The result over a tax period is the difference between the total amount of value added tax you owe for the period and the total amount of the tax credit you have deducted during the period. Where the tax credit exceeds the input tax, the difference is a result for the period – tax for refund (Article 88 of the VATA).
For VAT refund to non-residents, see VAT refund to non-residents
Conditions to fulfil in order to use tax credit
Tax credit is the amount of the tax you have the right to deduct from your tax liabilities under VATA for purchased goods or services received, as well as for advance payments related to them. To use a tax credit, you must:
- to be registered under VATA on grounds other than Art. 97a (registration for services performed and/or received services) or Art. 99 (for intra-Community acquisition);
- the tax shall be charged for goods or services received or paid in advance by you in respect of taxable supply;
- the goods or services to be used for the purposes of your taxable activity;
- to have a tax document in which the tax is indicated on a separate line (if the document is a customs declaration, you need to be listed in it as an importer, and the tax to be paid or issued by a report thereof and the tax to be reversed in the cases of Chapter Eight of the VATA);
- to exercise the right to deduct the tax credit during the tax period of the occurrence of this right or in one of the next twelve tax periods by including the tax document (invoice, customs declaration, protocol) in the purchase ledger;
- the right to deduct the tax credit not to be explicitly excluded from the VATA.
Refund rules
The refund of the tax as a result for the period is regulated in Art. 92 of the VATA. In case that for a given tax period the result is a tax for refund, it is necessary to monitor the results for the following two tax periods, as according to the deduction procedure, the refund tax is deducted from the tax for the next two tax periods. If, after deduction, within the following two tax periods there is a remainder from this refund tax, then you should ask that this tax is refunded to you.
Example:
For the October 2019 tax period, the result for the period indicated in box 60 of the tax return is a tax for refund amounting to BGN 1000. A deduction procedure for this tax begins. For the following two tax periods, the results are: for November – tax for paying BGN 200 and for December – tax for paying BGN 300. They are entered in box 70 of the tax returns. The non-deducted part of the refund tax is BGN 500. This non-deducted remainder is indicated in box 80 of the return for December.
Under certain conditions, the tax shall be refunded for each month without applying the aforementioned deduction procedure. In order to take advantage of this opportunity for an accelerated refund of the tax, it is necessary that the supplies you carry out and their volumes to fall within the scope of Art. 92, para. 3 of the VATA.
Time limit for refund
The time limit for the refund of the tax is conditional on whether an inspection or an audit will be carried out by the revenue administration in relation to the completed deduction procedure.
- Upon inspection, the refund period is 30 days from the submission of the last tax return and after the public liabilities (if any) have been collected by the NRA.
- Upon an audit, the time limit for refund is the deadline for issuing the audit statement.
Not specifying the refund tax in box 80 of the last tax return after a completed deduction procedure does not mean that this tax cannot be refunded to you. In case you forget to fill out the reference box, you can submit a written request to the competent territorial directorate of the NRA. The template for a request for offsetting and refund under Article 129 of the TSSPC.
The request shall be considered if it is submitted within 5 years of the occurrence of the refund right, beginning January 1st of the year following the year when the grounds for refund have occurred.
After the request is submitted and upon decision of the revenue authority an inspection or an audit shall be assigned.