Bulgaria’s Cabinet approves draft amendments to Value Added Tax Act
A phased increase in the threshold for registration under the Value Added Tax Act (VAT) – up to 60 000 euro in 2027, 70 000 euro in 2028 and 75 000 euro in 2029 – is among amendments to the Value Added Tax Act approved by Bulgaria’s Cabinet on November 4, the government information service said.
The amendments will require approval by Parliament.
“The amendments are justified by inflationary processes, economic growth rates and the current economic reality,” the government information service said.
“The introduction of a clear three-year schedule for increasing the threshold ensures predictability for businesses and the possibility of long-term planning of activities,” it said.
The possibility is preserved for small enterprises whose turnover does not exceed the threshold to continue to have the opportunity to exercise their right to apply the general VAT system.
The current threshold, introduced on April 1 2025, was reduced to ease business, “but given the cumulative inflation and the increase in the turnover of small and medium-sized enterprises, it quickly exhausted its positive effect,” the statement said.
According to general European legislation, each EU country determines its own threshold for VAT registration based on the specific characteristics of the economy and the estimated effect on the administrative burden, the costs of economic operators and the revenue administration, budget revenues, etc, the government information service said.
“The new threshold enables the revenue administration to direct more resources to preventing and combating tax fraud, tax evasion and tax avoidance, as well as to improving the quality of services for taxpayers and the efficiency of VAT collection from large business entities”
Other major changes in the draft are related to the introduction of mandatory electronic invoicing and real-time reporting for local supplies from 2028.
During the public consultations, the initial centralised model was replaced by a decentralised interoperability model.
The change is related to the unification of requirements with the European ViDA framework (“VAT in the Digital Age”), according to which from 1 July 2030, EU member states must introduce mandatory electronic invoicing for cross-border supplies into national legislation.
Rules are also established for the mandatory issuance of structured electronic invoices for local supplies and advance payments between companies, organizations and state authorities established in the country.
Mandatory registration under the VAT Act before the first delivery is introduced for taxable persons making sales of new buildings and regulated land properties.
“The purpose of this change is to eliminate the grey sector in quick disposal transactions with land and buildings, carried out in a short period immediately before the registration of persons under the general procedure,” the statement said.
“The measures are aimed entirely at effectively combating tax fraud and limiting the possibilities for VAT evasion when transferring real estate, including – new buildings, parts thereof, adjacent terrain and regulated land properties.”
The changes to the VAT Act will achieve modernisation of the tax system, reduction of the administrative burden, fight against tax fraud and harmonisation of Bulgarian legislation with European law, the statement said.
(Photo: Darren Shaw/ sxc.hu)
