On November 8, 2016, the new Bulgarian VAT system applicable to free food donations was published in the Official Gazette of Bulgaria. The Law will be applicable as of January 1, 2017 and will result in VAT-free supply of food donations to food banks, under conditions.
Food banking and related activities in Bulgaria include donations of food from manufacturers and retailers as well as storage, preservation and/or cutting and packaging of donated food. The provision of donated food to persons for free must be done in compliance with the food safety legislation. The list of foods subject to food banking is approved by the Minister of Agriculture and Food, after consultation with the Minister of Finance. The list is to be published on the websites of the Ministry of Agriculture and Food and the Bulgarian Agency for Food Safety and only items found on the list may be subject the newly introduced VAT exemption.
A permission to operate as a food bank may be issued to a legal non-profit entity established for public benefit, meeting the following requirements:
-has zero public liabilities (including tax, social security or other public liabilities);
-has no penalty for violations under VAT Act in the past 2 years;
-owns or rents space in facilities for carrying out activities in food banking;;
-owns or leases vehicles for transport purposes;
-has its own network or a network of organizations providing free food;
-uses the special reporting system that allows the authorities of the Bulgarian Agency for Food Safety and the National Revenue Agency to control the donated, stored and provided food.
Food donations shall be VAT exempt only when a set of conditions is fulfilled. Such conditions include: one unit of foodstuff’s value is considered to be of insignificant value; the operator of the food bank is registered per requirements; the goods are listed in the special list mentioned above; the food is considered to be edible; the food is marked with the text “donation is not subject to sale” and the total amount of donated food to operators of food banks for the current calendar year does not exceed 0.5%of the total value of the donating entity’s annual turnover calendar year preceding the current one.
It is worth noting that, per the new Law, the person donating food is obliged to issue a protocol within 5 days of such donation and that such protocol is to be included in the VAT return for the period.
Petаr Vаrbаnov
Eurofast Bulgaria Office
Direct tel: +359 2 988 69 75
Emаil: Petаr.Vаrbаnov@eurofаst.eu