Recent important amendments to the Bulgarian Law on Value Added
Tax (VAT) have become applicable as of January 1, 2017. The
amendments are related to mixed supplies of assets and immovable
property, tour operator margin scheme, obligation for VAT
registration in case of inheritance as well as changes in the rules
for supplies made by a person acting in his own name but for the
account of another person.
A new model of proportional VAT deduction for mixed supplies has
been introduced. Besides the partial deduction applicable to the
use of an asset for both taxable and tax-exempt supplies, a pro
rata deduction will be applied when these assets are used for both
business and personal purposes. Тhe proportion will be
determined on the basis of reasonable criteria for allocating
between personal and corporate use, according to the specifics of
the asset. This deduction applies to:
Transport vehicles (with the exception of those intended for
use by disabled persons);
Any other long-term assets with a value exceeding 2,500 EUR
(under the law for Cooperative Income Tax).
The amendment to article 79 of the VAT Act introduces a new
formula for the adjustment of the deduction of input VAT in cases
of destruction or discarding of goods.
Furthermore, the amendments introduce a regime of annual
adjustment (either upwards or downwards) in the event of a change
in use of the asset. This will be completed by applying
coefficients for the different types of assets and the adjustment
will be carried out in the last tax period of the calendar year by
drawing up a protocol for the adjustment and reflection of the
change in the amount of the tax credit.
The amended Article 136, para 3 of VAT Act introduces a special
tour operator margin scheme (TOMS) to supplies of single services
by a tour operator to any person, including another tour operator
or travel agent. The amendments stipulate a 5-day period after the
date of which an advance is refunded which is followed by the
issuing of a credit note if the price is reduced or contract is
Amendments to the provisions concerning the actions of heirs
upon death of a VAT- registered individual define what happens in
case they continue the business activities. These persons are
obligated to register under the VAT Act within 6 months of the
death (new article 132a of the VAT).
Additionally, as from 1 January 2017, if a taxable person acts
in his own name but for the account of another person with respect
to the supply of goods or services (such as a commission agent or
mandatary), such person will be considered to have
supplied/received the goods or services. In these cases, the date
of sale/purchase of goods or services will be determined under
general VAT rules but cannot be later/earlier than the date per the
contract between the parties.
These changes in the Bulgarian Law on Value Added Tax applicable
as of January 1, 2017 have affected a wide range of VAT- registered
persons. At Eurofast, we are always ready to provide our clients
with all regulatory updates and to work closely with them to ensure
full compliance with the rapid changes of the legislation.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The personal representatives, who are responsible for administering the estate of someone who has died, generally require a Grant of Representation to allow them to collect in, sell and distribute the deceased's assets.
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