The refund of value added tax to taxable persons established and registered for the purposes of VAT in another Member State of the European Union, for goods purchased by them, received services and import into the territory of the country, is regulated by the Value Added Tax Act (VATA) and Ordinance № N-9 of 16.12.2009 on the refund of VAT to taxable persons not established in the Member State of refund but established in another Member State of the European Union.
When is VAT refunded in Bulgaria?
In order to refund VAT to a taxable person not established in the country, this person must meet the following requirements for the refund period the application relates to:
1. during the refund period, he/she has not had a seat, registered office or a permanent establishment or, in the absence of such, permanent address or usual residence in the territory of the country, and
2. during the refund period he/she has not carried out any supplies with place of performance in Bulgaria, with the exception of supplies
• charged with zero-rate, the provision of transport services and services ancillary thereto, and/or
• supplies, the recipient of which is a person – payer of the tax pursuant to Art. 82, Para 2 of the Value Added Tax Act, and
3. the person is registered for VAT purposes in the Member State where he or she is established
How is VAT refunded in Bulgaria?
The taxable person, not established in the country, has the right to receive refund of the VAT charged by a supplier – registered under VATA, for goods and services received through taxable supplies on the territory of the country, as well as on imports made by him/her. This right shall be applicable in those cases where the goods and services are used for supplies with place of performance outside the territory of the country, which would give the right of tax credit deduction in accordance with Chapter Seven – “Tax Credit” from the VAT Act, if the place of performance was within the territory of the country. The right to refund shall be present in those cases where the tax liable person carries out taxable supplies with the right of tax credit deduction in the Member State of establishment.
The restrictions applied to taxable persons established on the territory of our country and registered under VATA regarding their right to deduct tax credit are applicable to the right of the taxable person not established in the applicant country for refund of value added tax.
The right of VAT refund as regards goods purchased and services provided refers to invoiced deliveries, the tax on which has become chargeable, as well as to import carried out in the territory of the country during the refund period.
Pursuant to the Ordinance no right to tax credit is present in case of unlawfully charged tax on received supplies of goods and services by the taxable person not established in the country.
The taxable person not established in the country shall be entitled to partial VAT refund when in the Member State of establishment he or she performs both supplies with the right of tax credit deduction and supplies with no such right. The amount of the tax to be refunded shall be calculated on the basis of the applicable by the person coefficient for the right of partial tax credit, calculated as per the rules in the Member State of establishment.
Irrespective of the fact that the person carries out in the Member State of establishment both supplies with the right to deduct a tax credit and supplies for which there is no such right, where the specific supply is intended only for supplies entitled to tax credit, the person shall have the right to be refunded all the tax.
In case of change in the coefficient specified by the person for the right of partial tax credit after submission of the refund application, the said person shall be entitled to correct the refund amount specified in the previous application or the amount already refunded. The correction shall be made in the calendar year, following the refund period by submitting a declaration via the electronic portal of the Member State of establishment of the person, not later than September 30th of the same year.
Where to submit the refund application
The right of VAT refund shall be exercised by the taxable person not established on the territory of the country by means of:
- submitting refund application to the competent revenue body of the National Revenue Agency, via an electronic portal set up by the person’s Member State of establishment.
The method of submitting the refund application via an electronic portal established in the Member State of establishment shall be determined by that Member State.
The information in the refund application, as well as any additional information requested, shall be provided by the person in Bulgarian or English.
The right to refund value added tax charged for goods and services received by the person shall be exercised by the person or by an authorised representative.
Time limit for submitting a refund application
The taxable person not established in the territory of the country may exercise the VAT refund right not later than September 30th of the calendar year, following the year during which the right of tax refund has arisen.
Where the taxable person detects incorrectly indicated invoices or import documents in the submitted refund application, he/she may submit a correction refund application. The corrective application shall be submitted by the end of the calendar year following the refund period. If subsequent to the submission of the refund application the deductible proportion is adjusted, the applicant shall make a correction to the amount applied for or already refunded. The correction shall be made during the calendar year following the refund period in question by submitting a declaration via the electronic portal established by the Member State no later than 30 September of the same year. The correction shall be made in the calendar year, following the refund period by submitting a declaration via the electronic portal of the Member State of establishment of the person, not later than September 30th of the same year.
What is the period for refund?
The refund period shall be three calendar months and/or one calendar year (a person can submit maximum five refund applications – four applications per the four quarters and one application per the calendar year).
Refund applications may, however, relate to a period of less than three months where the period represents the remainder of a calendar year.
If the refund application relates to a refund period of three calendar months, the amount of VAT for which a refund is applied for may not be less than BGN 800 (EUR 400).
If the refund application relates to a refund period of a calendar year or the remainder of a calendar year, the amount of VAT may not be less than BGN 100 (EUR 50).
What is the time limit for processing the refund application?
In case no additional information is requested, the maximum period is 4 months.
In case additional information is requested, the maximum period is 8 months.
In case new additional information is requested, the maximum period is 8 months.
For more information, see: Section I.I ‘Refund by the revenue authorities of the National Agency of VAT revenue to taxable persons established and registered for the purposes of VAT in another Member State of the Community’ of a Guide for the refund of value added tax to taxable persons not established in the Member State of refund but established in another Member State of the European Union.