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

The threat of 50% tariffs on Brazilian goods coincides with new Brazilian legal powers to adopt retaliatory economic measures, local experts tell ITR
The country’s chancellor appears to have backtracked from previous pillar two scepticism; in other news, Donald Trump threatened Russia with 100% tariffs
In its latest G20 update, the OECD also revealed tense discussions with the US where the ‘significant threat’ of Section 899 was highlighted
The tax agency has increased compliance yield from wealthy individuals but cannot identify how much tax is paid by UK billionaires, the committee also claimed
Saffery cautioned that documentation requirements in new government proposals must be limited if medium-sized companies are not exempted from TP
The global minimum tax deal is not viable without US participation, Friedrich Merz has argued
Section 899 of the ‘one big beautiful’ bill would have spelled disaster for many international investors into the US, but following its shelving, attention turns to the fate of the OECD’s pillars
DLA Piper’s co-head of tax for the US and Latin America tells ITR about her fervent belief in equal access to the law, loving yoga, and paternal inspirations
Tax expert Craig Hillier agrees with the comparison of pillar two to using a sledgehammer to crack a nut
The amount is reported to be up 57% from the £5.6bn that the UK tax agency believes was underpaid in the previous year
Gift this article