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. If you are seeking to hire and manage freelancers from Bulgaria with compliance, check out Xolo's guide to collaborate with Bulgaria-based freelance talents.
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.
There are three different VAT rates in Bulgaria, and freelancers must charge the amount that applies to their products and services.
Type |
Rate |
Goods or services |
Standard |
20% |
Applicable to all goods and services that do not fall under the reduced, zero or exempt category. |
Reduced |
9% |
Applicable to hotel accommodations |
Zero* |
0% |
Applicable to intra-community and international transport |
*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.
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:
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:
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.
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:
Bulgarian invoices must include the following information:
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.
Issuing VAT invoices and keeping all the accounts can be tricky and messy at times, a recommended solution to to use invoicing and admin managing solutions dedicated for freelancers like Xolo. To giving freelancers legal and compliance support and make your life easier, we have two different products which help you handle all the freelancer's hassles:
Creating VAT-compliant invoices without a company or running a full-fledged business-of-one with us!
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