A situation is possible in which a person registered in Bulgaria under the Value Added Tax Act (VATA) owns real estate, purchased with a tax credit, with which the person wants to register a new company. Several important questions arise in this hypothesis. First of all, is it possible to contribute with real estate purchased with a tax credit to a new company that is not a VAT registered person. The second important question that should be answered is what would happen to the tax credit for the real estate in the event that the new company is a registered or non-registered person for VAT purposes.
Tag: VAT
Deduction of tax credit for expenses for travel and business trips of the managers of a foreign company, incurred in connection with the activity of its branch in Bulgaria
When registering a branch of a foreign trader in Bulgaria, a question arises whether the expenses for travel and business trips of the managers of the foreign trader, which are reported in Bulgaria, are subject to tax credit deduction.
Branch of a foreign trader in Bulgaria
I. General provisions
In view of the tax advantages that Bulgaria provides for foreign investors, and taking into account the country’s membership in the European Union, one of the often preferred forms of commercial activity in Bulgaria by traders from other countries is the establishment of a branch of a foreign trader.
The registration of a branch of a foreign trader in Bulgaria does not lead to the creation of a new legal entity, but only to a territorially and organizationally separated part of it. The branch has its headquarters, object of activity, a person who manages it, workers, etc. However, the branch does not own separate property other than that of its principal. Continue reading “Branch of a foreign trader in Bulgaria”
Taxation of self-insured persons
For the income acquired from his activity in Bulgaria, the self-insured person is obliged to issue a reporting document.
A self-employed person, who has acquired income from his activity and has declared to the payer of the income the circumstance that he is self-insured, owes in advance a tax on the difference between the taxable income and the legally recognized expenses for his activity, as well as the social security contributions, which he is obliged to make at his own expense for the months of the quarter during which the taxable income has been acquired.
Varieties of the distance selling of goods from 01.07.2021
From 01.07.2021 the following types of distance selling of goods are introduced in the Bulgarian VAT legislation: intra-Community distance selling of goods; distance selling of goods imported from third countries or territories; domestic distance selling of goods; delivery of goods, which is facilitated by an electronic interface.
Intra-Community distance selling of goods is the dispatch or transport of goods by the supplier or on his behalf from the territory of a Member State other than that in which the dispatch or transport of the goods to a non-taxable person, including a taxable person and a non-taxable legal person carrying out an exempt intra-Community acquisition ends. The goods must have been produced in the EU or have already been released for free circulation. The rules on intra-Community distance selling of goods do not apply to the following categories of goods: new vehicles; goods that are mounted and / or installed by or at the expense of the supplier; goods subject to a special price margin procedure for second-hand goods, works of art, collectors’ items and antiques.
Continue reading “Varieties of the distance selling of goods from 01.07.2021”
Cross-border supplies of goods between the EU and the United Kingdom and VAT refunds from 01.01.2021
As of the end of the transition period (31 December 2020), the EU rules in the field of VAT, and in particular Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax and Council Directive 2008/9/EC of 12 February 2008 laying down detailed rules for the refund of value added tax, provided for in Directive 2006/112/EC, to taxable persons not established in the Member State of refund but established in another Member State, no longer apply to and in the United Kingdom. This has in particular the following consequences concerning the treatment of taxable transactions of goods and VAT refunds:
I. VAT RULES FOR CROSS-BORDER SUPPLIES OF GOODS
Taxation through the Amazon platform
We will look at the specifics of taxation when declaring services provided through a platform such as Amazon under the VAT Act. Imagine that we have a Bulgarian company that operates online trading through a platform such as Amazon and other similar online trading platforms.
The current trend for such cooperation is to take place through the so-called “dropshipping” model. The dropshipping business is a way to trade in goods that have not been purchased in advance by the manufacturer. The dropshipping trader advertises the product and when it is sold online, the trader buys it from the manufacturer and sends it to the customer. Continue reading “Taxation through the Amazon platform”
Amazon FBA and taxation
Amazon FBA, or Fulfillment by Amazon, is a business model that might seem attractive. Basically, if you decide to sell a certain product through Amazon, the deal is that you send your product to Amazon for storage and distribution, properly packaged. From then on it is your job to promote your business and find new clients, while Amazon does the practical things like handling orders and sending the products. There are, of course, fees for this service, as well as fees for storage.
But you should bear in mind that going into this line of business may bring some purely bureaucratic setback to you. There are Amazon’s strict rules to consider, there are sales tax and VAT regulations in different EU and non-EU countries, and there is personal responsibility for faulty or dangerous products. Continue reading “Amazon FBA and taxation”
Required documentation and reporting in compliance with the Value Added Tax Act (VATA)
In accordance with the 2006/112 EC directive from 28.12 2016 issued by the EC for the adoption of a common VAT taxation system among member states, there are set rules for issuing invoices and for the harmonization of the tax laws related to VAT including the specific requirements for their contents and conditions for issuing in Bulgaria. Any tax registered supplier is obligated to issue an invoice for the supply of services or goods for an advance payment received except for the cases when the supplies are documented otherwise.
A person who is registered under VATA for taxable supplies can take advantage of the right for tax deduction only when the services and goods provided are used for the purposes said by the registered person. Continue reading “Required documentation and reporting in compliance with the Value Added Tax Act (VATA)”
VAT charging and tax rates
Responsibility for charging VAT
Any person registered under the Bulgarian Value Added Tax Act (VATA) is obliged to charge value added tax and issue a tax document, such as an invoice, protocol or notice with the VAT amount indicated on a separate line. The document needs to be added to the purchase ledger for the relevant period in the VAT declaration issued in accordance to Art. 86 of VATA. If a document is not issued in the required period, the VAT is due for the period when the tax becomes chargeable. Continue reading “VAT charging and tax rates”