In a previous article, we already told you in detail about VAT with all its peculiarities. Speaking of VAT, we cannot help but mention VAT refund. In the following lines, we will try to clarify as much as possible the nature of the procedure and what deadlines must be met when submitting the request for reimbursement and within what time limit it is paid.
Every registered person is entitled to benefit from VAT refunds as a result of 3 consecutive VAT refund periods.
VAT refund mechanism
VAT refund affects all VAT registered persons who carry out taxable supplies of goods and services:
- local supplies of goods and services;
- intra-Community acquisitions (within the EU) of goods and services with place of performance Bulgaria;
- import of goods.
The VAT rate on these goods and services is 20% in Bulgaria, with the hotel business operating at a reduced rate of 9%.
All registered persons are obliged to:
- issue documentation of deliveries made and received;
- reflect this information in the purchase and sale journal;
- report the deliveries and declare and pay the VAT due in the state budget every month.
For the start of the VAT procedure, a declaration in a form, only electronically, shall be submitted to the National Revenue Agency (NRA).
Tax period and procedure
The deadline for submitting a VAT refund return is the 14th of the month following the reporting period. It equals one calendar month. A tax refund procedure is initiated and the procedures are of two types – verification or revision.
The period in this case is 30 days from the submission of the last VAT refund declaration. The revenue authority may require additional information (e.g. copies of invoices, debit and credit memos, etc.) to prove the validity of the VAT refund right.
The deadline for revision is 3 months. Possible extension in case the NRA requires further clarification of facts and circumstances. Revision shall be carried out at:
- larger amounts;
- recovery for the first time;
- inaccuracies or uncertainties in the VAT refund declared.
After the inspection/ revision, an Interception and Recovery Act (AAP) is issued.
The amount of VAT shall be refunded to an account specified by the registered person.
If the debtor has unpaid public debts at the time of verification, they will be offset with the VAT refund.
The tax due according to the submitted declaration is paid to the account of the territorial directorate of the NRA.
The law provides for the possibility of deducting the VAT paid from the VAT due, the so-called VAT tax credit. An amount of tax may be deducted for:
- taxable goods or services received;
- payments made before the tax event arises for taxable supply;
- imports made;
- tax payable as a payer under the 8 of the VATA.
The tax credit mechanism was introduced to avoid double taxation of a product throughout the chain of suppliers to the final consumer. Thus, the trader has the opportunity to deduct the tax paid to the previous supplier from the tax to be paid.
Accelerated VAT refund
Under certain conditions, VAT refunds may be made within 30 days of submission of the monthly return. This is possible when:
- The person has carried out in the last 12 months taxable deliveries at zero rate* totaling 30% of all taxable transactions carried out.
*To taxable deliveries at zero rate is also assimilated transport within the EU and related services (e.g. courier, postal, etc.)
- The person is a farmer who has carried out for the last 12 months taxable deliveries at a rate of 20% with a total value of more than 50% of all taxable transactions carried out.
We at T&G Consulting are at your disposal, if you need advice and assistance.