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Jan 15, 2026 16:43
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| New VAT Registration Rules in Bulgaria (Effective from 1 January 2026) | ||
| Tuesday, Jan 13, 2026 | ||
| New rules on mandatory VAT registration, including transactions involving old residential properties, have been in force in Bulgaria since 1 January 2026. Amendments to the Bulgarian Value Added Tax Act (VAT Act) were published in the State Gazette on the last working day of the previous year and are already applicable. Under the new rules, individuals who regularly buy and sell residential properties, even old properties, may now be required to register for VAT. Companies may also be required to register if they sell a property not used in their main business activity, provided the transaction is not occasional. VAT Treatment of Old and New Properties As before, the sale of old residential properties and buildings remains VAT-exempt. There is no change in the definition of a “new building”. A building is considered new if: it is at the shell construction stage, or less than 60 months have passed since the issuance of the permit for use / occupancy certificate. Sales of new buildings are subject to VAT, while sales of old buildings remain VAT-exempt. Major Changes to Mandatory VAT Registration Although the VAT treatment of property sales remains largely unchanged, the rules for mandatory VAT registration have been significantly amended. As a result, individuals and companies that previously traded in real estate without VAT registration may now be required to register. 1. New VAT Registration Threshold As of 1 January 2026, the mandatory VAT registration threshold is EUR 51,130 annual turnover. 2. Expanded Definition of Turnover A key change concerns which transactions are included in the calculation of annual turnover for VAT registration purposes. The annual turnover now includes: Taxable supplies subject to VAT VAT-exempt supplies with right to deduct input VAT (e.g. exports) Financial services Insurance services VAT-exempt supplies of real estate Key Difference from the Previous Regime Previously, VAT-exempt real estate sales (such as old apartments or land) were excluded from the turnover calculation. Now, these transactions are included, unless they qualify as ancillary (incidental) supplies. Ancillary (Incidental) Supplies Financial services, insurance services, and real estate transactions are excluded from turnover only if they are ancillary. An ancillary supply is defined as a transaction that: is not related to the person’s usual economic activity, and has a secondary or occasional nature Example A software company purchases agricultural land as an investment and later sells it. The transaction is VAT-exempt and could normally be included in turnover. However, since land trading is not part of the company’s core business and the transaction is incidental, it qualifies as an ancillary supply and is not included in the VAT registration turnover. By contrast, if the same company sells a regulated building plot (urban land), this remains a taxable transaction and is included in the VAT turnover calculation. Sale of Fixed Assets The following are excluded from VAT registration turnover: Sales of long-term assets used in the business, such as: Buildings Machinery Vehicles Software For example, if an accounting firm sells its own office premises, this is a sale of a business fixed asset and does not count toward the VAT threshold. However, if the same firm starts regularly buying and selling real estate, those properties are not considered business fixed assets, and such sales will count toward the VAT registration threshold. Rules Applicable to Individuals (Private Persons) For individuals buying and selling property, three conditions must be met for VAT to be payable: The person must be a taxable person The annual turnover must exceed EUR 51,130 The transaction must be taxable As before: The sale of an old residential property is VAT-exempt The sale of a new residential property (within 60 months of commissioning) is subject to VAT Taxable Person Status VAT liability depends on whether the individual carries out an independent economic activity. Occasional or one-off sales of personal property (land or buildings) are not considered economic activity No VAT is due in such cases However, according to court practice, if an individual carries out multiple similar transactions (generally three or more within one year), this may be considered independent economic activity. In such cases, VAT becomes due once the EUR 51,130 threshold is exceeded, even if the person is not yet registered. Changes to VAT Registration Deadlines Three important procedural changes apply as of 1 January 2026: 1. Threshold Confirmed at EUR 51,130 Transactions from 2025 must now be reassessed under the new turnover rules. Sales previously excluded (such as old property sales) may now count, potentially triggering mandatory VAT registration. 2. Calendar Year Monitoring VAT turnover is now monitored on a calendar-year basis, rather than over the last 12 months. 3. Shorter Registration Deadline The deadline for filing a VAT registration application is now 7 days from the date the threshold is exceeded, instead of by the 7th day of the following month. Example: Threshold exceeded on 5 March Registration deadline: 12 March This requires daily monitoring of turnover. The transaction that exceeds the threshold itself is VAT-exempt. VAT becomes payable on the first taxable sale made the following day. If the threshold is exceeded on 15 June, the person is considered VAT-registered as of 16 June. |
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| Source: Âåñòíèê "Òðóä" | ||
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