Value Added Tax in Bulgaria

The current rate of VAT in Bulgaria is 20 per cent. If you buy a property as an individual or as a company from a VAT-registered company,you will have to pay 20 per cent VAT. The seller then passes on this VAT to the government.

VAT Registration

Companies are obliged to register for VAT if the value of their sales is equal to or exceeds 50,000 leva (around €25,500) in any period not exceeding 12 months. You can also choose to register for VAT even if you have no revenue at the time of registration.

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Consequences of VAT Registration

As of the date of your company’s VAT registration you are obliged to charge 20 per cent VAT on all taxable deals carried out in Bulgaria. The company should prepare and file monthly VAT returns and VAT purchase and sales ledgers.These documents should be submitted to the local tax office monthly.The company is obliged to settle its VAT liabilities no later than the 14th of the following month.

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VAT in Operation

VAT charged to the buyer of the real estate will not be recoverable at the point of purchase unless the buyer is also registered for VAT. However, VAT may be recovered by the buyer as long as the property is still owned by the buyer at the date of their VAT registration. In other words, in order to get back the VAT charged on the purchase of real estate, the buyer should not dispose of the property before the date of their VAT registration. Once you have become VAT-registered, however, you will be expected by the tax authorities to be carrying out business and paying VAT for the services and goods that you sell.

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Bearing this in mind, it is important that you schedule the timing of the purchase of the property, VAT registration and subsequent sale of real estate so as to allow for the recovery of the VAT charged on the initial purchase.

Activities that are not subject to VAT (even if you are VAT-registered) for the purposes of this book include:

• Letting a residential property to an individual who uses the property for residential purposes.

• Deals connected with agricultural land or forests.

• The sale of any buildings that are more than five years old; buildings are subject to VAT for five years from the date permission to use is granted, rather than the date when the building was given planning permission.

• The value of the right to build on land.

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