Disposal of financial instruments: A broader exemption is introduced
As of 1 January 2021, profits and losses from trading with shares on third-country markets (outside the European Union [EU]) equivalent to the regulated markets within the European Union will not be recognised for tax purposes and will not be subject to withholding tax (WHT), i.e. the same tax treatment will apply to transactions carried out on the regulated markets within the European Union and to similar transactions carried out on equivalent markets outside the European Union.
With a temporary change, until 31 December 2025, a preferential tax regime will apply for trading with certain financial instruments on emerging markets within the meaning of the law. The results of trade on such markets will not be recognised for tax purposes and will not be subject to WHT.
Usage of sales management software in a retail outlet (SUPTO)
As of 1 January 2021, the usage of sales management software in retail outlets becomes voluntary. The taxpayers that use such software will be able to enjoy some tax benefits. In particular:
- The measure of closing (sealing) the outlet will not apply for the first case of non-issuance of fiscal receipt.
- Accelerated value-added tax (VAT) refunds.
- Accelerated tax depreciation for the sales management software and the hardware on which it is installed.
Administrative penalty for wrongful application of double tax treaty (DTT) relief
A penalty fine for wrongful application of a DTT relief is introduced at an amount of 5% (but not more than 15,000 Bulgarian lev [BGN]) of the WHT not paid under the domestic rules.
The penalty is double (10% of the not paid tax but not more than BGN 30,000) in case of repeated violations.
This fine replaces the late payment interest that was applied until recently for late application of a DTT relief.
Changes in the VAT legislation as of 1 July 2021
'One stop shop' reporting will be possible for a trader for most of its sales of goods and services towards end users in the European Union, as regulated in the legislation.
Several types of distance sales of goods (towards non-taxable persons) are defined in the law:
- Intra-Community distance sales of goods (dispatched from one member state to another).
- Internal distance sales of goods (transported within the territory of a single member state).
- Distance sales of goods imported from a third country (up to 150 euros [EUR]).
Special rules will apply with respect to supplies facilitated by an electronic interface (such as website, platform, marketplace, etc. through which other persons perform sales of goods).
The distance sales of goods are taxable in the state where the goods are delivered to the end customer. In case of distance sales up to EUR 10,000 per calendar year, the taxation takes place in the country where the supplier is established.
The changes introduce the following three new special schemes that the taxable persons could apply upon their discretion:
- Non-Union scheme.
- Union scheme.
- Import scheme.
Special arrangement for declaration and deferred payment of import VAT
The new rules will allow the import of goods from third countries aimed at end customers on the territory of Bulgaria, where import VAT is payable on deferred terms.
This arrangement will apply only for shipments not exceeding EUR 150. The declaration of import VAT will be made by persons acting as indirect representative under the customs legislation and having a licence to apply this arrangement.
The import VAT will become chargeable at the date of receiving the payment from the end customer. The payment of VAT will be done on a monthly basis by submitting a tax return towards the customs office.