than January 15th. However, if the car is purchased from an EU Member State and the transaction is an intra-Community acquisition, the invoice must be issued no later than February 15. The invoice must contain the mandatory requisites provided for in Art. 114 of the VAT, including the date of issue, serial number, VAT identification number of the supplier and recipient (where the recipient is a registered person), the quantity and type of goods supplied, the tax base, the rate and amount of tax.
When buying a car, the taxable person must also receive an invoice from the seller. The invoice must comply with the requirements of Art. 114 of the VAT and contain all the necessary data for the buyer to benefit from a tax credit if the vehicle is used to carry out taxable supplies.
According to Art. 78 of the Regulations on the Application of the VAT (VAT), the invoice must be issued in two copies — one for the supplier and one for the recipient. In cases where the invoice is issued for advance payment, it must also contain information on the delivery for which payment is made, including a description of the goods, the quantity and the estimated date of delivery.
If the vehicle is sold to a natural person who is not registered under the VAT, the invoice must still be issued, but it does not necessarily contain the VAT identification number of the recipient. In this case, the rest of the requisites on the invoice remain the same.
In addition, when making intra-Community deliveries of cars, the issuance of an invoice is also mandatory. Pursuant to Article 119 of the VAT Code, an invoice is issued for intra-Community supplies within the period referred to in Article 113 and must contain additional information, such as the VAT identification number of the recipient in the Member State where the supply takes place.
When selling a car, the accrual of VAT (value added tax) is regulated by the Value Added Tax Act (VAT). The sale of a car is considered a supply of goods within the meaning of the law. When a taxable person sells a car, it is a taxable supply, unless otherwise provided by law.
In order to charge VAT when selling a car, it is necessary to determine the tax event, which, as a general rule, occurs when transferring the right of ownership of the car. According to Art. 25 (2) of the VAT Act, the tax event occurs on the date on which the property is transferred, unless an advance payment has been agreed, in which case the tax becomes chargeable on the date of receipt of the payment.
The tax base for the sale of a car is determined in accordance with Article 26 of the VAT and includes everything that constitutes the remuneration received or to be received by the supplier from the recipient or from a third party, including all subsidies and grants related to the supply. In the case of a car, this may also include additional costs such as transport costs and fees if these are related to the delivery of the vehicle.
According to Article 79 (1) of the VAT Code, when goods for which a tax credit is used are sold, the supplier is obliged to adjust the deducted tax credit by charging the tax on their current market value, if it is lower than the taxable amount at the time of acquisition. This provision is particularly important when selling cars where a full tax credit is used.
When the vehicle is sold by a company to an individual, the value added tax is charged and invoiced, and the company must issue an invoice pursuant to Art. 113, para. 1 of the VAT Act, indicating the tax base and the accrued VAT. The invoice must contain the information provided for in Article 114, paragraph 1 of the VAT Act, including the VAT identification number of the supplier and the recipient, where he is a registered person.
Particular attention should be paid to cases where VAT is not charged. Pursuant to Article 50 of the ZVAT, the supplies of goods which have been used by the taxable person for an exempt activity or for an activity outside the scope of this Law are exempt from taxation, provided that no tax credit was used for the acquisition or importation of those goods.
When making an adjustment of a tax credit when selling a car, the provisions of Art. 79 of the VAT Act apply. The adjustment is made when the vehicle was used both for taxable supplies and for exempt supplies or for activities outside the scope of VAT. In this case, the taxable person must adjust the tax credit used in proportion to the degree of use of the vehicle for taxable and exempt supplies.
When selling a truck that was used for business activities, the accrual of VAT is carried out in accordance with the general rules for taxable supplies. If the truck is acquired with a used tax credit, the tax is charged on the entire tax base when it is sold.
It should be noted that when buying a car from a Member State of the European Union, an intra-Community acquisition may occur, which is taxable under Article 62 of the VAT Code. In this case, the buyer must self-charge the VAT and include it in his tax return.
The use of a tax credit when buying a car in Bulgaria is regulated by the Law on Value Added Tax (VAT). The tax credit is the right of the taxable person to deduct the value added tax charged on goods or services received when they are used to make taxable supplies.
According to Article 68 (1) of the VAT Code, the right to deduct a tax credit arises when the goods or services are used to carry out taxable supplies. That is, if the car is used for the activities of the taxable person related to the performance of taxable supplies, the person has the right to deduct the tax credit.
According to Article 69 (1) of the VAT Act, the tax credit may be used if the following conditions are met:
Art. 70 of the VAT Act lists the cases in which a tax credit cannot be used. Pursuant to Article 70 (1) (4) of the VAT Act, the tax credit is not used for goods or services intended for representation or entertainment purposes. That is, if the car is used for such purposes, the tax credit cannot be deducted.
However, there are exceptions to this rule. According to Article 70 (2) of the ZVAT, a tax credit may be used for passenger cars that are used for taxi services, for training vehicles used by driving schools, and for cars intended for rental or trade.
In the case of the purchase of a car that will be used for both taxable and exempt supplies or for activities outside the scope of VAT, the tax credit is deducted proportionally. According to Article 73 of the VAT Code, when goods and services are used for both taxable and exempt supplies, the tax credit is determined in proportion to the degree of use for the taxable supplies.
It is also important to mention that if the taxable person does not use the vehicle entirely for taxable supplies, he must make an adjustment to the tax credit used. According to Art. 79 of the VAT Code, the adjustment is made when there is a change in circumstances leading to a change in the right to deduct the tax credit. This can happen if the car is sold or begins to be used for exempt supplies or for personal needs.
In order to benefit from a tax credit when buying a car, it is necessary to fulfill all the conditions of the VAT and the Regulations for its application. Each purchase must be carefully analyzed to ensure proper application of the law and avoid penalties.
The number of seats in the car is of considerable importance in terms of VAT taxation in Bulgaria. The Value Added Tax Act (VAT) and the Regulations for the Implementation of the Value Added Tax Act (VAT) have laid down special rules for different types of cars depending on their passenger carrying capacity.
According to Article 70 (1) (4) of the ZVAT, no tax credit is used for the acquisition, import or production of passenger cars that have no more than 5+1 seats, unless they are used for certain activities such as taxi services, driving schools or trade and car rental. In this context, a passenger car is defined as a motor vehicle that has no more than 8+1 seats, including the driver's seat.
For cars with more than 5+1 seats, but not more than 8+1 seats, it is possible to use the tax credit under certain conditions. For example, when these cars are used to carry out transport services, the right to a tax credit is available. Art. 69, para. 1 of the ZVAT allows the deduction of a tax credit if the vehicle is used to carry out taxable supplies, such as transport services for third parties.
Particular attention is paid to cars with 6+1 and 7+1 seats. Pursuant to Article 69 (1) (3) of the PPZVAT, when a taxable person acquires a car with 6+1 or 7+1 seats and uses it for business purposes related to taxable supplies, he is entitled to a tax credit. These vehicles are often used to transport personnel or for business purposes, which makes them eligible for a tax credit.
It is important to note that if the car has more than 8+1 seats, it usually falls into the category of commercial vehicles or buses, for which the use of the tax credit is not limited in the same way as for passenger cars. According to Article 70 (1) (4) of the VAT Code, a tax credit may be used for these vehicles, since they are used for economic purposes related to the transport of goods or passengers.
Adjustments to the tax credit are also important when changing the purpose of the car. According to Art. 79 of the ZVAT, when making an adjustment to a tax credit, changes in the use of the car must be taken into account, for example, if the number of seats changes or if the car begins to be used for personal needs.
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When buying or selling a truck, VAT is subject to specific rules laid down by the Value Added Tax Act (VAT) and its Implementing Regulations (VAT).
When buying a truck from a taxable person, the supply is considered taxable. Pursuant to Article 69 (1) of the VAT Act, a tax credit may be used for goods and services used for the performance of taxable supplies. This means that if the truck is used for the business activity of the taxable person, he is entitled to a deduction of the tax credit on the VAT charged at the time of purchase.
According to Article 70 (1) (5) of the VAT Act, a tax credit is not used for motor vehicles unless they are intended exclusively for the provision of transport or other services. In the context of freight vehicles that are used for the transport of goods, the right to a tax credit exists, since they are used directly to carry out taxable supplies.
When selling a truck, the delivery is also subject to VAT. Art. 25 of the ZVAT states that the tax event occurs on the date of transfer of the right of ownership of the car. The taxable amount for VAT on the sale of a truck is determined in accordance with Article 26 of the VAT Act and includes everything that constitutes the consideration received or to be received by the supplier from the recipient or from a third party, including all subsidies and grants related to the supply.
When the truck is acquired with a used tax credit, the tax is charged on the entire taxable amount at the time of its sale. In accordance with Art. 79 of the VAT Code, if there is a change in the purpose of the vehicle, for example if it is used for both taxable and exempt supplies, the taxable person must make an adjustment to the tax credit used.
The VAT Implementing Regulations (GDPR) also provide guidelines for documenting sales. According to Art. 113 of the VAT Code, when selling a truck, the seller is obliged to issue an invoice in which the taxable base and the VAT accrued must be indicated. The invoice must contain all the mandatory requisites specified in Art. 114 of the ZVAT, including the VAT identification number of the supplier and the recipient, where he is a registered person.
A special case is the sale of a truck used for specific economic activities such as international transport. Article 21, paragraph 2 of the PPPDVD stipulates that in order to prove the delivery on export of goods, including vehicles, the supplier must have customs documents certifying the export, as well as documents for the carriage of these goods.
If the truck is purchased from another Member State of the European Union, the intra-Community acquisition regime applies. According to Art. 62 of the VAT Code, in the case of intra-Community acquisition of goods, including commercial vehicles, the tax becomes chargeable on the date of occurrence of the tax event and is self-charged by the buyer.
When buying and selling a car between two Member States of the European Union, the VAT rules are specific and are based on the provisions of the Value Added Tax Act (VAT), the VAT Implementing Regulations (VAT) and the EU VAT Directive.
In the case of an intra-Community purchase of a car, the purchaser who is a VAT registered person must charge the VAT himself. According to Article 62 of the VAT Code, an intra-Community acquisition of goods is the acquisition of the right to dispose as owner of movable property which has been dispatched or transported to the territory of the country by or on behalf of a supplier from another Member State. In this case, the buyer is obliged to self-charge VAT and include it in his tax return for the relevant period.
In the case of an intra-Community supply of a vehicle, the seller who is a VAT registered person must issue an invoice free of VAT, indicating the VAT identification number of the buyer from another Member State. Pursuant to Article 7 (1) of the VAT Act, the intra-Community supply of goods is exempt from tax provided that the purchaser is a VAT registered person in another Member State and the goods are dispatched or transported outside the territory of the country.
In order to prove the intra-Community supply, the supplier must have documents attesting that the vehicle has been dispatched or transported to another Member State. According to Article 21 (1) of the GDPR, these documents include the invoice for the delivery, the transport documents and a written confirmation from the consignee certifying that the goods have arrived in the territory of the other Member State.
It is also important to note that specific rules apply to intra-Community transactions involving new vehicles. According to Art. 13, para. 4 of the VAT Code, a new vehicle is one that was delivered within 6 months after its first entry into service or that has traveled no more than 6000 kilometers. In the case of an intra-Community supply of a new vehicle, the supplier issues an invoice free of VAT, and the buyer must charge the VAT himself in his Member State.
In order to properly document intra-Community supplies and acquisitions, it is important to monitor and comply with all the requirements of the VAT and UCITS, as well as the EU VAT Directive. The EU VAT Directive (Directive 2006/112/EC) provides for harmonised rules for intra-Community trade, including for vehicles, and provides a uniform VAT framework throughout the European Union.
In addition, in the case of an intra-Community purchase of a car, the buyer must declare and pay VAT in his Member State. This is done by filing a tax return and self-charging VAT at the rate applicable in the respective country. When carrying out such transactions, it is important to comply with all procedural and documentary requirements in order to avoid penalties and errors in tax reporting.
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