In this article, we summarize the most important changes to the Value Added Tax Law, adopted in the first six months of 2022, which came into force on the day of its promulgation, with the exception of some provisions for which a different date is foreseen.
1. Correction in the event of incorrect handling of the delivery in the event of an effective act issued by a revenue authority
2. Food vouchers
3. Supplies with zero VAT rate
4. Other changes
Correction in case of incorrect processing of the delivery in the event of an effective act of the revenue authority.
- An opportunity to correct wrongly issued tax documents is introduced, even if a revision act has entered into force for the period in which they were issued or reported.
- The change was caused by the need to introduce a legal mechanism in the Bulgarian legislation to correct incorrect treatment of deliveries after a revised act has entered into force.
Typical situations where the provision may apply include:
1) adjustment of the tax charged by a supplier when the right to tax credits is denied to the recipient;
2) correction of an omission in the assessment of VAT by a supplier found with an audit report, so that the client can use a tax credit on the reissued invoice with VAT.
- The correction is carried out according to the general procedure and requires the drawing up of a correction protocol.
- There is no time limit for the application of the provision, which gives the possibility in principle to correct already entered into force invoices and audit acts within the general limitation period.
Food stamps
- With the changes made to VAT treatment, food vouchers will be treated like any other voucher and their taxation will depend on their classification by type for VAT purposes.
- The existence of different VAT rates for the foods, for which food vouchers can be used, implies their classification as multi-purpose vouchers. In practice, in this case the vouchers will not be subject to VAT when they are sold by the employers’ operators, but when the goods to which they relate are sold.
- In 2022, the VAT treatment of food vouchers will not change and they will continue to be used as a means of payment.
Deliveries with zero VAT rate
- The application of a zero rate of VAT is introduced for the import of goods from the European Commission or another EU body, as well as for supplies of goods and services for which the recipients are the same bodies, when the goods are purchased in the performance of tasks related to the effects of the COVID-19 pandemic.
- Taxation with a zero rate of VAT is provided for the supply of goods and services, the recipients of which are the armed forces of an EU member state, including the import and intra-Community acquisition of goods from them.
Other important changes
- A new “Chapter 21 “a” of VAT is created in relation to specifying supplies from/to the United Kingdom, specifying the texts regarding the VAT treatment of these supplies. It is specified that Northern Ireland is considered to be territory of a Member State for VOD, GOP, bundled goods, in-stock mode and three-way operations.
- Clarifies certain provisions related to the taxation of supplies of goods and services made electronically to non-taxable persons, including the special regimes (non-Union regime, Union regime and regime for distance sales of goods imported from third countries).
- The scope of children’s food, to which the reduced VAT rate of 9% is applied, is being expanded and now includes foods suitable for infants and young children – specialized milk formulas and dietetic foods for special medical purposes intended for infants.
- It is specified that the acquisition of goods sent or transported from the territory of another member state for the intra-community distance sale of goods with a place of performance on the territory of the country is not an intra-community acquisition.
- The provision for mandatory deregistration upon termination of a legal entity – with or without liquidation – is being edited; there is a reason for mandatory deregistration upon termination of an unincorporated company or insurance fund and upon deletion of branches of foreign legal entities.
- The minimum threshold of taxable annual turnover for mandatory VAT registration has been changed, increasing it from BGN 50,000 to BGN 100,000. The increase in the threshold also affects self-insured persons. The change takes effect from January 2023.
For more information please contact Mr. Ivan Stenev, Senior Accountant and Tax Consultant in our Eurofast office in Sofia at sofia@eurofast.eu
Ivan Stenev
Senior Accountant & Tax Consultant
Eurofast Sofia
sofia@eurofast.eu