VAT in Bulgaria: A Complete Guide for Foreign Businesses and Entrepreneurs in 2026

Rates, Registration Thresholds, Mandatory and Voluntary Registration, EU Cross-Border Rules, VAT Returns, Refunds, Exemptions, and Practical Compliance for International Companies Operating in Bulgaria

20% Standard VAT Rate

€51,130 Mandatory Registration Threshold (BGN 100,000)

9% Reduced Rate (Hotels, Books, Baby Products)

Monthly VAT Return Filing Frequency

Introduction: Why VAT Matters for Foreign Businesses in Bulgaria

Value Added Tax (VAT) — known in Bulgarian as ДДС (Данък Добавена Стойност, ДДС) — is the primary indirect tax in Bulgaria and one of the most operationally significant tax obligations for any business operating in the country. Bulgaria is a full EU member state, and its VAT system is harmonised with the EU VAT Directive (2006/112/EC), meaning the fundamental principles are the same as in Germany, France, or the Netherlands. However, the specific rates, thresholds, registration procedures, and compliance requirements have Bulgarian-specific features that every foreign entrepreneur and business owner must understand.

For foreign entrepreneurs registering a Bulgarian company — whether an EOOD (single-member LLC) or OOD (multi-member LLC) — VAT is a central element of the tax compliance framework. The decision of when and whether to register for VAT, how to structure cross-border transactions with EU and non-EU partners, how to claim VAT refunds, and how to manage the monthly compliance cycle are all questions that arise early in the life of any Bulgarian company with meaningful commercial activity.

This guide covers the complete Bulgarian VAT framework for foreign businesses: the legal basis, all applicable rates and their scope, the mandatory and voluntary registration rules, the cross-border VAT rules for EU and non-EU transactions, the VAT return filing and payment process, VAT refund procedures, the OSS (One Stop Shop) system for e-commerce, penalties for non-compliance, and practical recommendations for structuring VAT obligations efficiently. It concludes with a detailed FAQ covering the questions most commonly asked by Bulgaria For Business VCC clients.

This guide reflects Bulgarian VAT law as of January 2026, following Bulgaria’s adoption of the euro on 1 January 2026. All monetary thresholds previously denominated in Bulgarian lev (BGN) now have direct euro equivalents at the fixed conversion rate of BGN 1.95583 = €1. The BGN 100,000 mandatory VAT registration threshold is equivalent to €51,130. This guide provides both BGN and EUR figures where relevant.

Legal Basis for VAT in Bulgaria

Bulgarian VAT is governed by the Value Added Tax Act (Закон за данък върху добавената стойност — ЗДДС), first enacted in 2006 and regularly updated to incorporate EU Directive changes. The implementing regulation is the Regulation for the Application of the VAT Act (Правилник за прилагане на ЗДДС — ППЗДДС). The administering authority is the National Revenue Agency (Национална агенция за приходите — НАП), which manages VAT registration, returns, payments, refunds, and enforcement.

Legal Framework

Legal Instrument	Role
EU VAT Directive 2006/112/EC	Framework directive that all EU member states must implement; defines the principles of VAT, taxable transactions, place of supply rules, exemptions, and the right to deduct input VAT
Value Added Tax Act (ЗДДС)	Primary Bulgarian legislation implementing the EU Directive; defines rates, registration thresholds, taxable persons, exemptions, and procedural requirements
Regulation for Application of the VAT Act (ППЗДДС)	Detailed implementing regulation; specifies forms, procedures, documentation requirements, and technical rules
National Revenue Agency (НАП)	The competent authority for VAT registration, administration, audit, and enforcement in Bulgaria; all VAT returns filed with НАП
Ministry of Finance	Issues binding interpretations (данъчно-осигурителни становища) on VAT questions; publishes guidance on VAT law application

VAT Rates in Bulgaria

Bulgaria applies three VAT rates: the standard rate of 20%, a reduced rate of 9%, and a zero rate of 0%. Each rate applies to a defined category of supplies. The standard rate applies unless a specific provision designates the reduced or zero rate.

VAT Rates and Their Application

Rate	Applies To	Key Examples	Notes
20% (Standard)	All taxable supplies of goods and services not qualifying for a reduced or zero rate	Most goods and services; professional services; software; consulting; retail trade; manufacturing; advertising; financial services (where not exempt)	The default rate; applies unless another rate is explicitly specified in the ЗДДС
9% (Reduced)	Specific categories defined in Art. 66(2) ЗДДС	Hotel and accommodation services (including tourist apartments); books and periodical publications (including e-books and e-periodicals from 2025); baby food and diapers/nappies	Extended to e-books and digital publications from 2025 EU harmonisation; applies to accommodation regardless of whether the provider is a hotel, guesthouse, or private rental
0% (Zero)	Intra-EU supplies of goods to VAT-registered buyers in other EU states; exports to non-EU countries; international transport; certain other specifically designated supplies	Export of goods outside the EU; supply of goods to VAT-registered EU businesses (intra-community supply); international air and sea transport; supply of goods or services for diplomatic purposes	Zero rate — not exempt: the supplier does not charge VAT but retains the right to deduct input VAT on purchases related to these supplies. This is the critical distinction from exempt supplies.
Exempt (No VAT)	Specific categories in Art. 45–47 ЗДДС; no VAT charged and no right to deduct input VAT	Sale and rental of residential property (with exceptions); financial services (lending, credit, insurance); healthcare services; educational services; postal services; certain cultural activities	Exempt supplies do NOT carry the right to deduct input VAT. Businesses making primarily exempt supplies cannot recover the VAT they pay on their purchases. This is a significant tax cost consideration for businesses in exempt sectors.

KEY DISTINCTION: The distinction between zero-rated (0%) and exempt supplies is critical and frequently misunderstood. A supplier making zero-rated sales (e.g. exporting goods outside the EU) charges no VAT but can fully deduct input VAT on their purchases — making them a net VAT recipient from the state. A supplier making exempt sales (e.g. renting residential apartments) charges no VAT and cannot deduct input VAT — meaning the VAT they pay on their purchases becomes an irrecoverable cost. For mixed businesses making both taxable and exempt supplies, a pro-rata calculation determines how much input VAT can be deducted.

VAT Registration: Mandatory and Voluntary

Mandatory Registration Threshold

A taxable person (физическо или юридическо лице) carrying out an economic activity in Bulgaria is required to register for VAT when its taxable turnover reaches BGN 100,000 (approximately €51,130) within any consecutive 12-month period. The obligation to apply for registration arises immediately when this threshold is reached — the application must be submitted within 7 days after the end of the month in which the threshold was exceeded.

2025 THRESHOLD CHANGE: From 1 January 2025, the mandatory VAT registration threshold in Bulgaria increased from BGN 50,000 to BGN 100,000, aligning with the EU SME VAT exemption scheme under the amended VAT Directive. This change doubled the threshold and reduced the administrative burden on smaller businesses. Companies already registered under the old threshold remain registered; they do not need to deregister.

Registration Thresholds

Threshold Type	Amount (BGN)	Amount (EUR)	Trigger	Application Deadline
Mandatory registration — taxable turnover	BGN 100,000	€51,130	Cumulative taxable turnover in any rolling 12-month period reaches BGN 100,000	Within 7 days after the end of the month in which the threshold is reached
Mandatory registration — intra-EU acquisition	BGN 20,000	€10,227	Total value of intra-EU acquisitions of goods in a calendar year reaches BGN 20,000	Before the intra-EU acquisition that causes the threshold to be exceeded
Mandatory registration — distance sales (OSS)	EU-wide €10,000	€10,000	Cross-border B2C digital services or distance sales to EU consumers exceed €10,000/year in aggregate across all EU member states	Before the supply that causes the threshold to be exceeded; OSS registration recommended
Voluntary registration	Any amount	Any amount	Business chooses to register despite being below the mandatory threshold	Any time; no minimum turnover required

Voluntary VAT Registration

Any Bulgarian taxable person — regardless of turnover — may voluntarily register for VAT. Voluntary registration is a strategic decision with both advantages and disadvantages that depend on the nature of the business:

Voluntary Registration — Advantages and Disadvantages

Voluntary Registration	Advantages	Disadvantages
B2B businesses selling to VAT-registered clients	VAT-registered clients can deduct input VAT; being VAT-registered is expected by corporate buyers; invoicing without VAT may deter professional clients	Administrative compliance cost; monthly VAT returns required from day one; must charge VAT to non-VAT-registered customers (B2C) from registration date
Businesses with significant input VAT (high purchase costs)	Can recover input VAT on purchases immediately rather than waiting for mandatory threshold; particularly valuable if purchasing expensive equipment, vehicles, or commercial property	Cash flow timing: must pay output VAT to NRA before receiving it from customers (unless immediate payment terms)
Exporters and EU B2B service providers	Can recover input VAT on all purchases; zero-rate or outside-scope treatment of sales means the business receives VAT refunds rather than paying net VAT	Refund process requires documentation and may take time; monthly filing obligation
Businesses below threshold with B2C customers	No particular advantage if customers cannot deduct VAT	Adds 20% to the price for VAT-final consumers; competitive disadvantage if competitors are not registered; compliance burden without corresponding benefit

Bulgaria For Business VCC recommends that all new Bulgarian companies with B2B activity — particularly those providing professional services, consulting, software development, or selling to corporate clients — register for VAT voluntarily from the outset. The practical and reputational benefit of being able to issue VAT invoices from day one outweighs the administrative burden, especially when the accounting is managed professionally.

VAT Registration Procedure

VAT registration in Bulgaria is administered by the National Revenue Agency (НАП). The registration application is submitted to the territorial office of the NRA covering the company’s registered address. Since 2020, the process can also be completed electronically through the NRA’s e-services portal using a qualified electronic signature (КЕП).

Registration Process

Action	Timeframe	Notes
Prepare registration application (Заявление за регистрация по ЗДДС — Form ЗДДС-1)	Before submission	Includes details of the taxable person, grounds for registration (mandatory or voluntary), taxable activity description, and expected turnover
Compile supporting documents	Before submission	Company registration certificate; copy of articles of association; proof of taxable activity (contracts, invoices, bank statements); if applicable, evidence of turnover exceeding the threshold
Submit to the relevant NRA territorial office or electronically	Day of submission	Electronic submission via NRA e-portal requires a qualified electronic signature (КЕП); paper submission in person or by post to the competent territorial directorate
NRA review period	Up to 7 working days	NRA may request additional documents or clarifications; may conduct a brief inspection of the business premises or review bank account information
VAT registration certificate issued	Within 7 working days of complete application	The company receives a VAT identification number (ДДС номер) in the format BG + 9-digit company UIC; this number is used on all VAT invoices
First VAT period begins	From the date of registration	The company must charge VAT on all taxable supplies from the registration date; first VAT return covers the calendar month in which registration was granted

COMPLIANCE FROM DAY ONE: From the date of VAT registration, the company must add VAT to all invoices for taxable supplies. Issuing invoices without VAT after registration is a compliance violation. Equally, issuing invoices with VAT before registration is also illegal. The registration date is the clean dividing line, and all accounting systems and invoicing templates must be updated on that date. Bulgaria For Business VCC manages the full VAT registration process as part of our company administration service.

VAT Invoices: Requirements and Format

A VAT invoice (данъчна фактура) is the fundamental document of the Bulgarian VAT system. Every taxable supply between VAT-registered parties must be supported by a compliant VAT invoice. Invoices that do not meet all mandatory requirements do not give rise to the right to deduct input VAT.

Mandatory Invoice Elements

Sequential invoice number — Unique 10-digit number; must be sequential; cannot skip numbers; the numbering series must be declared to the NRA

Issue date — Date of invoice creation; must be within 5 days of the taxable event (delivery of goods or completion of service)

Supplier details — Full legal name, address, UIC (ЕИК), and VAT number (ДДС номер) in format BGXXXXXXXXX

Customer details — Full legal name, address, and VAT number (if the customer is VAT-registered in Bulgaria or another EU member state); for unregistered B2C customers, name and address

Description of goods or services — Clear description sufficient to identify the supply; generic descriptions (‘services’) are not sufficient — must specify the nature of the service

Date of taxable event — Date on which goods were delivered or services were completed (may differ from invoice date)

VAT base (данъчна основа) — The amount before VAT; the basis on which VAT is calculated

VAT rate applied — 20%, 9%, or 0% as applicable; or notation that the supply is exempt

VAT amount — The VAT calculated on the VAT base at the applicable rate

Total amount payable — VAT base plus VAT amount

For zero-rated intra-EU supplies — Customer’s EU VAT number; notation that the supply is zero-rated as an intra-community supply (e.g. ‘Intra-Community Supply, Art. 138 VAT Directive’)

For reverse charge supplies — Notation that VAT is accounted for by the customer under the reverse charge mechanism; customer’s VAT number

Electronic invoices (e-invoices) are fully acceptable in Bulgaria and widely used. They must contain all the same mandatory elements as paper invoices and must be stored in a way that ensures their integrity and authenticity for the 10-year document retention period. PDF invoices sent by email are widely accepted; structured e-invoice formats (XML) are increasingly used for B2B transactions and will become progressively more prevalent under the EU’s e-invoicing Directive.

VAT Returns: Filing, Payment, and Deadlines

Filing Frequency and Deadline

All VAT-registered persons in Bulgaria are required to file monthly VAT returns (Справка-декларация по ЗДДС). The return covers the calendar month and must be filed — and the net VAT payable must be paid — by the 14th day of the following month. There is no quarterly filing option in Bulgaria; the monthly cycle applies to all registered persons regardless of the volume of their transactions.

VAT Filing Requirements

Filing Element	Detail
Return form	Справка-декларация по ЗДДС (VAT Return); submitted electronically via the NRA e-portal using a qualified electronic signature
Tax period	Calendar month (1st to last day of the month)
Filing deadline	14th day of the month following the tax period (e.g. January return filed by 14 February)
Payment deadline	Same as filing deadline: 14th of the following month
VIES filing (for intra-EU supplies)	VIES (VIES Декларация) must be filed simultaneously for months in which intra-EU supplies or acquisitions occurred; same 14th-day deadline
Intrastat declaration	Required for companies whose intra-EU trade in goods exceeds the Intrastat threshold (BGN 780,000 for arrivals; BGN 1,560,000 for dispatches in 2026); filed monthly
Zero return months	A return must be filed even in months with no transactions (zero return); failure to file is a violation even when no tax is due
Correction of errors	Errors in submitted returns can be corrected by filing an amended return; corrections for prior periods require a specific procedure; NRA audit may trigger corrections

Calculating the VAT Payable or Refundable

The VAT return reconciles output VAT (charged on sales) against input VAT (paid on purchases). The net position determines whether the company owes tax to the state or is entitled to a refund:

Output VAT: the total VAT charged on all taxable supplies made during the month (sales, services rendered, etc.)
Input VAT (deductible): the total VAT paid on purchases, expenses, and imports that relate to taxable business activities
Net VAT payable: Output VAT minus Input VAT = positive balance → company pays this amount to NRA by the 14th of the following month
Net VAT refundable: Input VAT minus Output VAT = negative balance → company is entitled to a VAT refund (see refund section below)
Carry-forward option: where the refundable amount is below BGN 25,000 (€12,782), the company may choose to carry the credit forward to offset against future VAT liabilities rather than claiming an immediate refund

Input VAT Deduction: What Can Be Recovered

The right to deduct input VAT — to recover the VAT paid on purchases and expenses — is the mechanism that prevents VAT from accumulating as a cost through the supply chain. For VAT-registered businesses, this right is fundamental and has specific rules and limitations under Bulgarian VAT law.

Input VAT Deductibility

Category	Deductible?	Conditions / Limitations
Goods and services used exclusively for taxable business activities	✓ Yes — 100%	The purchase must be for the taxable economic activity of the registered person; must have a valid VAT invoice meeting all mandatory requirements
Goods and services used for both taxable and exempt activities (mixed use)	Partial — pro-rata	Input VAT deductible in proportion to the ratio of taxable turnover to total turnover (pro-rata coefficient — коефициент за начин на ползване); calculated annually and applied to the year’s purchases
Capital goods (assets used in the business for 5+ years)	✓ Yes, subject to adjustment rules	Input VAT on capital goods (сгради, техника, МПС) deducted upfront; adjustments required if the use of the asset changes over a 5-year period (20% per year)
Business vehicles (леки автомобили)	Restricted — 50% as a rule	Input VAT on passenger cars (vehicles with up to 5 seats plus driver) is only 50% deductible unless the vehicle is used exclusively for specific business purposes (taxi, rental, driving instruction); fuel for such vehicles also 50%
Expenses for entertainment, gifts, or personal use	✕ Not deductible	VAT on expenses that are not for business purposes, gifts over a nominal value, or entertainment cannot be deducted; these are final costs for the business
Purchases from non-VAT-registered suppliers	Not applicable	A VAT invoice from a non-registered supplier carries no VAT; there is no input VAT to deduct; the purchase cost is simply an expense
Import VAT (upon importing goods)	✓ Yes — 100% if for taxable business use	VAT paid at customs on import of goods from non-EU countries is deductible as input VAT in the period in which the import declaration is issued; customs documents serve as the VAT invoice for this purpose

VEHICLE VAT RESTRICTION: The 50% restriction on input VAT for passenger cars is one of the most frequently overlooked limitations by new Bulgarian business owners. If your company purchases a car, van, or SUV with fewer than 8 passenger seats (plus driver) for general business use, only 50% of the VAT is deductible. The remaining 50% becomes an irrecoverable cost. This also applies to fuel and maintenance of such vehicles. Bulgaria For Business VCC advises clients on the vehicle acquisition structures that optimise VAT recovery.

VAT Refunds: Procedure and Timelines

When a VAT-registered company’s input VAT exceeds its output VAT in a given period — typically because it is an exporter, operates at zero rate, or has made large capital investments — it is entitled to a VAT refund from the NRA. This is a standard situation, not an exception, and the VAT refund system is an important cash flow mechanism for export-oriented businesses.

VAT Refund Process

Refund Situation	Timeframe	NRA Process
Standard refund request (amount below BGN 25,000)	Within 30 days of the VAT return filing deadline	NRA reviews the return; may conduct a desk audit (проверка); refund transferred to the company’s bank account if no issues are identified
Accelerated refund (for companies with good compliance history)	Within 30 days	Companies that have been VAT-registered for 24+ months with no compliance violations may qualify for accelerated refund processing
Refund above BGN 25,000	Up to 60 days; may trigger full audit	Larger refund claims routinely trigger a more thorough NRA review; documentation of the supplies giving rise to the refund must be available; audits of exporting companies are common
Refund to carry-forward	Immediate — no application needed	If the refundable amount is below BGN 25,000, the company may choose to carry forward the credit against future VAT liabilities rather than requesting an immediate refund; this is often more practical for companies with consistent monthly activity

FOR EXPORT BUSINESSES: For Bulgarian companies that primarily export goods or provide services to non-Bulgarian EU or non-EU clients (e.g. software development companies, IT service providers, consulting firms with international clients), the monthly position is typically a refund position — the company pays 20% input VAT on its Bulgarian purchases but charges 0% or no VAT on its exports. Managing this refund cycle efficiently — ensuring documentation is complete and refund claims are filed correctly — is a significant cash flow management task that Bulgaria For Business VCC handles for our accounting clients.

Cross-Border VAT: EU Rules for Bulgarian Companies

For companies doing business across EU borders — buying from or selling to businesses or consumers in other EU member states — the EU VAT rules on place of supply, reverse charge, and the VIES reporting system are essential knowledge. These rules replaced the old export/import framework within the EU and apply specifically to intra-community transactions.

B2B Services: The Reverse Charge Mechanism

When a Bulgarian VAT-registered company provides services to a VAT-registered business in another EU member state, the general rule (Art. 44 EU VAT Directive, Art. 21 ЗДДС) is that the place of supply is where the customer is established. This means the Bulgarian supplier does not charge Bulgarian VAT; instead, the customer in the other EU country accounts for VAT in their own country under the reverse charge mechanism. The Bulgarian supplier issues a zero-rated invoice and reports the supply in the VIES declaration.

Cross-Border VAT Treatment

Transaction Type	VAT Treatment	Invoice Requirement	VIES?
Bulgarian company sells services to EU VAT-registered business	Zero-rated in Bulgaria; customer accounts for VAT in their country (reverse charge)	Invoice without Bulgarian VAT; customer’s EU VAT number on invoice; notation: ‘Reverse charge — Art. 21 ЗДДС / Art. 44 VAT Directive’	✓ Yes — report in monthly VIES declaration
Bulgarian company buys services from EU VAT-registered business	Bulgarian company accounts for VAT as if it is both supplier and buyer (reverse charge acquisition); 20% Bulgarian VAT self-assessed; simultaneously deductible if for taxable use	Supplier’s invoice without Bulgarian VAT; Bulgarian company must self-assess VAT in the VAT return (output and input in same return)	✓ Yes — report acquisition in VIES
Bulgarian company sells goods to EU VAT-registered business (intra-EU supply)	Zero-rated in Bulgaria if customer provides valid EU VAT number and goods are physically transported to another EU state	Invoice with customer’s EU VAT number; transport documentation required (CMR, delivery note); zero rate notation	✓ Yes — mandatory VIES reporting
Bulgarian company buys goods from EU VAT-registered business (intra-EU acquisition)	Bulgarian VAT applies at 20%; self-assessed by Bulgarian buyer; deductible if for taxable use	Supplier’s invoice; Bulgarian company self-assesses acquisition VAT	✓ Yes — report acquisition
Bulgarian company sells services to non-VAT-registered EU consumer (B2C)	VAT in the EU country of the consumer if total B2C sales exceed €10,000/year; OSS registration recommended to simplify	Charge VAT at the rate applicable in the consumer’s country; OSS simplifies payment	No VIES for B2C

Selling to Non-EU Customers (Export)

Supply of goods to customers outside the EU is zero-rated (export). The Bulgarian company charges no VAT and retains the right to deduct input VAT on purchases related to the exported goods. Export documentation (customs export declaration, transport documents, proof of delivery outside the EU) must be retained for 10 years to support the zero rating.

Supply of services to non-EU business customers: under the general B2B rule, the place of supply is where the customer is established (outside the EU), so Bulgarian VAT does not apply. The service is outside the scope of Bulgarian VAT. The Bulgarian supplier can still deduct input VAT on related purchases. This is the same outcome as zero-rating from an input VAT perspective.

The OSS (One Stop Shop) System for E-Commerce and Digital Services

Since July 2021, the EU’s One Stop Shop (OSS) system has simplified VAT compliance for businesses selling digital services or goods to consumers (B2C) in multiple EU countries. For Bulgarian companies selling digital services (software, streaming, online courses, downloads) or goods to EU consumers, OSS is the practical solution to managing multi-country VAT obligations from a single registration.

OSS Schemes

OSS Scheme	Who Uses It	How It Works	Bulgarian Registration
Union OSS (for EU-established businesses)	Bulgarian companies selling goods or services to B2C customers in other EU member states	Register once with the Bulgarian NRA for OSS; file a single quarterly OSS return covering all EU B2C sales; pay all EU VAT to the Bulgarian NRA, which distributes it to the respective EU member states	Registration via NRA e-portal; available to all Bulgarian VAT-registered companies
Non-Union OSS (for non-EU businesses selling to EU consumers)	Non-EU companies without an EU establishment selling digital services to EU consumers	Register in any EU member state (can choose Bulgaria as the member state of identification); file quarterly returns; pay all EU VAT centrally	Registration available in Bulgaria for non-EU businesses choosing Bulgaria as their OSS member state of identification
IOSS (Import OSS, for goods imported to EU)	Non-EU or EU sellers sending individual parcels under €150 to EU consumers	Simplified VAT treatment for low-value imports; single registration; goods cleared through customs without additional VAT at the border	Registration in Bulgaria available; practical for businesses shipping to EU from non-EU countries

For Bulgarian software companies, SaaS providers, and digital content creators selling to EU consumers, the Union OSS is an important compliance tool. Without OSS, a Bulgarian company selling to consumers in, say, Germany, France, and Poland would need to register for VAT in each of those countries separately once the €10,000 B2C threshold is exceeded. With OSS, a single Bulgarian registration and a quarterly return covers all EU B2C sales. Bulgaria For Business VCC assists clients with OSS registration and quarterly filing.

VAT Exemptions: What Is Not Subject to VAT

Certain transactions are exempt from VAT under the Bulgarian VAT Act. Exempt supplies are not the same as zero-rated supplies: the supplier of exempt services does not charge VAT AND does not have the right to deduct input VAT on purchases related to those exempt supplies. This makes VAT exemption a significant factor in business cost structuring.

VAT Exemptions

Exempt Category	Key Examples	Input VAT Right?	Practical Impact
Financial services	Lending and credit; deposit-taking; payment services; foreign exchange dealing; securities trading; insurance and reinsurance	✕ No	Banks, insurance companies, and financial intermediaries cannot recover most of their input VAT; this becomes a significant operating cost at scale
Healthcare services	Medical services provided by licensed healthcare professionals; hospital and clinical services; dental treatment (medical component)	✕ No	Private medical clinics and practitioners cannot recover input VAT on most purchases; equipment and premises VAT becomes an irrecoverable cost
Educational services	Formal education services provided by accredited educational institutions; vocational training for the regulated professions	✕ No	Schools, universities, and formal training providers cannot recover input VAT; informal corporate training and coaching may be taxable
Residential property sale and rental	Sale of residential buildings or parts thereof (with exception for first supply of newly constructed residential property, which can be taxable); long-term rental of residential property	✕ No	Landlords renting residential apartments cannot recover VAT on renovation, furnishing, or management costs; this is particularly relevant for property investors
Cultural and sports services	Certain public interest cultural, sports, and educational activities provided by non-profit organisations	✕ No	Non-profit sports clubs and cultural organisations; specific conditions apply
Postal services	Universal postal services provided by the Bulgarian Posts	✕ No	Applies to the public postal monopoly; private courier services (DHL, FedEx, Speedy) are taxable at 20%
Land sales (excluding building land)	Sale of undeveloped land that is not classified as ‘building land’	✕ No	Sale of agricultural land and forest land by private owners; first-time sale of building land is taxable at 20%

PROPERTY INVESTORS: Residential property rental is exempt from VAT — this is a frequently misunderstood point for foreign property investors. If you own Bulgarian apartments and rent them out residentially, you do not charge VAT on the rent (which is an advantage for tenants) but you cannot recover the VAT you pay on renovation, furnishing, or property management costs. Short-term tourist rental (Airbnb-type) is taxable at 9%, not exempt — and if your short-term rental turnover exceeds BGN 100,000, you must register for VAT and charge 9%.

Penalties for VAT Non-Compliance

Violations and Penalties

Violation	Penalty	Notes
Failure to register for VAT when required (late registration)	Fine of BGN 500–5,000 (€256–2,557); plus the VAT that should have been charged from the date the threshold was reached is assessed and must be paid	The NRA can assess VAT for all supplies made from the date when registration was required, retroactively; this can result in significant back-VAT liability
Late filing of VAT return	Fine of BGN 500–3,000 (€256–1,534) for first violation; up to BGN 5,000 for repeated violations	Interest also accrues on any VAT due but not paid; late payment interest rate is the base interest rate plus 10 percentage points annually
Failure to issue a VAT invoice	Fine of 25–50% of the VAT that should have been charged; minimum BGN 500 (€256)	Each invoice not issued is a separate violation; penalties accumulate
Issuing an incorrect or incomplete VAT invoice	Fine of BGN 100–1,000 (€51–511) per incorrect invoice	Invoice missing mandatory elements; wrong VAT rate applied; incorrect tax base
Incorrect input VAT deduction (overclaiming)	Assessment of the excess VAT deducted plus interest; fine of 25–50% of the incorrectly deducted amount	If NRA audit identifies overclaimed input VAT, the business must repay the excess plus interest and a penalty
Failure to file VIES declaration	Fine of BGN 500–1,000 (€256–511)	VIES is a mandatory EU information exchange system; non-filing also prevents the zero-rating of intra-EU supplies
Tax evasion (intentional non-payment or fraudulent refund claims)	Criminal liability; fines up to BGN 20,000+ (€10,227+); potential imprisonment for serious cases	Intentional VAT fraud is a criminal offence under the Bulgarian Penal Code as well as an administrative violation

VAT Deregistration

A VAT-registered person may or must deregister from VAT in specific circumstances. Deregistration is also administered by the NRA and has important implications for any remaining input VAT credit and for the treatment of the business’s assets at the time of deregistration.

Deregistration Grounds

Deregistration Ground	Mandatory or Voluntary?	Procedure	VAT Consequence
Cessation of economic activity	Mandatory	Application within 14 days of cessation	All assets of the business at the time of deregistration are treated as a supply — VAT must be self-assessed on their market value if input VAT was previously deducted on their purchase; this is the ‘exit VAT’ charge
Turnover falling consistently below the threshold for 12 months	Voluntary — the business may choose to remain registered	Application to NRA; must demonstrate turnover has remained below threshold	No mandatory consequence if the business remains below threshold but stays registered; deregistration triggers exit VAT on assets
Company liquidation or merger	Mandatory upon liquidation	Coordinated with the company dissolution process	Exit VAT on remaining assets; final return filed; refund (if any) processed before dissolution
NRA-initiated deregistration (enforcement)	Mandatory	NRA may deregister a company that has not filed returns or has significant unpaid VAT liabilities	Does not cancel the VAT liability; NRA pursues the debt through enforcement mechanisms

Bulgarian VAT vs. Other EU Countries: Key Comparisons

VAT Comparison Across EU Countries

Country	Standard Rate	Reduced Rate(s)	Registration Threshold	Filing Frequency
Bulgaria	20%	9% (accommodation, books, baby products)	€51,130 (BGN 100,000)	Monthly
Germany	19%	7% (food, books, public transport)	€22,000 (Kleinunternehmerregelung)	Monthly or quarterly depending on liability
France	20%	10% (restaurants, construction) / 5.5% (food, books)	€91,900 (services) / €36,800 (services, lower)	Monthly or quarterly
Netherlands	21%	9% (food, medicines, books)	€20,000	Quarterly (most businesses)
Romania	19%	9% (food, medical) / 5% (books, cultural)	RON 300,000 (≈60,000)	Monthly (large) or quarterly (small)
Poland	23%	8% (food, accommodation) / 5% (basic food)	PLN 200,000 (≈46,000)	Monthly or quarterly
Greece	24%	13% (food) / 6% (medicine, books)	€10,000	Monthly
Czech Republic	21%	12% (accommodation, food)	CZK 2,000,000 (≈78,000)	Monthly or quarterly

COMPARATIVE NOTE: Bulgaria’s combination of a relatively modest standard VAT rate (20%), a meaningful registration threshold (€51,130 — higher than Greece, Poland, or Romania), and a simple two-rate structure (20% and 9%) makes it one of the more straightforward VAT systems to administer within the EU. The monthly filing obligation adds compliance frequency, but the underlying rules are less complex than in many Western European jurisdictions.

Practical Compliance: Tips for Foreign Business Owners

Register for VAT early if you expect to have significant B2B activity or to exceed the threshold within the first year. Being registered from the outset avoids the administrative disruption of registering mid-operation and having to re-invoice clients.
Set up compliant accounting software from day one. Popular solutions used by Bulgarian companies include SAP, Microinvest, Superto, and cloud-based international platforms like Xero or QuickBooks with Bulgarian localisation. All invoices must have sequential numbers and the mandatory elements described in this guide.
File on time, every month, even if the return shows zero activity. The NRA system automatically identifies non-filers and issues fine assessments. A zero return takes minutes to file and costs nothing; the fine for not filing does.
Keep all purchase invoices and import documentation. Input VAT can only be deducted if you have a compliant invoice. Missing or defective invoices mean lost VAT recovery. For the NRA’s 10-year document retention requirement, digital storage of properly authenticated documents is fully accepted.
Verify the VAT numbers of your EU clients. Before applying zero-rate to an intra-EU B2B supply, confirm the customer’s EU VAT number is valid using the EU VIES database (ec.europa.eu/taxation_customs/vies). Supplying zero-rated to an invalid VAT number leaves your company liable for the 20% Bulgarian VAT.
Plan for the vehicle VAT restriction. If your company purchases cars for employee use, factor in that only 50% of the VAT is recoverable. For fleets or single company cars, consider leasing structures where the ongoing lease VAT is 50% deductible rather than absorbing the full upfront VAT cost.
Engage a Bulgarian accountant or accounting firm from day one. The monthly filing cycle, combined with payroll, social insurance, and corporate tax obligations, creates a consistent compliance workload that is impractical to manage without professional support. Bulgaria For Business VCC provides full monthly accounting and VAT compliance services for international clients.

How Bulgaria For Business VCC Can Help: Bulgaria For Business VCC provides comprehensive VAT and tax compliance services for international companies and entrepreneurs operating in Bulgaria: VAT registration (mandatory and voluntary), monthly VAT return preparation and filing, VIES declaration filing, Intrastat declaration preparation, OSS registration and quarterly filing, input VAT optimisation, VAT refund management, cross-border VAT advisory, VAT audit support, and full monthly accounting packages. Contact us at bulgaria-for-business.com.

FAQ — Frequently Asked Questions

Bulgaria applies three rates: 20% (standard, applying to most goods and services), 9% (reduced, applying to hotel accommodation, books, and baby products), and 0% (zero rate, applying to exports and intra-EU B2B supplies). Certain supplies — including residential rental and most financial and healthcare services — are exempt from VAT entirely.

The mandatory VAT registration threshold is BGN 100,000 (approximately €51,130) of taxable turnover in any rolling 12-month period. This threshold was increased from BGN 50,000 to BGN 100,000 on 1 January 2025. Voluntary registration is available at any turnover level.

A foreign company making taxable supplies in Bulgaria that exceed the registration threshold must register for Bulgarian VAT. A foreign company with no physical presence in Bulgaria that sells services to Bulgarian VAT-registered businesses may not need Bulgarian VAT registration — the reverse charge mechanism shifts the VAT obligation to the Bulgarian buyer. Foreign companies selling digital services to Bulgarian consumers may need to register for OSS. The specific requirement depends on the nature and volume of the supplies. Bulgaria For Business VCC advises on the registration requirement for each specific situation.

For companies with B2B clients who are themselves VAT-registered, voluntary registration from the outset is generally advisable. It allows the company to issue proper VAT invoices, recover input VAT on all purchases from day one, and present itself as a professional business operating within the full VAT framework. For companies selling primarily to individual consumers (B2C) with limited purchases, voluntary registration adds compliance cost without proportionate benefit and should be evaluated case by case.

Monthly. All Bulgarian VAT-registered persons file a monthly VAT return (Справка-декларация) by the 14th of the following month, and pay any net VAT due by the same date. There is no quarterly option in Bulgaria. Returns must be filed every month, including months with zero activity.

Only 50% of the input VAT on a passenger car (vehicle with up to 5 seats plus driver) is deductible for a Bulgarian company, regardless of whether the car is used exclusively for business. The full 100% input VAT deduction applies only to vehicles used exclusively for specific purposes: taxi services, driver training, car rental, and transport of goods or people as the company’s core business. Fuel and maintenance costs for partially-deductible vehicles are also only 50% deductible.

If the German client is a VAT-registered business (B2B), the supply falls under the reverse charge rule (Art. 21 ЗДДС / Art. 44 EU VAT Directive). Your Bulgarian company issues an invoice without Bulgarian VAT, noting the customer’s German VAT number and the reverse charge notation. The German client accounts for German VAT. You report the supply in your monthly VIES declaration. Your Bulgarian company retains full right to deduct input VAT on purchases related to this supply.

The VIES (VAT Information Exchange System) declaration (VIES Декларация) is a monthly report filed by Bulgarian VAT-registered companies that lists all intra-EU supplies of goods and services to VAT-registered customers in other EU member states. It must be filed by the 14th of the following month, simultaneously with the VAT return, for any month in which intra-EU supplies occurred. Failure to file the VIES declaration means the zero rate cannot be applied to the relevant supplies.

Long-term residential rental is exempt from VAT — no VAT is charged, and the landlord cannot recover input VAT on related expenses. Short-term tourist rental (Airbnb-type) is taxable at 9% as accommodation services. If short-term rental turnover exceeds BGN 100,000 in any 12-month period, VAT registration is mandatory. Commercial property rental is taxable at 20% (unless the landlord elects the residential property exemption, which is not applicable to commercial property).

Late filing triggers an automatic fine of BGN 500–3,000 (€256–1,534) for a first violation. Interest accrues on any VAT liability from the payment deadline at the base NRA interest rate plus 10 percentage points annually. The NRA system automatically identifies non-filers and issues assessments. Filing late is always preferable to not filing at all — the fine for late filing is significantly lower than the compounding interest and penalties for sustained non-compliance.

Standard VAT refunds are processed within 30 days of the VAT return filing deadline. For companies with a good compliance history (24+ months of registration with no violations), the process is typically prompt. Refunds above BGN 25,000 may trigger a more detailed NRA review and can take up to 60 days or trigger a formal audit. The NRA pays interest on refunds that are delayed beyond the statutory deadline.

The One Stop Shop (OSS) is an EU system that allows businesses selling digital services or goods to consumers in multiple EU countries to register in one EU member state and file a single quarterly return covering all EU B2C VAT obligations. For Bulgarian companies whose B2C digital sales to other EU consumers exceed €10,000 per year, OSS registration with the Bulgarian NRA is the simplest compliance approach. Without OSS, the company would need to register separately in each EU country where it sells to consumers above that country’s VAT threshold.

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Bulgaria For Business VCC — Your Trusted Partner for Business Expansion into Bulgaria and the European Union. All information is provided for general guidance purposes. For advice specific to your situation, please consult our team directly.