Bulgaria: New rules for cash reporting in Bulgaria

International Tax Review is part of Legal Benchmarking Limited, 4 Bouverie Street, London, EC4Y 8AX

Copyright © Legal Benchmarking Limited and its affiliated companies 2024

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Bulgaria: New rules for cash reporting in Bulgaria

pechilkova.jpg

Donka Pechilkova

On January 1 2014, Bulgaria took one more step forward to the synchronisation of the local Bulgarian legislation with the European one by passing changes in the Law on Value Added Tax by applying a special regime of cash reporting for Bulgarian entities. This kind of reporting is well known in more than twenty EU member states and they have proved their good results. The main principle underlying this regime is the VAT to be payable in the tax period when the company received payment, fully or partially, from its client but not when the related invoice is issued. Respectively companies, registered under this regime will accrue and deduct VAT of the preceding deals after payment to the supplier is executed. Once payment is executed a protocol for payment should be issued and based on this protocol the relevant amount will be included into the VAT statement for the related tax period. It is important to note the regime is applicable only for deals that have place of performance in the territory of Bulgaria, and is not applicable for import of goods, inter-community sales and deliveries; zero rated deals; deals between related parties and sales to non-registered under VAT regime entities. The regime does not have a mandatory character and Bulgarian companies can choose to register voluntary under this regime.

In accordance with the Bulgarian legislation, there are some restrictions on applying of the 'cash reporting' regime. It could be applicable for entities that are VAT registered; have turnover not more than €500,000 ($685,000) for the last 12 months; the entity is not classified as risky from the National Revenue Agency structures; the entity has not been appointed for cases of abuses and has no claims for collection of public liabilities. All the payments from and to companies, registered under the cash reporting regime should be bank transfers or post transfers via license post operators.

The changes aim to help to the Bulgarian business by improving the liquidity of the companies, especially to the small and medium business level. Last but not least is the attempt of the politics by these changes to avoid the possibility of tax frauds, which is showing their will to secure much better future business environment.

Donka Pechilkova (donka.pechilkova@eurofast.eu)

Eurofast Global, Sofia Office

Tel: +359 2 988 69 78

Website: www.eurofast.eu

more across site & bottom lb ros

More from across our site

Luxembourg saw the highest increase in tax-to-GDP ratio out of OECD countries in 2023, according to the organisation’s new Revenue Statistics report
Ryan’s VAT practice leader for Europe tells ITR about promoting kindness, playing the violincello and why tax being boring is a ‘ridiculous’ idea
Technology is on the way to relieve tax advisers tired by onerous pillar two preparations, says Russell Gammon of Tax Systems
A high number of granted APAs demonstrates the Italian tax authorities' commitment to resolving TP issues proactively, experts say
Malta risks ceding tax revenues to jurisdictions that adopt the global minimum tax sooner, the IMF said
The UK and what has been dubbed its ‘second empire’ have been found to be responsible for 26% of all countries’ tax losses by the Tax Justice Network
Ireland offers more than just its competitive corporate tax environment but a reduction in the US rate under a Trump administration could affect the country, experts tell ITR
The ‘big four’ firm was originally prohibited from tendering for government work until December 1 due to its tax leaks scandal, but ongoing investigations into the matter have seen the date extended
Approximately 74% of MAP cases in 2023 reached a full resolution, but new transfer pricing MAP cases fell by 16%
Brazil is looking to impose the OECD’s 15% global minimum tax on multinationals; in other news, PwC is set to pull out of Fiji
Gift this article