These are the general rules for the Vat taxation of intra-EU services in accordance to the Bulgarian Value Added Tax Act (VATA).
The intra-EU goods supplies are subject to special rules. Here is the VAT taxation procedure for some of the most common intra-EU services provided:
General intra-EU supply taxation rules
The general rules for this type of supplies are listed in Chapter 5 Taxation of intra-community supplies of VATA (articles 51 to 53).
The chargeable event occurs on the date of the supply on the territory during an intra-EU acquisition, except for the cases when the event as listed in Art.7 (4) of VATA occurs on the date when the shipment of the goods to its destination begins.
VAT on an intra-community supply is chargeable on the 15th day of the next month after the occurrence of the event, or on the day of the issuance of the invoice if it is issued before the 15th day of the following month (with the exception of the cases when it has been issued prior to the date of the actual chargeable event).
In the cases when there are continuous or periodic supplies of goods within the EU, according to Art.7 (1-4) of VATA, when they continue for longer than one calendar month, the tax becomes chargeable at the end of that month and every month until the completion of the supplies in which case the chargeable event occurs on the date of the termination.
Supply of transport and freight forwarding services within the EU
The following services are included within the scope of this type of transaction:
- Forwarding or transport from one member state to another.
- Forwarding of goods from one EU country to another as well as transport of these same goods within the country of dispatch or arrival when the internal transport is linked to cross border transport.
According to VATA, there are several criteria used to determine the place of supply when transporting the goods, namely: whether the transport is within or outside of the EU, whether the recipient is taxable or non-taxable, as well as where the goods are actually delivered to.
In the case when an intra-EU transport of goods is for a non-taxable person, the place of supply is the EU country of departure (see Art. 22 (1) of VATA).
As for the transport of goods to countries outside of EU to a non-taxable recipient, the place of supply is where the forwarding is carried out in proportion to the distances covered during the shipment (Art. 22 (2) of VATA).
When the goods are transported to a taxable person located outside the EU, the place of supply is determined in accordance to Art.21 (2 and 3) of VATA, such as the place of supply is the fixed establishment location of the recipient, the permanent address of the recipient or the independent economic activity of the recipient of the goods (Art.22 (3) of VATA).
Art. 22 (4) of VATA specifies the requirements for the postal, courier or transport services and their relationship with the transporting of goods.
If the transport is within the EU but the recipient is not, then the transport companies are required to charge VAT based on the location where the goods were originally dispatched from. In this case, a company outside of the EU can recover the VAT paid I accordance to the rules for VAT reimbursements for foreigners.
The above requirements and tax regimes for intra-EU transport do not include passenger transport, and are only for goods. Passenger transport within the member countries of the EU is treated as “international transport” and is not subject to VAT taxation (zero tax rate).
Also, note that the VAT charge depends on the specific local VAT regime in each member state where the recipient is registered rather than where it is established, which means that companies can pick the place of registration with their best interest in mind.
These services include organizing, conducting and handling the transport of goods in or outside of the EU, along with all activities included in the process such as: packaging, labeling, loading, document processing, insurance, storage, re-loading and others. (Art.22 (5) of VATA). For the purposes of this act, any postal, courier or forwarding services which are not among those listed in Art.49 of VATA which provide transport of goods both within and outside of the European Union are considered intra-EU or non-EU transport services according to Art. 22(4) of VATA.
Supply services provided by intermediaries
According to Art.24 of VATA, in case an intermediary is used for the supply of goods to a non-taxable person, the place of supply is the location of the original supply where the intermediary acts.