A moment comes when you have to register under the Value Added Tax Act (VATA), regardless of whether you are a legal or natural person. This is so because for the purposes of the VAT, the Act does not distinguish between the two. The main criterion is whether you are a taxable person or not.
Who are taxable persons under VATA?
The main criterion to determine whether a natural person is subject to tax under VATA is whether it performs an independent economic activity. In the event that a person begins to systematically carry out an activity and does it by profession and receives remuneration in return, or exploits materially or immaterially property for the purpose of obtaining income from it, it can be assumed that same performs an independent economic activity.
Within the scope of taxable persons under VATA are all natural persons, depending on the activity that they carry out. For example, if a natural person carries out freelancing work as an accountant, auditor, consultant, lawyer, engineer, journalist, notary, private enforcement agent, doctor, dentist, dental technician, agent, broker, etc., he/she will be a taxable person under VATA. Also, if a person lets out for lease movable and/or immovable property, sells movable and/ or immovable property, provides technical or consultancy services, this person again may be required to register for the purposes of VATA.
Which persons are not taxable persons under VATA?
A person is not a taxable person if he or she receives income from an activity that is not independent, namely:
1.The activity is carried out by natural persons under an employment relations or by a legal relation equated to employment one;
2. Natural persons who carry out activity in the management and control of legal entities,
3. Incidental sales made from natural persons;
Types of VAT registration
The VAT registration may be mandatory and voluntary.
Vera RusinovaManaging partner Accounting services
Mandatory VAT registration
is required if the taxable turnover of a taxable person is or exceeds BGN 50,000 for a period not longer than the last 12 consecutive months prior to the current one. Where a taxable person reaches this threshold, it is obliged, within 7 day term from the expiration of the tax period during which it reached this turnover, to apply for registration under the Act. The registration obligation arises regardless of the period for which the taxable turnover is reached. This means that the obligation arises even if the turnover of BGN 50,000 has been reached in one transaction only or for a shorter period, for example two months.
Taxable income within the meaning of the Act includes the amounts of the tax bases of taxable transactions carried out by the persons, including those taxable at zero rate. This includes provision of financial services (pursuant to Article 46 VATA), as well as provision of insurance services (pursuant to Article 47 VATA), but only when they are the principal activity of the person.
To reach the taxable turnover for the purposes of mandatory VAT registration under those circumstances, the person must be taxable and make taxable supplies with a place of performance on the territory of the country.
For example, the place of supply associated with an immovable property is where the property is located (Article 21, paragraph 4 VATA). This means that if a natural person pays a property that will not be used for residential purposes (Article 45 (4) of the VATA) and for office purposes, then this supply will form a turnover for VAT registration and upon reaching with a turnover of BGN 50,000 within 12 months before the current one, the provider, in this case the natural person, will have to register for VAT purposes.
Voluntary VAT registration
pursuant to Article 100, paragraph 1 VATA may be made by any taxable person not subject to compulsory registration.
Besides the mandatory and voluntary VAT registration there are some specific cases where a natural person will need to register for the purposes of the Act. For example, registration obligation arises in case of an intra-Community acquisition of goods (ICA).
Any taxable natural person who has not been VAT registered is required to register for the purposes of the VATA if he or she makes an intra-Community acquisition of goods purchased from VAT registered persons in another Member State worth more than BGN 20,000 (this amount does not include the VAT payable or paid in the Member State) within the current calendar year (i.e. from 01.01.2018 until 31.12. 2018).
It should be borne in mind that the acquisition of new vehicles and goods subject to excise duty fall outside this hypothesis.
A person who has registered for VAT because of ICA and which becomes obliged to make mandatory registration or decides to make a voluntary registration, is registered in the order and within the deadlines for mandatory registration or optional registration.
Another specific ground for VAT registration may occur for one taxable natural person, in order to declare a supply of services received or provided by or to, foreign persons registered for VAT in another Member State (registration under Article 97a VATA).
For example, the delivery will have a place of performance outside the territory of the country if a supplier, in its capacity of Bulgarian natural person who is a taxable person registered for VAT, carries out consulting services for a non-resident person, registered for VAT in another Member State. For the purpose of declaring this supply, for the Bulgarian taxpayer there will be an obligation to file an application for registration under 97a, paragraph 2 VATA, no later than 7 days before the date on which the tax for the service has become collectible.
Specific case of mandatory VAT declaration for the acquisition of a new EU vehicle
This is a special case regulating the situation in which a natural person has acquired a new car from the EU. A car is new for VAT purposes if the working volume of its engine is more than 48 cu. cm. or having a maximum capacity of over 7.2kW, designed to carry passengers and freight, and has been driven for no more than 6 000 km, or delivered within six months from the date of first registration (no matter where it was made).
The natural person would be required to declare the acquisition in Bulgaria, regardless of whether the dealer is registered or not for VAT in the Member State, since the dealer would not have calculated VAT for it in the invoice it issued. VAT will be charged in the country where the car will be registered, in this case – Bulgaria. For this purpose, the Bulgarian taxable and non-registered person will not register under VATA but will have to file a Declaration on intra-Community supply or the intra-Community acquisition of a new car. The deadline to submit the declaration is the same as the due date, namely by the 14th of the month following the month in which the acquisition tax became collectible.
Obligation to submit declaration will occur in intra-Community supply of a new car by a natural person who sells a new car to a customer who is a person from another Member State, including and a natural person. In this case, the tax is will be payable in the other Member State.
Similar to the acquisition of a new car, where a physical non-VAT registered person, irrespective of whether it is taxable or non-taxable person, makes a intra-Community acquisition of excise goods, that person, in the role of acquirer will have to pay value added tax due within 14 days of the expiration of the month through which he it become collectible.
Can the taxable person be registered at the initiative of the NRA?
If the revenue authority establishes that a taxable person has not fulfilled the registration obligation but at the same time the conditions for registration are in place, it will register the person concerned ex officio with the issuance of a registration document.