VAT changes: July 2022   

The Amendments and Supplements to the State Budget Act for 2022 were promulgated on 5 July 2022. They introduced changes to the Value Added Tax Act ("VATA") which entered into force on 1 July 2022 (with the exception of a few separate provisions).

Two new articles have been created in connection with the tax rates. One of the provisions regulates the 9 % reduced tax rate, applicable for the supply of non-accommodation services provided in hotels and similar establishments, including the provision of holiday accommodation and the rental of places for camping sites or caravans, with a place of performance on the territory of Bulgaria.

The second new article regulates the exemption with the right to deduct VAT tax credit by applying a zero tax rate. A zero rate of tax is applied to supplies with a place of performance on the territory of the country, such as exempt supplies, intra-community supplies, intra-community acquisitions, supplies of general tourist services, supplies of goods under the special order of zero-rate margin taxation and exempt supplies pursuant to international agreements, as well as supplies to which the armed forces of foreign countries or institutions of the European Union are recipients.

The changes that have attracted the most attention, however, are found in the Transitional and Final Provisions of the VATA. The reduced tax rate of 9% will apply until 31 December 2022 to the following supplies:

1. delivery of books on physical media or a delivery thereof carried out electronically;

2. delivery of restaurant and catering services, which consist of the delivery of prepared or unprepared food, including delivery of takeaway food; this does not apply to restaurant and catering services that consist of the delivery of beer, wine and spirits (effective from 7 July 2022);

3. supplies of baby food;

4. supplies of baby diapers and baby hygiene items;

5. delivery of general tourist services(1), as well as excursions organised by tourist operators and travel agents with random bus transport of passengers;

6. delivery of service for the use of sports facilities.

A reduced VAT rate of 9% is also introduced for supplies of central heating and natural gas with a place of performance on the territory of Bulgaria. The change is in effect from 7 July 2022 and will be applied until 1 July 2023.

Until 1 July 2023, a zero tax rate will be applied for the supply of bread and flour with a place of performance on the territory of the country, upon importation of goods in Bulgaria, and upon taxable intra-community acquisitions of goods.   

(1) In the cases under Art. 136 of the VATA