VAT refund to non-residents who are not established in the territory of the European Union and are established in third countries which refund value added tax or similar tax to Bulgarian persons, for the goods purchased from them, the services received and import carried out into the territory of Bulgaria is regulated by the Value Added Tax Act (VATA) and Ordinance № N-10 of 24 August 2006 on the refund of the value added tax to non-residents on the territory of the EU (Ordinance № N-10) which transposes Thirteenth Council Directive on the harmonization of the laws of the Member States relating to turnover taxes – Arrangements for the refund of value added tax to taxable persons not established in Community territory (86/560/EEC).
The persons established in the countries referred to in Order № ZMF-204 of 16.03.2021 of the Ministry of Finance and № 95-00-142 of 09.03.2021 of the Ministry of Foreign Affairs may submit requests for VAT refund pursuant to Ordinance № H-10.
When is VAT refunded in Bulgaria?
Persons entitled to VAT refund (conditions designating one person as "non-resident person"):
Any taxable person (a person carrying out an independent economic activity regardless of its objectives and results) for whom the following conditions are met at the same time for the period to which the request for refund relates, has the right to apply for VAT refund:
1. the person has no registered office and address of management, permanent establishment, permanent address or usual residence in the territory of the country;
2. the person has not made supplies with a place of performance on the territory of the country according to the VATA with the exception of supplies of:
- transport services and services ancillary thereto within the meaning of Articles 30 and 31 of VATA;
- supplies, the recipient of which is a person – payer of the tax pursuant to Art. 82, Para 2 of the VATA
3. the country in which the person is established is included in the list of countries which refund VAT or other similar tax to Bulgarian persons, approved by the Minister of Finance and the Minister of Foreign Affairs.
Conditions under which the right to refund arises:
- The person shall be entitled to VAT refund for goods and services received by them and import carried out by them, which will subsequently be used for taxable supplies to the country where they are established, provided that they would be entitled to tax credit if these supplies were made within the territory of the country.
- the amount of the tax for which the right to refund has arisen during the calendar year or for the remainder of the year is not less than BGN 50.
How to apply for VAT refund?
The right to VAT refund arises when the tax to be refunded becomes payable and is exercised through an agent authorised by the non-resident, acting on behalf of and at the expense of the person.
The foreign legal person shall exercise its right to refund value added tax by providing the agent and the competent revenue authority with the following documents:
- VAT refund application in a standard form completed by the agent of the person in Bulgarian, except for the information on the name and address of the person, to be completed in the official language of the country in which the person is established;
- a declaration that the conditions for identifying the person as “a non-resident” are met.
- original certificate in a standard form issued by the competent tax authorities of the country where the person is established and legalized translation of this certificate in Bulgarian, proving that the person is engaged in economic activity, in the calendar year for which the right to refund has arisen;
- originals of tax documents on received services or import documents for which the refund of value added tax is requested;
- written authorization of the agent. The authorization shall be made in writing for each application.
Deadline for submission and processing of a refund application
The right to refund shall be exercised no later than 30 June of the year following the year in which the right to refund the tax has arisen.
The refund application may cover a period of less than 1 calendar year but not less than 3 months. In this case, refund of tax is allowed on condition that the amount of the tax is equal to or exceeds 400 BGN. The refund application may also cover a period of less than 3 months if this period is a remainder of the calendar year and the amount of the tax is not less than BGN 50.
VAT shall be refunded by the competent revenue authority in Bulgarian levs, to the bank account indicated in the refund application, within 6 months of the receipt of the application and the costs of the transfer of the refunded tax shall be borne by the non-resident person.
For more information, see: Chapter III “Conditions and procedure for the refund of VAT paid by the Bulgarian administration to non-residents who are not established on the territory of the community” of the Guidelines for VAT Refund to taxable persons not established in the Member State of refund but established in another Member State of the European Union
List of agents for representation in relation to refund to non-resident persons who are not established in the territory of the European Union and are established in third countries which refund value added tax or similar tax to Bulgarian persons, for the goods purchased by them, the services received and imported into the territory of Bulgaria.