Cash on delivery sales accounting is an important topic for all those who are engaged in online trading in Bulgaria. “How is cash on delivery income declared?” and “What are the requirements for accounting for cash on delivery through courier companies such as Speedy and Econt?” are just some of the questions that clients of accounting and consulting firm “Elan Consulting” often ask. In this article, we will look at these questions in detail, as well as other related aspects, such as “What is the difference between cash on delivery and postal money transfer?” and “How is cash on delivery accounted for?”.
Customers also often ask about the specifics of “accounting for cash on delivery by Speedy” and what documents are needed for this, such as “is a cash on delivery invoice required without a cash receipt?”. Also, topics such as “What is postal money transfer?” and “How does it differ from cash on delivery?” are often the subject of interest, especially when it comes to “checking cash on delivery from Speedy” or “time limit for receiving cash on delivery from Econt”.
In this article, we will answer all these questions and provide useful information on various aspects of the topic. We will look at more questions such as “Should we have an online store to use cash on delivery?” and “What are the accounting operations when using cash on delivery?”. We will also discuss what to do when receiving a “letter from the NRA about undeclared income from imposed payments” and up to what amount is not declared in the NRA. We will also not miss the questions related to “receiving cash on delivery by card through Speedy” and what are the “fees for cash on delivery through courier companies”.
The team of “Elan Consulting” is ready to help you with professional advice and services in the field of accounting and declaration of sales with cash on delivery, whether you are in Sofia, Burgas, Pomorie, Karnobat, Sunny Beach, Aytos, Nessebar, Sozopol, Primorsko or anywhere in Bulgaria. Contact us to get competent assistance and make sure that your sales are correctly reported and declared.
In Bulgaria, if you sell various goods by cash on delivery, it is important to understand whether you need to have the quality of a trader, that is, have a registered company.
According to the Commercial Law, a person who carries out commercial activities is obliged to register as a trader. Commercial activity includes a number of activities such as the purchase and sale of goods, the performance of services and other commercial transactions for the purpose of profit. Article 1, paragraph 1 of the Commercial Law states that a trader is any natural or legal person who carries out by occupation any of the following activities:
Therefore, if you sell goods by cash on a regular basis and for the purpose of making a profit, it is considered that you are carrying out a commercial activity and must have the quality of a merchant, which involves the registration of a company.
In addition, when selling goods regularly, even as an individual, you may need to declare your income to the NRA (National Revenue Agency) and pay taxes on it. The Personal Income Taxes Act (ZDDFL) states that any income derived from the sale of goods or services is subject to tax.
If the sales are incidental and are not carried out by profession, registration as a dealer may not be required. However, it is important to consult with an accountant or lawyer to ensure that you comply with all legal requirements and tax obligations.
If you trade by cash on delivery and do not have a registered company, this means that you are acting as a trader without having met the requirements for registration as a sole trader (ET) or other legal entity. It is important to distinguish between the sale of personal belongings and commercial activity - commercial is precisely the activity for the purpose of profit - that is, the systematic purchase of certain goods for the purpose of resale or the manufacture of goods for the purpose of sale. The sale of personal belongings does not mean that you are engaged in commercial activity. Bulgarian law requires that any person who carries out commercial activities for profit be registered in the commercial register.
Pursuant to Art. 40, para. 1 of the Commercial Register and the Register of Non-Profit Legal Entities Act, a person who is obliged to declare an entry of circumstances under Art. 4 or to submit an act under Art. 5, but does not do so within the period specified by law, shall be punished with a fine of 1000 to 5000 leva. If, after being punished with a fine, the person continues to fail to fulfill his duties, the fines are re-imposed every month until the necessary actions are performed (art. 40, para. 3).
Article 4 of the same law states that traders, branches of foreign traders and other non-profit legal entities, as well as related circumstances, for which it is provided by law, are entered in the commercial register. This means that if you carry out a commercial activity without being registered as a trader, you are breaking the law.
Administrative penalties for such violations are established by acts drawn up by officials appointed by the Executive Director of the Registry Agency, and criminal decrees are issued by the Executive Director of the Agency or by officials authorized by him (Art. 41, para. 1).
Therefore, if you sell various goods on cash on a regular basis and for the purpose of making a profit, without having a registered company, you are obliged to register as a trader. If you do not, you are subject to significant fines and penalties, which may increase monthly until the fulfillment of your obligations.
It is important to comply with legal requirements and register as a trader if you are doing business in order to avoid administrative penalties and ensure that your business complies with the legislation.
Cash on delivery and postal money transfer are two different ways of processing payments when delivering goods in Bulgaria, which often cause confusion among customers.
Cash on delivery is a service in which the recipient of the goods pays an amount specified by the sender upon receipt of the shipment. According to §1, item 12 of the Additional Provisions of Ordinance No H-18 of the Ministry of Finance of 13.12.2006, cash on delivery is defined as a postal service in which the postal item is delivered to the recipient against payment of an amount specified by the sender. This means that the courier collects the money from the recipient and transfers it to the sender either by bank transfer or in cash depending on the contract between the courier and the supplier.
On the other hand, postal money transfer is a cash payment that is made through a licensed postal operator. According to Art. 3, para. 1, item 3 of the Postal Services Act, postal money transfers are one of the services that include acceptance, transfer and delivery of parcels. Postal money transfers allow the sender to send a certain amount to the recipient through the postal system, and this can also be done without physical delivery of goods.
The main difference between cash on delivery and postal money transfer is in the way the transaction is paid and processed. In the case of cash on delivery, payment is made upon receipt of the goods, while in the postal money transfer the money is transferred through the postal system without goods.
Accounting, the way of accounting for these two methods is also different. According to Art. 118, para. 1 of the ZVAT, any supply of goods or services must be registered by issuing a fiscal receipt or a system voucher. In Ordinance No H-18, Art. 3, para. 1, it is specified that the registration of sales must be carried out through a fiscal device, unless payment is made by bank transfer, by credit transfer, direct debit or postal money transfer.
Regardless of the payment method, if the courier pays the collected amount to the sender by bank transfer, the supplier of the goods is not obliged to issue a fiscal voucher. This is regulated in Art. 3, para. 1 of Ordinance No. H-18, where it is indicated that an exception is made only when payment is made in the above-mentioned ways.
For customers interested in the difference between these two payment methods, it is important to know that with cash on delivery, the amount is paid on the spot upon receipt of the goods, and postal money transfer is a direct transfer of money through the postal system. The accounting and recording of these transactions depend on the method of payment of the collected amount to the sender and should comply with the requirements of the Postal Services Act and Ordinance No H-18.
When making a sale through the courier companies Econt and Speedy, the obligation to issue a cash receipt depends on the specific payment method and the terms of the transaction.
According to Art. 3, para. 1 of Ordinance No. H-18 of the Ministry of Finance, any person making sales of goods or services in or from a commercial establishment is obliged to register and account for these sales by issuing a fiscal receipt (fiscal note) or a cash receipt from an integrated automated business management system (IASUTA)), except in cases where payment is made by bank transfer, by credit transfer, direct debit or by postal money transfer.
Cash on delivery, in which payment is made in cash on delivery, usually requires the issuance of a cash receipt. In this case, the courier (Econt or Speedy) collects the money from the customer and then transfers it to the supplier. In order for the legal requirement to issue a fiscal receipt to be met, the supplier must issue such a document upon receipt of payment by the courier.
However, if the payment is made by postal money transfer, the courier pays the amount to the supplier by bank transfer or cash, in which case the supplier is not obliged to issue a fiscal receipt. This is regulated in Article 3, paragraph 1 of Ordinance N-18, where it is specified that an exception is made for payments made by postal money transfer by a licensed postal operator.
Additionally, Art. 25, para. 1, item 1 of the same ordinance specifies that a fiscal cash receipt is compulsorily issued for each sale, unless payment is made by depositing money into a payment account or postal money transfer. Therefore, if your customer pays for the goods by postal money transfer, you as a merchant are not obliged to issue a fiscal cash receipt.
For sales through courier companies, when payment is made by bank transfer or by postal money transfer, the obligation to issue a cash receipt is waived. This means that if the customer pays the courier in cash upon receipt of the shipment and the courier transfers the amount to you by bank transfer, you are not obliged to issue a receipt.
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For cash on delivery sales through courier companies such as Econt and Speedy, the obligation to issue an invoice depends on whether you are registered under the Value Added Tax Act (VAT) and whether the recipient is a taxable person.
Pursuant to Article 113 (1) of the VAT Act, every taxable person-supplier is obliged to issue an invoice for the supply of goods or services made by him or upon receipt of an advance payment beforehand, except in cases where the supply is documented by a protocol under art. 117. This means that if you are registered under the VAT and carry out the delivery of goods, including by cash on delivery with Econt or Speedy, you are obliged to issue an invoice.
However, pursuant to Article 113, paragraph 3, item 1, an invoice may not be issued for supplies in which the recipient is a non-taxable natural person. In this case, if the recipient of the goods is a natural person who is not registered under the VAT, you are not obliged to issue an invoice, unless requested by the recipient.
A non-taxable person is a natural person who does not carry out independent economic activity and is not registered under the Value Added Tax Act (VAT). This includes ordinary consumers who do not sell goods or services for profit and do not engage in commercial transactions as part of their professional activity.
According to Article 3 (1) of the VAT Act, a “taxable person” is any person who carries out an independent economic activity, regardless of the objectives and results of that activity. Paragraph 2 specifies that an independent economic activity is any activity of producers, traders and persons providing services, including mining, agriculture and the exercise of the liberal professions.
However, Art. 114 of the VAT Code requires that the invoice contain certain requisites, including the identification number of the supplier and recipient, quantity and type of the goods, unit price and tax base, among others. The invoice is necessarily issued no later than 5 days from the date of occurrence of the tax event for the delivery (Art. 113, para. 4).
For cash on delivery sales with Econt or Speedy, if you are VAT registered and the recipient is a taxable person, you must issue an invoice. If the recipient is a natural person, the invoice is not mandatory unless requested by the recipient.
The legislation also provides for the possibility of issuing electronic invoices in compliance with certain requirements for authenticity and completeness of the data (Article 114, paras. 10 and 11).
When receiving a letter from the NRA about undeclared income from cash payments, it is important to take several key steps to ascertain the status and respond correctly.
First, it must be established whether the income to which the letter refers originates from the sale of personal belongings or from commercial activity. According to Art. 13, para. 1 of the Personal Income Taxes Act (ZDDFL), income from the sale of movable property that is not commercial goods and is not sold for profit is exempt from taxes. If the sales are of personal items that are not sold for profit, it is important to provide evidence of this to the NRA.
Secondly, find out whether an audit procedure or an inspection has been initiated under the Tax and Insurance Procedure Code (DOPC). Audit and verification have different objectives and procedures:
If the letter refers to an inspection under the DOPP, Art. 114 et seq. regulate the procedures for the verification that can be carried out to establish facts and circumstances related to tax obligations. The inspection usually precedes the audit proceedings and aims to gather the necessary information.
Regardless of the type of production, you need to collect and prepare all the necessary documents that prove the origin of your income, as well as their declaration or the absence of the obligation to declare. This may include contracts, receipts, invoices and other documents that show that income is from personal belongings or has been properly declared.
Lastly, it is highly recommended to consult a tax consultant or accountant from Elan Consulting. Professional advice will help you better understand your rights and obligations, as well as take the most correct steps in response to the letter from the NRA. Consultation with experts will provide you with the necessary legal and accounting support to protect your interests in the best way.
In summary, upon receipt of a letter from the NRA for undeclared income from imposed payments:
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