VAT deregistrationWe have already talked to you about VAT registration and now it is time to clarify the issue related to VAT deregistration. In this publication we will try to explain to you what a VAT deregistration is, when and how it is done.

What is VAT deregistration?

Deregistration is a procedure under the VAT Act, as opposed to VAT registration. When a company deregisters, it is no longer obliged to charge VAT, as well as the right to use a tax credit.

When is VAT deregistration mandatory?

In certain circumstances, companies are obliged to deregister. VAT deregistration is mandatory when:

  • The company is a sole proprietorship and will be deleted from the Commercial Register; (except when the company is subject to mandatory registration or has registered at its source. In this case, it can be deregistered at will. This must be done no earlier than 24 months from the beginning of the calendar year following the year of registration)

In the case of a company that is not a trader – association, foundation, impersonal persons (law firms or insurance funds) and it is terminated (with or without liquidation) – for example EOOD, declared bankrupt and deleted or deleted after liquidation;

  • In the cases when there is a VAT registration as a person who is not established in our country and who provides telecommunications services, radio and television broadcasting services or services that are performed electronically, with recipients – persons who are established in our country – for example, a person without a registered office in Bulgaria, but maintaining a website providing information about travel to persons who are established in our country.

In all other cases, deregistration under the VAT Act is not mandatory and is at the discretion of the company. Examples are:

  • The turnover of the company from taxable supplies for the last 12 months before the current month decreased below BGN 50,000;
  • In case of elimination of any of the grounds for obligatory registration;
  • The company is registered under the VAT Act because it has acquired goods and services from another already registered person as a result of transformation or inheritance. Here, VAT deduction can be made if the grounds for mandatory registration are dropped.

Procedure

If a company wishes or is obliged to deregister under the VAT Act, it is necessary to submit an application to the territorial directorate of the NRA. The application must be accompanied by the following documents:

  • Information on the taxable turnover by months, for the last 12 months before the current one;
  • Information on the total amount of taxable intra-Community acquisitions for the previous and current year, except for the acquisition of new vehicles and excise goods;
  • Information on the total amount of the tax bases of the supplies under conditions of distance sales with a place of performance on the territory of the country, except for the supplies of excise goods, for the current year and for each of the two calendar years before the current one;
  • Certificate of registration;
  • Protocol-inventory for charging VAT according to a sample.

The term for deregistration under the VAT Act is 14 days from the occurrence of the grounds for mandatory deregistration. In cases where the termination of the registration is optional, it can be done without time limit.

An inspection should be carried out by the NRA. Within 7 days after the completion of the inspection, an act is issued to perform or refuse the deregistration.

NB! After deregistration under the VAT Act, the company is not entitled to charge VAT and use a tax credit.

Deregistration at the initiative of the NRA

In the following cases, deregistration under the VAT Act can be done at the initiative of the NRA:

  • In case of death of a natural person;
  • In case of establishing the absence of an application for deregistration under the VAT Act within the stipulated term;
  • Upon detection of any of the following tax violations:
    -Non-disclosure of a specified address; change of address without notifying the NRA;
    -Systematic non-fulfillment of tax obligations (over 3 times);
    -Existence of liabilities to the state in the amount exceeding the assets;
    -Failure to provide contact email for 3 months;
    -Failure to provide the NRA with access to accounting documents (unless these accounting documents have been destroyed or lost and the NRA has been notified);
    -Changes his address and does not notify the NRA bodies therefore;
  • In case of legal entities, terminated without liquidation – e.g. bankrupt company;
  • In the case of an impersonal company that has been dissolved – e.g. VAT-registered law firm;
  • Upon termination of the insurance fund.

The Revenue Authority issues an act for deregistration under the VAT Act. When the deregistration is obligatory, the act is not served, and the date of the deregistration is the date on which the grounds for termination arose. In other cases the act is served and the date of deregistration is the date of service.

Fines

In the presence of VAT liabilities and the absence of an application for deregistration under the VAT Act in the cases specified by law, the company is subject to a fine. A fine or property sanction is provided for non-traders. For legal entities or sole proprietors, the fine is in the amount of BGN 500 to 5,000. The acts for establishing administrative violations are drawn up by the revenue authority, and the penal decrees – by the executive director of the NRA or an official authorized by him.

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