Bulgaria introduces VAT adjustments on uncollectible receivables


As a result of amendments to the Value Added Tax Act (VATA) that went into force on 1 January 2023, taxpayers in Bulgaria will be able to reduce the tax base of their supply in the event of total or partial non-payment by customers, thus allowing taxpayers to recover output VAT on unpaid invoices.

The VAT adjustment mechanism will ultimately allow for reduction of cash outflow and ensure VAT neutrality. Under the new procedure, taxpayers will be able to review historical collectibles as far as five years in the past and claim corresponding VAT adjustments.

Other notable changes to VATA include:

  • A new procedure for the application of the zero VAT rate for exports performed by suppliers not established in the territory of the EU;
  • An option for correction of the tax base in case of wrongfully issued tax documents, including incorrect tax treatment of supplies based on a tax assessment notice by the authorities;
  • The term for providing security for trading with liquid fuels has been shortened from seven to three days. Under certain conditions, taxable persons may reduce the provided security from 20% to 10% of the tax base for taxable supplies, acquisitions or the value of received liquid fuels released for consumption (e.g. upon expiry of three consecutive years of provided security with no record of violations and outstanding public liabilities).

For assistance in the review and procedure for available VAT adjustments to optimise cash flows, get in touch with your CMS contact or our local CMS experts: Alexander Rangelov and Nikola Naydenov.