Accounting of a doctor's office and medical center in Bulgaria

Accounting of doctors' offices, medical centers and dentists in Bulgaria requires specialized knowledge and attention to detail. Although the basic principles of accounting are the same, the specific needs and requirements of these medical practices create unique challenges. In this introduction we will consider the key aspects in which the accounting and consulting company “Elan Consulting” can be useful for doctors and dentists in the cities of Sofia, Burgas, Pomorie, Karnobat, Sunny Beach, Aytos, Nessebar, Sozopol, Primorsko and the whole of Bulgaria.

One of the most frequent questions we receive is related to the accounting of doctors' offices. Freelance doctors are faced with questions such as “How do I organize the accounting of my private doctor's office?” and “What are the specific requirements for keeping accounting in a medical center?”. These questions are often complemented by the need to understand regulatory requirements and interact with the health insurance fund.

For doctors considering VAT registration, the question “Is it necessary to register my practice for VAT and what are the benefits and obligations?” is essential. We at Elan Consulting offer expert advice to help doctors understand when and how to register for VAT and what are the advantages and disadvantages of this registration.

For dentists, the question “How to manage the accounting of my dental office?” is often asked. Our services include assistance with bookkeeping, ensuring compliance with regulatory requirements and optimizing financial processes. Also, we often receive inquiries about “VAT-exempt dental services” and how this affects the financial statements and tax liabilities of dental practices.

Medical centers also have their own specific needs. The questions “How to keep the accounting of a medical center?” and “How do I deal with financial and regulatory requirements?” are common. We provide solutions that help medical centers maintain financial health and compliance with all legal requirements.

In our work, we also often face questions about “Accounting of a private doctor's office” and what is needed to maintain financial stability and compliance with tax requirements. We provide a full range of accounting services that include income and expense management, tax returns and financial statements.

Elan Consulting's expertise also includes advice on tax and cost optimization so that our clients can focus on what they do best — providing high-quality medical services. The questions “How can I optimize my tax liabilities?” and “What are the best cost management practices in my medical practice?” are among the most frequent we get.

What are the features of accounting of doctors, dentists and medical centers?

The accounting of doctors, dentists and medical centers in Bulgaria has its own specific features, which arise from the regulations and regulations in the country. These features are important for the proper and lawful management of finances and taxes in these medical practices. First, it is important to note that according to the Law on Accounting (Art. 5, para. 1), all medical institutions and practices must keep current accounting and prepare annual financial statements.

For doctors and dentists who practice a freelance profession, bookkeeping is regulated by the Personal Income Tax Act (ZDDFL). According to Article 29, paragraph 1, these persons have the right to choose between being subject to income tax in the general order or as self-employed persons, which implies different accounting and tax obligations.

Of particular interest is the registration under the Value Added Tax Act (VAT). According to Art. 96 (1) of the VAT Act, registration is mandatory for any person who carries out independent economic activity and whose taxable turnover for the previous 12 months exceeds BGN 50,000. However, dental services are exempt from VAT within the meaning of Article 39 (1) (1) of the VAT Act, which means that dentists are not obliged to charge VAT for their services.

Accounting of medical centers differs from that of individual practices due to the fact that they usually function as legal entities. This means that the provisions of the Corporate Income Tax Act (CPA) apply to them, where Art. 20 stipulates that all income and expenses must be duly documented and accounted for.

The Regulation on the conditions and procedure for keeping the registers, information databases and systems included in the National Health Information System (NSIS) also has a significant role in the accounting of medical practices. According to Art. 3, para. 1 of Ordinance No. H-6 of 21.12.2022, every medical institution is obliged to collect, process and store information about the health status of patients by creating and maintaining an electronic health record.

Also, interaction with the health insurance fund is an integral part of the accounting of medical practices. According to Art. 45, para. 1 of the Health Insurance Act, doctors and dentists who work with the health insurance fund must regularly submit reporting documents and maintain correct financial statements for the health services provided.

For doctors working as a freelancer, it is important to comply with the requirements of the DOPK (Tax and Insurance Procedure Code). Art. 5, para. 1 of the DOPP stipulates that they must keep logs of their income and expenses, which must be kept for at least 5 years after the expiration of the respective tax year.

How to organize the accounting of my private doctor's office?

Organizing the accounting of a private doctor's office requires a systematic and structural approach, which involves compliance with a number of legal requirements and good accounting practices. To ensure legality and effective financial management, follow these steps:

First of all, it is important to register your medical practice. According to the Law on Medical Institutions, every doctor who wishes to practice in a private office must be registered with the Regional Health Inspectorate (RZI). It is also important to obtain permission to carry out medical activities, which is issued by the RZI on the basis of certain criteria and requirements.

After registration, it is necessary to open a bank account in the name of your practice. All income and expenses must go through this account so that financial transactions can be easily tracked and documented.

Accounting involves the issuance of invoices for each service provided. According to Art. 113 of the ZVAT, invoices must contain information about the supplier, the customer, the date of issue, a description of the service and the amount. These documents must be kept for at least five years.

The next step is to make sure that you keep regular and accurate records of income and expenses. This may include the use of accounting software or hiring a professional accountant. According to Art. 7 of the Accounting Act, all financial operations must be recorded in chronological order and supported by documents that prove their legality and veracity.

It is also important to understand your tax obligations. Freelance doctors must file an annual tax return by April 30 of the following year, as provided for in Art. 50 of the ZDDFL. Depending on their income, they may be required to pay advance income tax.

Insurance contributions should not be neglected either. Freelance doctors are obliged to provide for pension, health and general illness and maternity. According to Article 40, paragraph 1 of the Social Insurance Code, insurance contributions are calculated on the basis of the minimum insurance income for self-employed persons, but not less than the minimum wage for the country.

It is also important to have a clear understanding of cash registers and the issuance of cash receipts. According to Ordinance H-18, every doctor who performs paid medical services is obliged to use a cash register and issue cash receipts for each transaction.

To ensure proper reporting and compliance with regulatory requirements, it is also helpful to keep up to date on legislative changes that may affect your practice. This may include changes in tax legislation, social security and other relevant regulatory enactments.

Last but not least, hiring a professional accountant or consulting firm such as Elan Consulting can greatly facilitate the accounting management of your private doctor's office. They can provide you with expert advice and assistance in meeting all necessary financial and tax obligations, which will allow you to focus on providing high-quality medical services to your patients.

When is a doctor's office or medical center required to register for VAT?

The organization of VAT registration for a doctor's office or medical center depends on a number of factors related to the volume of income and the nature of the services provided. Although many medical services are exempt from VAT under Bulgarian law, there are cases when VAT registration is mandatory.

First, according to Art. 96 (1) of the Value Added Tax Act (VAT), any person who carries out independent economic activity and whose taxable turnover for the last 12 months exceeds BGN 100,000 (with the threshold increasing to BGN 166 000 from 01.01.2025) is obliged to register for VAT. That is, if the revenues of the doctor's office or medical center exceed this threshold, VAT registration is mandatory, regardless of the type of services provided.

At the same time, according to Art. 39 of the ZVAT, certain health and medical services are exempt from VAT. This includes:

1. The provision of health (medical) services and directly related services provided by health facilities and kindergartens under the Health Act and by medical institutions under the Medical Institutions Act.
2. The supply of human organs, tissues and cells, blood, blood components and breast milk.
3. The supply of prostheses and services for the provision of them to persons with disabilities, where the supplies are part of health services.
4. The supply of implantable medical devices when they are part of health services.
5. The supply of dental prostheses by dentists or dental technicians.
6. The provision of transport services for sick or injured persons with specially designed vehicles.
7. The supply of goods and services within the framework of humanitarian activities carried out by the Bulgarian Red Cross and other non-profit legal entities with a status in the public benefit.
8. The provision of medical care by a person practicing a medical profession under the Health Act.

In these cases, if the revenue of the doctor's office or medical center derives solely from exempt supplies, according to Art. 39, VAT registration is not mandatory, even if the turnover exceeds BGN 100,000 (BGN 166 000 as of 01.01.2025). This is because these services are not considered taxable supplies and are not included in the calculation of the VAT registration threshold.

However, if the doctor's office or medical centre also provides taxable supplies, such as the sale of medical devices or other goods that are not exempt from VAT, these revenues are included in the calculation of turnover. In this case, if the total taxable turnover exceeds BGN 50,000, VAT registration becomes mandatory.

In addition, Art. 100 of the ZVAT provides for the possibility of voluntary registration under VAT, even when the turnover is below the mandatory threshold. This can be useful for medical practices that have significant input costs, as they will be able to benefit from a tax credit for the VAT paid on those costs.

It is important to note that the procedures and requirements for VAT registration are strictly regulated and include submitting an application to the National Revenue Agency (NRA), providing the necessary documents and meeting certain deadlines. When submitting an application for VAT registration, the NRA checks the declared turnover and the circumstances surrounding the applicant's activities.