Accounting of a transport and forwarding company in Bulgaria is a key aspect for the successful management of these businesses, which operate in one of the most dynamic industries. Customers often ask questions such as “What is the price for accounting services of a transport company?”, “What are the specific requirements for international transportation?” and “How is the accounting of a forwarding company carried out?”. It is these aspects that are of particular importance for companies operating both locally and internationally.
When working with transport and forwarding companies, accounting processes require knowledge of national and international standards, as well as regulatory requirements, which vary depending on the type of activity — domestic or international transport. In order to account for all income, expenses and liabilities, specific costs such as fuel, fleet maintenance, and even tolls for passing through different countries must also be taken into account.
Elan Consulting provides full support to its clients in the transport sector, including the development of an individual accounting strategy appropriate to the scale and nature of the company's activities. In Sofia, Burgas, Pomorie, Nessebar and other key cities, we are ready to offer professional solutions to optimize the financial operations of your company.
In this article, we will consider the main aspects of accounting for transport and forwarding companies, providing answers to questions related to legislative requirements and good practices in this sector.
How is the accounting of a transport company in Bulgaria? What are the features in accounting?
Accounting of a transport company requires strict adherence to the National Accounting Standards (NSS) and the Law on Accounting, taking into account the specifics of this activity. The main aspects to be taken into account include the accounting of fixed tangible assets, fuel and maintenance costs, revenues from transport services, as well as the correct treatment of VAT in international transport.
According to IAS 1, the financial statements of transport companies must include a structured presentation of assets, liabilities, income and expenses. In particular, the assets of a transport company often include a significant proportion of fixed tangible assets such as means of transport, which are depreciated according to the methods set out in IAS 16. In addition, a record must be kept of expenses related to repairs, fuels and other current expenses that affect the financial results of the company.
The accounting of revenues from transport services is carried out on the basis of the current accrual principle specified in IAS 1. That is, the income is recognized at the time the service is performed, and not at the actual receipt of the cash. This approach ensures that the financial statements accurately reflect the economic activity of the enterprise.
In international transport, VAT rules are essential. According to the Value Added Tax Act, transport services for the international carriage of goods are exempt from VAT if they are performed under certain conditions. It is necessary for the transport company to document these operations with the necessary accounting documents and observe the rules for registration and accounting of these transactions.
The specifics of the transport activity also include compliance with the requirements for accounting for the costs of vignettes, tolls and insurance, which constitute essential elements of expenditure by economic elements, according to IAS 2. All these costs should be accounted for accurately in order to ensure a correct calculation of the cost of services.
In the case of forwarding activities, an additional feature is the reporting of expenses to third parties, which include payments to subcontractors or other transport service providers. According to the NSS, these costs must be correctly attributed to the revenues that are realized from the forwarding services provided.
Proper accounting of a transport company is critical to its financial stability and legal compliance. The application of an appropriate accounting policy, tailored to the specific requirements of the sector, is essential for the accuracy of financial information and the effective management of the business.
What are the features of accounting of forwarding companies?
The accounting of forwarding companies is particularly complex, since it includes specific aspects related to the intermediary role that these companies perform between customers and transport service providers. This type of activity is regulated in detail by both the National Accounting Standards (NSS) and the legislation in Bulgaria, which places certain requirements on reporting.
One of the key features in the accounting of forwarding companies is the accounting of expenses and income related to intermediary services. According to the principles of the NSS, the costs of external services that the company pays to subcontractors or transport companies to carry out the transportation must be correctly distributed and classified. According to IAS 2, these costs can be accounted for as direct costs for the relevant transactions, and customer revenue should be accounted for as service revenue.
Another feature is the accounting of advances and deposits. Often, customers pay advance amounts for the organization of transport or logistics. According to the Law on Accounting and the NSS, these amounts are recorded as advances in the balance sheet and are not recognized as income until the corresponding service is performed. Similarly, if the forwarding company pays sums to transport companies in advance, they are counted as advances until the corresponding invoices are issued.
VAT reporting is an essential aspect for freight forwarding companies. According to the Value Added Tax Act, forwarding services related to international transport may be exempt from VAT or taxable at a rate of 0%, depending on the specific circumstances and documentation. Therefore, the correct accounting of these operations is crucial for compliance with tax legislation.
Also, a feature is associated with the correct identification and accounting of commissions. In some cases, the forwarding company receives income in the form of commissions for the implementation of the relationship between the client and the transport company. These commissions must be clearly identified in the accounting documents as separate revenue, other than the main service revenue.
Freight forwarding companies often incur additional costs, such as warehousing, document processing, customs fees and others. According to IAS 2, these expenses must be accounted for correctly and linked to the specific revenues they help to realize.
Finally, it is important for shipping companies to observe the accuracy of financial statements and timely disclosure of data on accounts receivable and payable. According to IAS 24, disclosure of information about related persons and obligations to them is mandatory in order to ensure transparency in accounting.
Accounting of forwarding companies requires a high degree of precision and strict compliance with the regulatory base, which allows these companies not only to comply with legal requirements, but also to effectively manage their financial flows.
What are the features and requirements for registering a transport company in Bulgaria?
Registration of a transport company in Bulgaria requires the implementation of several important steps, which are described in detail in the relevant legal regulations. The first step is the choice of the legal form of the company, the most commonly preferred forms being a limited liability company (LLC) or a sole proprietorship limited liability company (EOOD), according to the provisions of the Commercial Act (TC).
Once the legal form has been chosen, the necessary documents are prepared for entry in the Commercial Register and the Register of Non-Profit Legal Entities (ZTRRULNC). This includes a constituent act or contract, declarations under Art. 141, para. 8 and Art. 142 of the Commercial Law, an application for registration, as well as a number of other documents, depending on the specific case. The Memorandum of Association must contain information such as the company name, registered office, subject of activity and capital of the company (art. 14 TC), as well as information on the rights of the founder, owners of capital, manager and commercial director.
After registration in the Commercial Register, the company must also register with the National Revenue Agency (NRA) for tax purposes. Depending on the turnover of the company, registration under the Value Added Tax Act (VAT) may be required. An application for VAT registration is submitted upon reaching a certain threshold of taxable turnover (Art. 96, para. 1 VAT), if desired, as well as when providing international transport or forwarding services within the EU.
In order for the transport company to carry out cargo transportation activities, it is necessary to obtain a license for transport activities. According to the Road Transport Act (CAP), licensing is regulated by different requirements depending on the type of transport. For the carriage of goods up to 3.5 tons or with a maximum permissible mass of up to 6 tons, a license and registration certificate are not required, unless otherwise provided for in international treaties (Article 6, paragraph 3, item 1 and item 1). 2 ZAP).
Additional permits are required for international transport. According to art. 18, para. 1 ZAP, license for international transport includes a certificate of financial condition, certificates of technical condition of vehicles and documents proving the qualifications of the manager of the transport activity. A certificate of absence of tax and insurance obligations is also required.
Once all the legal requirements have been met and the necessary documents have been submitted, the registration of the company in the Commercial Register usually takes about 7 days. The management of a transport company also includes compliance with all regulatory requirements and maintenance of the necessary licenses and permits to carry out the activity.
In addition, the firm must provide adequate accounting services, which include bookkeeping, tax planning, and filing the necessary returns and reports to the NRA. According to the Accounting Act, all legal entities must maintain up-to-date and accurate accounting.
When should a transport company register for VAT in Bulgaria?
Every transport company in Bulgaria must register for VAT in several main cases, which are regulated in the Law on Value Added Tax (VAT). Important points for registration include reaching a certain taxable turnover, making intra-community acquisitions and voluntary registration.
Any transport company that reaches a taxable turnover of BGN 100,000 for a period not longer than the last 12 consecutive months is obliged to register for VAT. According to the law, from January 1, 2025, the threshold will be increased to BGN 166,000 (Art. 96, para. 1 ZDDS). Taxable turnover includes all supplies of goods and services that are taxable or exempt with the right to tax credit. The application for registration must be submitted to the National Revenue Agency (NRA) within 7 days after the end of the tax period during which this turnover was reached or exceeded (Art. 96, para. 3 ZDDS).
In case of intra-Community acquisitions of goods worth more than BGN 20,000 for the calendar year, the transport company must also register for VAT (Art. 99, para. 2 ZDDS). This requirement applies when the company acquires goods from other EU Member States. The application for registration in this case must be submitted no later than 7 days before the date of occurrence of the tax event, whereby the total value of the acquisitions exceeds BGN 20,000.
For the international transport of goods, transportation from a place in the territory of the country to the territory of a third country or vice versa, as well as between two places on the territory of the country as part of such transportation, is taxable at a zero rate (Art. 30, para. 1 ZDDS). Forwarding, courier and postal services in connection with the international transport of goods are also treated as international transport services (Art. 30 para. 2 ZDDS).
Voluntary VAT registration is possible for any taxable person who has not reached the threshold for compulsory registration. According to Art. 100 VAT, any transport company can choose to register voluntarily in order to recover the tax credit for expenses incurred and improve its competitiveness.
Compulsory registration also applies to persons who supply services with a place of performance in another Member State, for which the tax is payable by the recipient (Article 97a of the VAT). Companies must submit an application for VAT registration no later than 7 days before the date on which the delivery tax becomes chargeable.
In practice, the registration of a transport company under VAT in Bulgaria takes about 14 days, after submitting the necessary documents and checking by the NRA. In order to avoid penalties and complications, it is important for the company to monitor its financial indicators and submit an application for registration in accordance with the requirements of the ZVAT.
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