VAT Guide for Freelancers in Bulgaria

Bulgaria follows the "destination principle" of the EU, which states that value-added tax should be paid to the country’s government where the products are purchased. As a result, regardless of your location, you must comply with Bulgarian VAT rules if your clients are in Bulgaria. Bulgaria's standard VAT rate is set at 20%, with reduced VAT rates at 9% and 0%, depending on the type of goods or services sold.

In this guide, we'll walk you through the VAT system in Bulgaria that you'll need to follow when selling your services to Bulgarian clients. We'll discuss the various VAT rates that apply to certain products, when and how you should register for VAT, and your obligations as a sole proprietor in Bulgaria.

What are the different VAT rates in Bulgaria?

There are three different VAT rates in Bulgaria, and freelancers must charge the amount that applies to their products and services.

*Although there are no charges on zero rates, you should record sales of goods and services and create a report based on your returns.

Here is a list of services that are usually exempt from VAT.

When to register for VAT?

For Bulgarian resident freelancers and non-resident EU-based freelancers, the VAT registration threshold is currently set at BGN 50,000 (~ EUR 26,000). The registration threshold for distance selling is 70,000 BGN. However, if you are an EU-based seller and choose to register for VAT using the Mini One-Stop-Shop (MOSS), the global EU VAT threshold of €10,000 is applicable. You are required to register for VAT once your annual sales turnover reaches or exceeds the respective threshold relevant to you.

The following are examples of situations that require Bulgarian VAT registration:

• Importing goods into Bulgaria
• Purchasing and selling goods within the country of Bulgaria
• Organising live events, conferences, and other types of paid gatherings in Bulgaria
• Online e-commerce transactions with Bulgarian customers.
• Online sales to individual clients, subject to the Bulgarian distance selling threshold.

How to register for VAT in Bulgaria

If you are eligible to register for VAT in Bulgaria, you need to apply via the forms available on the Bulgarian National Revenue Agency’s website. You will then receive a unique VAT number that will link your services to the NRA and keep track of all your taxes and related information.

​​Non-resident EU-based freelancers must obtain a Tax Identification Number (TIN) before registering for VAT in Bulgaria. This can be done online using the "BULSTAT" registration form from the National Statistical Institute.

The following documentation is required when registering with the NRA:

• Tax and VAT registration from the country of residence
• Details of the taxable turnover in Bulgaria
• Articles of Association
• An extract from the company's national trade register
• Declaration of absence of criminal record
  
  

Alternatively, you can also register using the aforementioned Mini One-Stop-Shop, an EU-wide tax system that allows you to consolidate all of your EU VAT in one single tax return. This scheme is optional but convenient and beneficial if you have customers in multiple countries within the EU, including Bulgaria. Furthermore, MOSS allows you to avoid registering in each Member State of consumption. To learn more, click here.

Lastly, you can also hire an accountant (or agency) to handle your VAT registration and returns. Xolo provides services like Xolo Go and Xolo Leap, which help with precisely this and any other VAT concerns you may have.

Financial Obligations of VAT Registered Freelancers in Bulgaria

Once you have registered for VAT in Bulgaria, you should begin invoicing your clients with Bulgarian VAT rates added to the total sales amount. You must also comply with additional local rules, which include:

• Issuing invoices that include the information required by the Bulgarian VAT Act. 
• Electronic invoices that include the recipient's signature, authentication, and agreement.
• Use of the 'reverse charge' procedure when applicable
• Processing of credit notes and other corrections.
• Use of approved foreign currency rates.

Bulgarian invoices must include the following information:

• Date and place of issue of the invoice
• Unique, sequential invoice number
• Full name, address, VAT number of the supplier 
• Full name, address, VAT/ BULSTAT number of the customer
• Description/nature of the goods or services
• Date of supply, completion of services, and prepayment (if any)
• Per VAT rate price per unit (excluding VAT) 
• Per VAT rate taxable amount or exemption 
• VAT rate(s) applied and total VAT amount
• Total amount payable (excluding VAT)

You must store Bulgarian VAT invoices for a period of ten years.

If you are registered with VAT MOSS instead, you must keep your VAT records for at least six to 10 years. These records can be stored in an electronic format, on paper, or in a software program. Moreover, your records must be precise, readable, complete, and easy to comprehend.

If you're a freelancer offering services to customers all across Europe, invoicing each client, securely storing records, and computing different VAT rates for each transaction can get overwhelmingly time-consuming. Xolo can help take a load off! We automatically generate, send, and store all your invoices digitally, so you won’t have to worry about misplacing them over the next decade.

How Xolo Can Help

The tax registration process can be tricky at times, but we hope this guide has helped clear your doubts! If you’re still confused about the different schemes and numbers and paperwork, Xolo offers a range of solutions that handle all the hassle while you focus on your core competencies. 

With Xolo Go, you can easily freelance and invoice your clients, even without a registered company or LLC. 

• Signing up takes only 10 minutes, and once you do, taxation, corporate compliance, and all the tricky VAT calculations are all automatically taken care of in the background!
• We charge a flat rate of 5% from every withdrawal to your personal bank account. No surprise fees, no contracts, and no BS.

• Xolo Leap is the easiest and most effective way to create your own company through Estonian e-Residency! Reduce time spent on mundane business administration and focus on what you do best!
• We offer different tiers of service depending on the solopreneur’s, or as we call them, Xolopreneur's, individual needs.
• Once you get your business set up, you can run it from anywhere in the world! So whether you’re looking to gain access to the EU market or a digital nomad - this is the place for you! 

Simply put, we do the hefty work for you so that you can enjoy the freedom of freelancing. So connect with us immediately, and we’ll help you get your one-person business up and running in Bulgaria in no time!