Bulgaria: Bulgarian National Revenue Agency’s official position on reinvoicing of expenses

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Bulgaria: Bulgarian National Revenue Agency’s official position on reinvoicing of expenses

pechilkova.jpg

Donka Pechilkova

The Bulgarian National Revenue Agency published an official opinion regarding the VAT Act, and more specifically related to the part concerning the reinvoicing of expenses, when they are not part of explicit obligations, related to major transactions between two VAT registered companies. This action is a step towards unifying the local Bulgarian legislation with the standards applicable in the EU. Reinvoicing done by one company (receiver of the service) to another legal entity (the real beneficiary of that service) is a sensitive topic in Bulgaria. The reason for the sensitivity is the grounds of the service-receiving company to reinvoice to another company. A very common situation in the existing business practice is one company to reinvoice services like electricity, water supply, and mobile telephones to another VAT registered company. Tax officers are recently refusing to recognise the accrued VAT from such transactions for the real beneficiary of the service, treating the company as an end consumer, with the argument being the function and the character of VAT as an indirect, multi-phase tax. This results in the economic burden being undertaken by the end users. Additionally, the tax officers treat the receiving company to not be the real provider of the service. As these standpoints contradict with the operating EU rules, according to the official new opinion of the Bulgarian tax authorities, published February 2014, such transactions that assure the operating economic activity of the real beneficiary of the reinvoiced service are fully acceptable. They even go further based on a decision of the European Court of Justice (ECJ) by case C-25/03, according to which in such cases the reinvoicing is not only possible, but is recommendable. It must be noted that reinvoicing could be applicable only if the participants in the transaction do not alter the tax base, tax event, or place of delivery. In that sense, the VAT accrued to a foreign EU entity will not be recognised by the Bulgarian National Revenue Agency as the place of delivery would have been altered. Fully in accordance with the decisions of the ECJ there is one more specific item, concerning zero VAT rates of deliveries to entities that possess documentation allowing them enjoying such preferential rates – these prefix rates are applicable only for these companies and cannot be reinvoiced to other companies with such prefix rate.

This official opinion of the National Revenue Agency is an action that makes the operating of the Bulgarian business easier, as the reinvoicing is a very common practice, for which the application of regulations was, until now, not sufficiently detailed and explicit.

Donka Pechilkova (donka.pechilkova@eurofast.eu)

Eurofast Global, Sofia Office

Tel: +359 2 988 69 78

Website: www.eurofast.eu

more across site & shared bottom lb ros

More from across our site

Encompassing everything from international scandals to seismic political events, it’s a privilege to cover the intriguing world of tax
In his newly created role, current SSA commissioner Bisignano will oversee all day-to-day IRS operations; in other news, Ryan has made its second acquisition in two weeks
In the age of borderless commerce, money flows faster than regulation. While digital platforms cross oceans in milliseconds, tax authorities often lag. Indonesia has decided it can wait no longer
The tariffs are disrupting global supply chains and creating a lot of uncertainty, tax expert Miguel Medeiros told ITR’s European Transfer Pricing Forum
Corporate counsel should combine deep technical knowledge with strategic dynamism, says Agarwal, winner of ITR’s EMEA In-house Indirect Tax Leader of the Year award
Luxembourg’s reform agenda continues at pace in 2025, with targeted measures for start-ups and alternative investment funds
Veteran Elizabeth Arrendale will lead the new advisory practice, which will support clients with M&A tax structuring, post-deal integration, and more
MAP cases keep increasing, and cases closed aren’t keeping pace with the number started, the OECD’s Sriram Govind also told an ITR summit
Nobody likes paperwork or paying money, but the assertion that legal accreditation doesn’t offer value to firms and clients alike is false
Ryan hopes the buyout will help it expand into Asia and the Middle East; in other news, three German finance ministers have called for a suspension of pillar two
Gift this article