The sale of personal belongings and related tax aspects is an interesting and frequently asked topic by individuals. Within the framework of the Bulgarian legal and tax system, various questions arise: “Should income from the sale of personal belongings be declared?”, “Are such sales subject to taxation by the National Revenue Agency (NRA)?”, “How is it determined whether the sale is a commercial activity or not?” and “What tax obligations does this income bring?”. These issues arouse particular interest both among private individuals who carry out one-time sales, and among those who carry them out on a regular basis.
First of all, it is important to clarify what Bulgarian legislation defines as income from personal belongings and which sales are considered tax-free. There are a number of rules and exceptions that regulate this issue, and it is necessary to take into account whether the sale is made by a natural person who is not a trader or by one who acts in his capacity as a trader. In addition, questions such as “What are the cases in which the NRA may require evidence of the origin of the goods or the proceeds of the sale?” and “What is the importance of the amount of income received for the determination of taxation?”.
Elan Consulting offers consultations on all issues related to the sale of personal belongings, both in Sofia and in Burgas, Pomorie, Karnobat, Sunny Beach, Aytos, Nessebar, Sozopol, Primorsko and throughout Bulgaria. We will look at whether fixed income is taxable and declared, what requirements the NRA puts forward, and how to avoid administrative penalties. In the following article, we will look at the specific requirements and applicable regulatory provisions that regulate the sale of personal belongings and related tax obligations.
According to Bulgarian law, the sale of personal property is a process in which an individual transfers ownership of movable or immovable property that is not acquired or intended for commercial activity. According to Art. 13, para. 1 of the Personal Income Taxes Act (ZDDFL), income from the sale of movable property is tax-free, except for certain categories, such as motor vehicles, if the period between acquisition and sale is less than one year, works of art, objects for collections and other exceptions.
The distinction between personal belongings and commercial activity is essential. If a sale is carried out regularly for the purpose of making a profit, it can be considered as a business activity within the meaning of Article 10, paragraph 1, item 3 of the GDPR, which makes it taxable. This also includes cases in which the person sells goods acquired with the intention of being resold, regardless of the quantity or frequency of transactions.
In order to determine whether an activity is commercial, a number of factors are taken into account, such as the frequency of sales, the way in which the property is acquired and whether the person is registered as a trader within the meaning of the Commercial Law. According to Art. 1 of the Commercial Law, a natural person who carries out commercial activity by occupation is considered a trader.
In cases of doubt about tax liabilities, the NRA has the right to request additional information and evidence of the nature of the sales. This is important to avoid wrongful taxation or sanctions.
Pursuant to Article 13 (1) of the Personal Income Taxes Act (ZDDFL), Bulgarian legislation defines multiple categories of income as non-taxable, while imposing specific exceptions.
Exceptions to non-taxable income are clearly regulated. For example, although income from the sale of movable property is tax-free, this rule does not apply to certain categories, such as cars if sold within one year of the acquisition, or works of art. Also, income related to a commercial activity or made by a trader within the meaning of the Commercial Law is excluded from these rules.
The legal provisions provide ample opportunities for tax exemptions, while providing a framework for avoiding abuse through clearly defined exceptions.
Sales of personal belongings by individuals in Bulgaria are declared depending on the nature of the income and the applicable legal requirements. According to Art. 50 of the Personal Income Taxes Act (ZDDFL), every natural person who has earned taxable income is obliged to file an annual tax return by April 30 of the following year. This declaration covers all taxable income, including those from the sale of property that does not fall into the category of non-taxable income referred to in Article 13, paragraph 1 of the GDPR.
The sale of personal belongings is generally not taxed if the goods do not fall within the exceptions listed in Article 13, paragraph 1, item 2 of the GDPR. For example, if an individual sells personal furniture, clothing or household appliances, this income is not taxable and not subject to declaration. However, in the event that movable property such as cars, boats or planes is sold within one year of the acquisition, the income becomes taxable and must be declared. This also applies to income from the sale of works of art, objects for collections or shares, which are also exceptions to non-taxable income.
The declaration is made by filling in the relevant annexes in the annual tax return. For example, if the income is from the sale of movable property that falls under the exceptions, then an application for income from the sale of rights or property must be filled out. According to Art. 11, para. 2 of the ZDDFL, income is considered to have been acquired on the date of sale, which is key to its correct declaration. That is, the tax liability arises in the year in which the transaction is concluded.
Example: If a person sells a personal car purchased less than a year ago for an amount of BGN 20,000, and its purchase price was BGN 15,000, the taxable income is BGN 5,000. This income must be declared in the annual tax return, calculating the tax due on it.
An important element of the declaration is also the presence of documents that prove both the acquisition of the goods and their sale. During inspections by the NRA, these documents may be required. This is especially relevant for persons who carry out sales more often, since their actions can be qualified as a commercial activity within the meaning of the Commercial Law. In such cases, individuals are obliged not only to declare income, but also to register as sole traders or for VAT, if the conditions for this are met.
If the National Revenue Agency (NRA) contacts you with a request to provide information, it is important that you approach responsibly and in a structured manner. This request usually means that you are subject to an inspection, audit or simply an administrative procedure related to the establishment of your tax obligations. The first step is to carefully review the document you have received and make sure that you understand the nature of the request, as well as the deadlines within which you must provide the requested information.
The NRA may request different types of data, such as:
In such a situation, tax law experts from Elan Consultingcan be extremely useful to you. They will analyze the nature of the NRA request, check its legal basis, and advise you on the type of information you are required to provide and how to do so in order to protect your interests. It is important to provide complete and accurate information without providing unnecessary data that can be misinterpreted.
In order to prepare an effective defense strategy, we will need the following data from you:
The experts of Elan Consultingassist you in preparing the necessary documentation and ensure that your response to the NRA is structured, accurate and compliant with current legislation. If necessary, they can represent your interests in communicating with the tax authorities and ensure that your rights are fully protected. In the event of potential sanctions or additional obligations, our consultants can offer a legal remedy or an appeal procedure.
Also, we will analyze whether the actions of the NRA comply with legal requirements, such as whether the request was issued by a competent authority, whether there is a legal basis and whether the deadlines are realistic. Any mistake made by the tax authorities may be grounds for challenging their claim.
With proper assistance from our experts, you will be confident that you are meeting the requirements of the NRA without unnecessary risks and with full protection of your rights.
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The tax authorities in Bulgaria have at their disposal various mechanisms to establish whether an individual earns income from the sale of personal belongings. The NRA uses modern tools to analyze and monitor financial flows, including checking receipts on bank accounts and data received from courier companies such as Econt and Speedy. These mechanisms are aimed at identifying regular and significant cash receipts, which may indicate systematic business activity, and not a one-time sale of personal belongings.
The first main tool is the analysis of bank receipts. If your bank account regularly receives payments with a description that points to the sale of goods, the tax authorities can take up a check. They will require information on the source of these revenues in order to determine whether it is income from personal sales or from systematic economic activity, which must be declared and taxed under the GDPR. For example, if you frequently receive payments with descriptions such as “payment for a commodity” or “purchase,” this may spark interest from the NRA.
Another commonly used approach is tracking data from courier companies. The NRA works actively with companies such as Econt and Speedy, which are obliged to provide information on shipments sent and received cash payments. If you often send parcels by cash on delivery, this can also be seen as an indication of systematic activity, especially if it concerns significant amounts or regular operations. This is a common scenario in individuals who use sales platforms such as OLX, Bazar.bg or social networks.
To protect yourself from possible checks and penalties, it is important to act transparently and in accordance with the law. If you sell personal items, it is advisable:
The tax law experts of Elan Consultingcan help you structure your business in such a way that you avoid the risk of incorrect accusations or sanctions. We will analyze your business and offer appropriate solutions to protect your interests, including consulting on properly documenting personal sales and presenting correct information to the NRA. In the event of checks that occur, we will assist you in presenting evidence and provide full assistance to minimise the risk of administrative or financial penalties.
The calculation of the tax on the sale of personal belongings depends on whether the income from the sale falls into the category of taxable income, according to Art. 12 and Art. 13 of the Personal Income Taxes Act (ZDFL). The basic rule is that if the items are personal and not acquired for the purpose of trade, the income from their sale is tax-free. However, if the sale falls within the exceptions specified in the law (for example, movable property such as cars sold within one year of the acquisition), then the income is taxable.
The tax is calculated on the difference between the sale price of the thing and the cost of its acquisition. That is, it takes into account what the real profit from the transaction is. For example, if you bought a car for £15,000 and sold it for £20,000, the taxable income is the difference of £5,000. This income is taxed with 10% tax, which means that the amount due to the NRA is BGN 500. According to Article 33 (1) of the GDPR, this difference must be declared in the annual tax return.
It is important to note that in the absence of documents proving the cost of acquisition, the entire sale price can be considered taxable income. For example, if you sell a personal laptop for $1,500 but do not have a document proving its purchase price, the NRA may treat all income as taxable. In this case, the tax will be 10% of the 1,500 BGN, or 150 BGN.
An additional aspect for the calculation of the tax is that some income can be reduced by legally recognized expenses. For example, when selling movable property that falls into the category of taxable income, certain expenses may be deducted if they are demonstrable and related to maintenance or improvements.
Example 1: A person buys a work of art for BGN 10,000 and sells it for BGN 12,000 in less than a year. The taxable income is BGN 2,000, and the tax is 10% of this amount, or BGN 200.
Example 2: A person sells a car for BGN 8,000 that was acquired more than a year ago for BGN 6,000. In this case, the income is not taxable because the sale falls outside the exceptions specified in Article 13, paragraph 1, item 2 of the GDPR.
In order to correctly calculate the tax and avoid mistakes, it is important to document both the costs of acquiring the items and their sale. The experts of Elan Consultingcan help you with the correct calculation, filling out declarations and document management to ensure that you comply with all legal requirements and avoid penalties. If you are in a situation where you do not know how to determine the tax base or what documents are needed, we will provide you with expert guidance and individual solutions.
