Value Added Tax Act

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PART ONE

GENERAL DISPOSITIONS

Purpose of Act

Article 1. This Act regulates the levy of value added tax (VAT).

Subject to Taxation

Article 2. The following shall be subject to value added tax:

1. each taxable supply of goods or services effected for consideration;

2. each intra-Community acquisition effected for consideration, whereof the place of transaction is within the territory of the country, by a person registered under this Act or by a person in respect of which an obligation to register has arisen;

3. each intra-Community acquisition of new means of transport effected for consideration, whereof the place of transaction is within the territory of the country;

4. each intra-Community acquisition effected for consideration, whereof the place of transaction is within the territory of the country, of excisable goods, where the recipient is a taxable person or a non-taxable legal person which is not registered under this Act;

5. the importation of goods.

Taxable Persons

Article 3. (1) “Taxable person” shall mean any person who independently carries out an economic activity, whatever the purpose and results of that activity.

(2) Independently carried out economic activities shall comprise the activities of producers, traders and persons supplying services, including mining and agriculture, as well as the practice of a liberal profession, including as private enforcement agents and notaries. Any remunerative activity, carried out on a continuing basis or as a regular occupation or business on a professional basis for the purpose of obtaining income there from, including the exploitation of tangible and intangible property, shall also be considered an independently carried out economic activity.

(3) The following shall not be considered an independently carried out economic activity:

1. the activity carried out by natural persons under an employment relationship or under a legal relationship equivalent to an employment relationship;

2. the activity of natural persons, who are not sole traders, in respect of the activity carried out by such natural persons and regulated by law, or concerning management and control of legal persons.

(4) Any person, who from time to time effects an intra-Community supply for consideration of a new means of transport, shall also be regarded as a taxable person.

(5) The State, the state and the local bodies shall not be taxable persons in respect of all activities and supplies in which they engage in their capacity as a central or local government authority, even where they collect fees, contributions or payments in connection with these activities or supplies, with the exception of:

1. the following activities or supplies:

(a) telecommunications services;

(b) supply of water, gas, electricity or steam;

(c) transport of goods:

(d) port and airport services;

(e) passenger transport;

(f) sale of new goods manufactured for sale;

(g) supplies effected for the purpose of intervention on the market in agricultural products;

(h) organizing or running of trade fairs, exhibitions;

(i) warehousing;

(j) the activities of commercial publicity bodies, advertising services, including rental of advertising space;

(k) tourist services;

(l) running of shops, industrial canteens and other commercial outlets, the letting of buildings, parts of buildings and sales areas;

(m) activities of radio and television bodies of a commercial nature.

2. Any supplies other than those covered under Item 1, which will lead to significant distortion of competition.

Non-taxable Legal Person

Article 4. “Non-taxable legal person” shall mean any legal person which is not a taxable person within the meaning given by Article 3 herein and which effects intra-Community acquisition of goods.

Goods

Article 5. (1) “Goods,” within the meaning given by this Act, shall be any movable and immovable thing, including electric current, gas, water, heat or refrigeration and other such, as well as standard software.

(2) Money in circulation and foreign currency used as tender shall not be goods within the meaning given by paragraph (1).

Supply of Goods

Article 6. (1) “Supply of goods,” within the meaning given by this Act, shall be the transfer of the right of ownership or another right in rem to goods.

(2) For the purposes of this Act, the following shall also be considered supply of goods:

1. the transfer, resulting from a request or an act of a central or local government authority or the administrations thereof or in pursuance of the law, of a right of ownership or another right against payment of compensation;

2. the actual handing over of goods, pursuant to a lease contract which provides for the passing of the right of ownership of the said goods under a suspensive condition or in the normal course of events;

3. the actual handing over of goods, pursuant to a lease contract which expressly provides for passing of the right of ownership of the goods; this provision shall not apply where passing of ownership of the goods is stipulated in the contract solely as an option;

4. the actual handing over of goods to a person acting in his own name and for the account of another.

(3) For the purposes of this Act, the following shall also be considered supply of goods effected for consideration:

1. the setting aside or handing over of goods for the private use or consumption of the taxable natural person, of the owner, of the factory or office workers thereof or of third parties and subject to the condition that credit for input tax has been deducted wholly or partly upon the production, importation or acquisition of the said goods;

2. the transfer of ownership or another right in rem to goods to third parties, effected free of charge, where credit for input tax has been deducted wholly or partly upon the production, importation or acquisition of the said goods.

(4) Paragraph (3) shall not apply upon:

1. the handing over of special-purpose, working, uniform and presentable clothing by an employer to the factory and office workers thereof, including such under management contracts, for the purposes of the economic activity of the person;

2. the provision, free of charge, of goods of negligible value for advertising purposes or upon distribution of samples.

Intra-Community Supply of Goods

Article 7. (1) “Intra-Community supply of goods” shall be any supply of goods, transported by or for the account of the supplier who is a person registered under this Act, or of the recipient from the territory of the country to the territory of another Member State, where the recipient is a taxable person or a non-taxable legal person registered for VAT purposes in another Member State.

(2) Any supply of a new means of transport, dispatched or transported by or for the account of the supplier or of the recipient from the territory of the county to the territory of another Member State, regardless of whether the recipient is a taxable person or a non-taxable person, shall also be considered intra-Community supply of goods.

(3) Any supply of excisable goods, dispatched or transported by or for the account of the supplier who is a person registered under this Act, or of the recipient from the territory of the country to the territory of another Member State, where the recipient is a taxable person or a non-taxable legal person which is not registered for VAT purposes in another Member State, shall also be considered intra-Community supply of goods.

(4) The dispatch or transport of any goods produced, extracted, processed, purchased or imported into the territory of the country by a person registered under this Act within the framework of the economic activity thereof shall also be considered intra-Community supply of goods effected for consideration, where the said goods are dispatched or transported for the purposes of the economic activity thereof by or for the account of the said person from the territory of the country to the territory of another Member State in which the said person is registered for VAT purposes.

(5) The following shall not be intra-Community supply:

1. the supplies of any goods in respect of which the supplier applies the special procedure for taxation under Chapter Seventeen herein;

2. the supplies of any goods which are assembled or installed by or for the account of the supplier;

3. the supplies of any goods under Article 18 herein;

4. the supplies of any goods referred to in Items 1, 2 and 7 of Article 31 and Article 34 herein;

5. the supplies of natural gas through the natural gas distribution system or of electricity;

6. the supplies by a person registered under this Act who is an intermediary in a triangular operation to the acquirer in a triangular operation;

7. the distance selling of goods effected under the identification number issued by the Member State whereto the goods have been dispatched or transported;

8. the dispatch and transport of any goods from the territory of the country to the territory of another Member State for the purpose of work on the said goods, which is carried out in that other Member State, provided that the said goods, after being worked upon, are re-dispatched to the sender within the territory of the country;

9. the dispatch and transport of any goods from the territory of the country to the territory of another Member State for the purpose of use of the said goods for the purposes of the supply of services within the territory of that other Member State, provided that the said goods are re-dispatched to the sender within the territory of the country after supply of the services;

10. the dispatch and transport of any goods from the territory of the country to the territory of another Member State, if the following conditions are simultaneously fulfilled:

(a) the import of the same goods from a third country or territory to the territory of that other Member State would be eligible for the arrangements for temporary importation with total exemption from import duty;

(b) the goods are re-dispatched to the sender within the territory of the country within a period not exceeding 24 months after their dispatch.

(6) Where the conditions under Items 8 to 10 of Paragraph (5) no longer apply, intra-Community supply for consideration under Paragraph (4) shall be considered to be effected by that time.

Services

Article 8. “Services,” within the meaning given by this Act, shall mean everything which has a value and which is other than goods, money in circulation and foreign currency used as legal tender.

Supply of Services

Article 9. (1) “Supply of services” shall be any performance of services.

(2) The following shall also be considered supply of services:

1. the sale or transfer of rights to intangible property;

2. the assumption of an obligation not to perform any acts or not to exercise any rights;

3. any manual and intellectual work, including treatment in the sense of production, construction or assembly of a tangible asset using raw and prime materials placed by the client at the disposal of the service provider;

4. the performance of services by a tenant/user for repair and/or improvement of an asset hired out or allocated for use.

(3) The following shall also be considered supply of services effected for consideration:

1. the provision of services for the private use of the taxable natural person, of the owner, of the factory and office workers or of third parties, the performance of which involves use of goods upon the production, importation or acquisition whereof credit for input tax has been wholly or partly deducted.

2. the provision, free of charge, of services for the private use of the taxable person, of the owner, of the factory or office workers or of third parties.

(4) Paragraph (3) shall not apply upon:

1. the provision, free of charge, of transport services from the place of residence to the place of work and back, by an employer to the factory and office workers thereof, including such under management contracts, where for the purposes of the economic activity of the person;

2. the performance, free of charge, of services by a tenant/user for repair of an asset hired out or allocated for use in the cases where the said asset was hired out or allocated for use to the tenant/user and has been actually used on a continuing basis for a period of not less than three years;

3. the performance, free of charge, of services by a concessionaire for improvement of an asset allocated for use, where this is a condition and/or obligation under the contract of concession;

4. the performance, free of charge, of services of negligible value for advertising purposes.

Where No Supply or Goods or Services Has Taken Place

Article 10. (1) No supply of goods or services has taken place where the supply to the transferee from the transforming corporation, from the transferor or from the contributor of a non-cash asset results from:

1. transformation of a commercial corporation according to the procedure established by Chapter Sixteen of the Commerce Act;

2. transfer of an enterprise according to the procedure established by Article 15 or Article 60 of the Commerce Act;

3. contributing a non-cash asset in consideration of a capital allotment in a commercial corporation.

(2) In the cases covered under Paragraph (1), the recipient of the goods or services shall furthermore accede to all rights and obligations under this Act and in connection with them, including the right to deduct credit for input tax and of the obligations to adjust credit for input tax used.

(3) Paragraph (2) shall furthermore apply in the cases where the goods and services have been acquired by legal or testamentary succession by a taxable person under this Act.

(4) The procedure and the requisite documents for application of Paragraphs (2) and (3) shall be determined by the Regulations for Application of this Act.

Supplier and Recipient

Article 11. (1) “Supplier,” within the meaning given by this Act, shall be the person who effects the supply of goods or services.

(2) “Recipient,” within the meaning given by this Act, shall be the person who receives the goods or the services.

Taxable Supply

Article 12. (1) “Taxable supply” shall be each supply of goods or services within the meaning given by Articles 6 and 9 herein, where effected by a taxable person under this Act and whereof the place of transaction is within the territory of the country, as well as the zero-rated supplies effected by a taxable person, save in the cases in which this Act provides otherwise.

(2) A supply in which the recipient is a taxpayer under Chapter Eight herein shall not be subject to taxation by the supplier.

Intra-Community Acquisition

Article 13. (1) “Intra-Community acquisition” shall mean acquisition of the right of ownership of goods, as well as the actual receipt of goods in the cases under Article 6 (2) herein, which are dispatched or transported to the territory of the country from the territory of another Member State, where the supplier is a taxable person registered for VAT purposes in another Member State.

(2) The acquisition of a new means of transport, which is dispatched or transported to the territory of the country from the territory of another Member State, regardless of whether the supplier is a taxable person for VAT purposes in another Member State, shall also be considered an intra-Community acquisition.

(3) The receipt of goods within the territory of the country by a person registered under this Act, which will be used for the purposes of the economic activity of the said person, shall also be considered an intra-Community acquisition for consideration where the said goods are dispatched or transported by or for the account thereof from the territory of another Member State in which the person is registered for VAT purposes and where the said goods were produced, extracted, processed, purchased, acquired or imported thereby within the framework of the economic activity thereof.

(4) The following shall not be an intra-Community acquisition:

1. the acquisition of any goods to which the supplier applies special arrangements for taxing of second-hand goods, works of art, collectors’ items and antiques, as regulated in the legislation of the relevant Member State;

2. the acquisition of any goods which are assembled or installed by or for the account of the supplier;

3. the acquisition of any goods covered under Article 18 herein;

4. the acquisition of any goods referred to in Items 1, 2 and 7 of Article 31 and Article 34 herein;

5. the acquisition of natural gas through the natural gas distribution system or of electricity;

6. the acquisition of any goods by a person registered under this Act who is an acquirer in a triangular operation from an intermediary in a triangular operation;

7. the acquisition of any goods dispatched or transported from the territory of another Member State for the purpose of distance selling whereof the place of transaction is within the territory of the country, where selling is effected under the supplier’s identification number referred to in Article 94 (2) herein;

8. the receipt of any goods dispatched or transported from the territory of another Member State to the territory of the country for the purpose of work on the said goods, which is carried out within the territory of the country, provided that the said goods, after being worked upon, are re-dispatched to the sender within the territory of that other Member State;

9. the receipt of any goods dispatched or transported from the territory of another Member State to the territory of the country for the purpose of use of the said goods for the purposes of the supply of services within the territory of the country, provided that the said goods are re-dispatched to the sender within the territory of that other Member State after supply of the services;

10. the receipt of any goods dispatched or transported from the territory of another Member State to the territory of the country, if the following conditions are simultaneously fulfilled:

(a) the import of the same goods from the territory of the country would be eligible for the arrangements for temporary importation with total exemption from customs duty;

(b) the goods are re-dispatched to the sender within the territory of another Member State within a period not exceeding 24 months after their dispatch.

(5) Where the conditions under Items 8 to 10 of Paragraph (4) no longer apply, intra-Community acquisition for consideration under Paragraph (3) shall be considered to be effected by that time.

Distance Selling of Goods

Article 14. (1) “Distance selling” shall be a supply of goods where the following conditions are simultaneously fulfilled:

1. the goods are dispatched or transported by or for the account of the supplier from the territory of a Member State other than the Member State in which the transport ends;

2. the supplier of the goods is registered for VAT purposes in a Member State other than the Member State in which the transport ends;

3. the recipient of the supply is a person who is not obliged to charge tax upon intra-Community acquisition of the goods in the Member State where the transport ends;

4. the goods:

(a) are not new means of transport, or

(b) are not assembled and/or installed by or for the account of the supplier, or

(c) are not subject to special arrangements for taxing the price margin for second-hand goods, works of art, collectors’ items and antiques.

(2) For the purposes of Paragraph (1), where the goods are supplied, dispatched or transported from a third country or territory and are imported by the supplier into a Member State other than the Member State in which the transport to the recipient ends, the goods shall be deemed to be dispatched or transported from the Member State of import of the goods.

Triangular Operation

Article 15. “Triangular operation” shall be the supply of goods between three persons registered for VAT purposes in three different Member States A, B and C, where the following conditions are simultaneously fulfilled:

1. a registered person in Member State A (transferor) effects a supply of goods to a person registered for the purposes of VAT in Member State B (intermediary) who then effects a supply of the said goods to a person registered for the purposes of VAT in Member State C (acquirer);

2. the goods are transported directly from A to B;

3. the intermediary is not registered for VAT purposes in Member States A and B;

4. the acquirer charges VAT as a recipient of the supply.

Importation of Goods

Article 16. (1) “Importation of goods,” within the meaning given by this Act, shall be the introduction of non-Community goods into the territory of the country.

(2) “Importation of goods” shall furthermore mean the release of goods for free circulation after placing under the outward processing procedure.

(3) “Importation of goods” shall furthermore mean the introduction of Community goods into the territory of the country from third countries or territories which form part of the customs territory of the Community.

(4) “Importation of goods” shall furthermore mean any other event from which a customs debt arises.

(5) Notwithstanding Paragraphs (1) to (4), where upon introduction into the territory of the country the customs status of goods in temporary storage is conferred on the goods or the goods are place in a free zone or free warehouse, or are placed under the customs procedures of: customs warehousing, inward processing, temporary importation with total exemption from duty, external transit, the importation shall be deemed effected when the goods cease to be under the relevant procedure within the territory of the country.

PART TWO

TAXATION OF SUPPLIES

Chapter One

PLACE OF TRANSACTION

Place of Supply of Goods

Article 17. (1) “Place of supply of goods which are not dispatched or transported” shall mean the place where the goods are when ownership passes or upon the actual handing over of the goods under Article 6 (2) herein.

(2) “Place of supply of goods which are dispatched or transported either by the supplier or by the recipient or by a third person” shall be the place where the goods are at the time when dispatch or transport to the recipient begins.

(3) “Place of supply of goods by an intermediary in a triangular operation to an acquirer in a triangular operation” shall be the Member State where the acquirer in a triangular operation is registered for VAT purposes.

(4) “Place of supply of goods which are assembled or installed by or for the account of the supplier” shall be the place where the goods are assembled or installed.

Place of Supply of Goods Effected on Board Ships, Aircraft and Trains

Article 18. (1) The place of supply of goods effected on board ships, aircraft or trains during a transport of passengers shall be the territory of the country where:

1. the point of departure of the transport of passengers is within the territory of the country and the point of arrival of the transport of passengers is within the territory of another Member State without a stop in the territory of a third country or territory, or

2. the point of departure of the transport of passengers is within the territory of the country and the point of arrival of the transport of passengers is within the territory of a third country or territory without a stop in the territory of another Member State, or

3. the point of departure of the transport of passengers is within the territory of a third country or territory and the point of arrival is within the territory of another Member State and the first stop within the territory of the Community has taken place within the territory of the country, or

4. the transport of passengers is effected between two points within the territory of the country.

(2) The place of supply of goods effected on board ships, aircraft or trains during a transport of passengers shall be determined according to the procedure established by Items 2 and 3 of Paragraph (1) solely in respect of the part of the transport of passengers effected between the territory of the country and the other Member States.

(3) In the cases not covered by Paragraphs (1) and (2), the place of supply of goods effected on board ships, aircraft or trains during a transport of passengers shall be outside the territory of the country.

Place of Supply of Natural Gas and Electricity

Article 19. The place of supply of natural gas through the natural gas distribution system or of electricity shall be:

1. the place where the recipient has established his registered office or fixed establishment or, in the absence of such an office or establishment, the place where the said recipient, who is a taxable dealer of natural gas or electricity, has his permanent address or usually resides;

2. the place where the goods are effectively consumed: where a person other than the person referred to in Item 1 is a recipient;

3. the place where the recipient referred to in Item 2 has his registered office or fixed establishment or, in the absence of such an office or establishment, the place where the recipient referred to in Item 2, who effects a subsequent supply or all or part of the goods received thereby, has his permanent address or usually resides.

Place of Supply under Terms of Distance Selling

Article 20. (1) The place of supply of goods under the terms of distance selling referred to in Article 14 herein shall be the territory of the Member State where the transport ends and where the following conditions are simultaneously fulfilled:

1. the supplier is a person registered under this Act on grounds other than for registration for intra-Community acquisition;

2. the supplies effected by the person referred to in Item 1 under the terms of distance selling for a Member State exceed the threshold established in the legislation of that Member State for the current calendar year or have exceeded the said threshold for the last preceding calendar year.

(2) The place of supply under the terms of distance selling shall be the territory of the country where the following conditions are simultaneously fulfilled:

1. the supplier is a person registered for VAT purposes in another Member State;

2. the supplies effected under the terms of distance selling for the territory of the country will exceed the amount of BGN 70,000 for the current calendar year or have exceeded the said amount for the last preceding calendar year.

(3) The amount referred to in Item 2 of Paragraph (2) shall be net of the VAT due in the Member State where the supplier is registered for VAT purposes on the supplies of any goods other than excisable goods.

(4) Where excisable goods for the private consumption of a natural person who is not a sole trader are subject of the supply, the place of supply under the terms of distance selling shall be the place where the goods arrive or the transport ends.

(5) Where the conditions referred to in Item 2 of Paragraph (1) are not fulfilled, the place of supply shall be the territory of the country, with the exception of the cases where the supplier has notified the territorial directorate exercising competence over the place of registration that the said supplier wishes that the place of supply be the territory of another Member State, where the transport ends, and the said supplier is registered for VAT purposes in that other Member State.

(6) Paragraph (2) shall not apply where the place of supply is the territory of the country, where the supplier is registered in pursuance of Article 100 (3) herein.

Place of Supply of Services

Article 21. (1) The place of supply of services shall be the place where the supplier has established his independently carried out economic activity or has a fixed establishment from which the supply is effected or, in the absence of such a place or establishment, the place of his permanent or habitual residence.

(2) The place of supply of services shall be:

1. the place where the immovable property is situated, where the supply of services is connected with immovable property, including upon:

(a) expert services or the services of estate agents;

(b) the services for preparing and coordinating construction works connected with immovable property, such as the services of architects, engineers, firms providing on-site supervision etc.;

2. the place where transport services are performed, having regard to the part of the distance covered for the supply of the said services;

3. the place where the services are physically carried out, upon:

(a) services relating to cultural, artistic, sporting, scientific, educational, entertainment or similar activities, including the activities of the organizers of such activities;

(b) services relating to transport handling of goods;

(c) valuation, expert examination or work on a movable thing.

(3) The place of supply of services shall be the place where the recipient has his registered office or permanent establishment from which the said recipient carries out his economic activity or, in the absence of such an office or establishment, the place where the said recipient has his permanent address or usually resides, where the following conditions are simultaneously fulfilled:

1. the recipient is a person established outside the Community, or a taxable person established in a Member State other than the Member State in which the supplier is established;

2. the services supplied are:

(a) assignment or transfer of licence, patent, copyright, trade mark, know-how rights or other similar industrial or intellectual property rights, as well as transfer of rights to software products other than standard software;

(b) advertising services;

(c) services performed by consultants, engineers, accountants, lawyers and other similar services, including the services for the redesign of software;

(d) data processing or supplying of information;

(e) banking, financial, social insurance, commercial insurance and reinsurance services, with the exception of the hire of safes;

(f) supply of staff;

(g) hiring out of movable things, with the exception of all types of means of transport;

(h) telecommunications services;

(i) radio and television broadcasting services;

(j) electronically supplied services;

(k) services for the provision of access to, and of transport or transmission through, natural gas and electricity distribution systems and the provision of other directly linked services;

(l) assumption of an obligation not to perform any acts or not to exercise any rights referred to in Litters (a) to (k);

(m) the services of intermediaries performed by a person acting in the name of and for the account of another, in connection with the services referred to in Litters (a) to (l).

(4) The place of supply of telecommunications services and radio and television broadcasting services shall be the territory of the country, where the following conditions are simultaneously fulfilled:

1. the recipient of the said supplies is a non-taxable person who is established, has his permanent address or usually resides within the territory of the country;

2. the supplier is a person with registered office or a permanent establishment from which the said supplier carries out his economic activity or, in the absence of such an office or establishment, the place of his permanent address or habitual residence is outside the Community;

3. the services are effectively used within the territory of the country.

(5) The place of supply of electronically supplied services shall be the territory of the country, where the following conditions are simultaneously fulfilled:

1. the recipient of the said supplies is a non-taxable person who is established, has a permanent address or usually resides within the territory of the country;

2. the supplier is a person whose registered office or fixed establishment or, in the absence of such an office or establishment, whose permanent address or habitual residence is outside the territory of the Community.

Place of Supply of Services in Intra-Community Transport of Goods

Article 22. (1) The place of supply of services in the intra-Community transport of goods shall be the territory of the country, where the place of departure is situated within the territory of the country and the place of arrival is situated within the territory of another Member State.

(2) Where a recipient of the supply referred to in Paragraph (1) is a person registered for VAT purposes in another Member State, the place of supply shall be the territory of the Member State which issued the said recipient with the VAT identification number under which the service was rendered thereto.

Place of Supply of Services Ancillary to Supply of Services in Intra-Community Transport of Goods

Article 23. (1) The place of supply of services involving transport handling of goods ancillary to the supplies referred to in Article 22 herein shall be the territory of the Member State which issued the recipient with the VAT identification number under which the service was rendered thereto.

(2) The place of supply of services rendered by an agent, broker and another intermediary acting in the name and for the account of another person in connection with the supplies of services under Article 22 herein, shall be the territory of the country where the place of departure of the transport of goods is within the territory of the country and the place of arrival is within the territory of another Member State.

(3) Where the recipient of the supply referred to in Paragraph (2) is a person registered for VAT purposes in another Member State, the place of supply shall be the territory of the Member State which issued the recipient with the VAT identification number under which the service was rendered thereto.

(4) The place of supply of services rendered by an intermediary acting in the name of and for the account of another person in connection with the provision of services for transport handling of goods under Paragraph (1) shall be the place where the transport handling of the goods is physically performed.

(5) Where the recipient of the supply under Paragraph (4) is a person registered for VAT purposes in another Member State, the place of supply shall be the territory of the Member State which issued the recipient with the VAT identification number under which the service was rendered thereto.

Place of Supply of Services with Recipient Established within Territory of Another Member State

Article 24. (1) The place of supply of services rendered by an intermediary acting in the name of and for the account of another person, when such services are linked to the supplies of services other than those referred to in Article 21 (3), Articles 22 and 23 herein, shall be the place of the supplies in connection with which the intermediation is rendered.

(2) Where the recipient of the supply is any person registered for VAT purposes in another Member State, the place of supply shall be the territory of the Member State which issued the recipient with the VAT identification number under which the service was rendered thereto.

(3) The place of supply of services involving valuations or work on movable things shall be the territory of the Member State which issued the recipient with the VAT identification number under which the service was rendered thereto, where the following conditions are fulfilled:

1. the recipient of the supply is a person registered for VAT purposes in another Member State;

2. the goods are dispatched or transported from the territory of the country to a destination outside the territory of the country.

(4) The documents certifying the circumstances referred to in Item 2 of Paragraph (3) shall be determined by the Regulations for Application of this Act.

(5) If the supplier of the service referred to in Paragraph (3) fails to obtain documents certifying the circumstances referred to in Item 2 of Paragraph (3) prior to the lapse of the calendar month following the calendar month during which the chargeable event for the supply occurred, the place of supply shall be determined according to the procedure established by Article 21 herein. In such case, the supplier shall adjust the result of the application of Paragraph (3) according to a procedure established in the Regulations for Application of this Act.

Chapter Two

CHARGEABLE EVENT AND TAXABLE AMOUNT

Occurrence of Chargeable Event and Charge ability of Tax

Article 25. (1) “Chargeable event,” within the meaning given by this Act, shall be the supply of goods or services effected by taxable persons under this Act, the intra-Community acquisition, as well as the importation of goods under Article 16 herein.

(2) A chargeable event shall occur on the date on which ownership of the goods passes or on which the services are performed.

(3) In addition to the cases referred to in Paragraph (2), a chargeable event shall occur on:

1. the date of actual handing over of the goods under Article 6 (2) herein;

2. the date of setting aside or handing over of the goods under Article 6 (3) herein;

3. the date on which the transport under Article 7 (4) herein starts;

4. the date on which the supplier receives the payment: applicable to sale of goods by mail order or by electronic means;

5. the date of retrieval of the coins or tokens: applicable to effecting of supplies by means of vending machines or other similar devices actuated by coins, tokens or other such;

6. the date of the actual return of the asset repaired and/or improved upon termination of the contract or discontinuance of the use of the asset: in the cases of performance, free of charge, by a tenant/user of services for repair and/or improvement of an asset hired out or allocated for use, where the conditions under Items 2 and 3 of Article 9 (4) herein do not apply.

(4) In supplies effected periodically, by stages or continuously, with the exception of the supplies covered under Article 6 (2) herein, each period or stage for which payment has been agreed shall be considered to be a separate supply and the chargeable event for it shall occur on the date where this period or stage has expired.

(5) On the date of occurrence of the chargeable event under Paragraphs (2), (3) and (4):

1. the tax under this Act shall become chargeable in respect of the taxable supplies and an obligation for the registered person to charge the said tax shall arise, or

2. grounds shall arise for exemption from the charging of tax in respect of the exempt supplies and the supplies whereof the place of transaction is outside the territory of the country.

(6) Where a payment is effected on a supply before the occurrence of a chargeable event under Paragraphs (2), (3) and (4), the tax shall become chargeable upon receipt of the payment, with the exception of a payment received in connection with an intra-Community supply.

(7) Where a person who is not registered under this Act receives an advance payment in connection with a taxable supply and actually effects the said supply after the date of registration of the said person under this Act, the advance payment received shall be presumed to include a tax which becomes chargeable on the date on which the tax on the supply becomes chargeable.

Taxable Amount in Supplies within the Territory of the Country

Article 26. (1) “Taxable amount,” within the meaning given by this Act, shall be the value whereon the tax is charged or not charged depending on whether the supply is taxable or exempt.

(2) The taxable amount shall be determined on the basis of everything which constitutes the consideration which has been obtained by or is due to the supplier from the recipient or another person in connection with the supply, expressed in leva and stotinki exclusive of the tax under this Act. Any payment of interest and damages of a compensatory nature shall not be considered a consideration for a supply.

(3) The taxable amount referred to in Paragraph (2) shall be credited with:

1. all other taxes and fees, including excise duty, where such are payable on the supply;

2. all subsidies and investment grants directly linked to the supply;

3. the incidental expenses charged by the supplier to the recipient, such as commission, packing, transport, insurance costs etc., directly linked to the supply;

4. the cost of the usual or customary packing materials or containers, unless returnable or if the recipient is not a taxable person; if such packing materials or containers are returned by the recipient, the taxable amount shall be debited with the value of the said materials or containers upon return.

(4) The taxable amount shall be deemed to include:

1. the value of the subsequent warranty services for the goods;

2. the value retained by the recipient as a performance bond.

(5) The taxable amount shall not include:

1. the amount of the trade discount or rebate, if allowed to the recipient on the date of occurrence of the chargeable event; if the said discount or rebate is allowed to the recipient after the date of occurrence of the chargeable event, the taxable amount shall be debited therewith upon allowance;

2. the cost of the usual or customary packing materials or containers, if the recipient is a taxable person and the said materials or containers are returnable; if such materials or containers are not returned within 12 months after dispatch thereof, the taxable amount shall be credited with the value of the said materials or containers at the end of this time period;

3. the costs incurred by a lessor and lessee in connection with the use of goods under the terms and within the term of validity of a lease contract, such as: costs of property insurance, civil liability insurance and other such, for all or part of the term of validity of the contract, the costs of property taxes and fees, environmental fees and registration costs;

4. the amounts paid to the supplier as repayment for the expenses incurred in the name and for the account of the recipient, where the said amounts are expressly entered in the accounts of the supplier; the supplier must hold proof of the actual amount of this expenditure and shall not have the right to credit for input tax in respect of the tax which may have become chargeable upon the incurrence of the said expenditure.

(6) Where the values required for calculation of the taxable amount are expressed in a foreign currency, the taxable amount shall be determined on the basis of the lev equivalent of the said currency at the exchange rate announced by the Bulgarian National Bank for the date on which the tax on the supply became chargeable.

(7) Where the consideration is expressed wholly or partly in goods or services (the payment is effected wholly or partly in goods or services), the taxable amount of the supply shall be the open market value of the goods or services supplied, calculated at the date on which the tax became chargeable.

Special Cases of Determination of Taxable Amount

Article 27. (1) The taxable amount of the supply may not be less than the taxable amount upon acquisition of the costs or than the cost price, and in the cases where the goods are imported, than the taxable amount upon importation, for any supplies of:

1. goods under Article 6 (3) and Article 7 (4) herein;

2. land which is a regulated lot within the meaning given by the Spatial Development Act, with the exception of building land of buildings which are not new;

3. new buildings or parts thereof and the building land thereof.

(2) The taxable amount of supplies of services under Article 9 (3) herein shall be the amount of the direct costs incurred in connection with the performance of the said services.

(3) The taxable amount shall be the open market value in respect of the following supplies:

1. any supplies between connected persons;

2. any supplies of goods under Article 111 herein;

3. any supplies effected free of charge under Item 4 of Article 9 (2) herein.

Chapter Three

ZERO-RATED SUPPLIES

Supplies of Goods Dispatched or Transported to Destination outside Territory of Community

Article 28. The following shall be supplies liable to tax at the zero rate:

1. the supply of any goods which are dispatched or transported from a place within the territory of the country to a destination in a third country or territory, by or for the account of the supplier;

2. the supply of any goods which are dispatched or transported from a place within the territory of the country to a destination in a third country or territory, by or for the account of the recipient, if the recipient is a person who is not established within the territory of the country; this provision shall not apply where the goods are intended for the fuelling, equipment and provisioning of vessels and aircraft which are used for sporting and entertainment purposes or for private use.

International Transport of Passengers

Article 29. (1) Transport of passengers shall be a supply liable to tax at the zero rate where the transport is effected:

1. from a place within the territory of the country to a destination outside the territory of the country, or

2. from a place outside the territory of the country to a destination within the territory of the country, or

3. between two places within the territory of the country, where the transport is not part of a transport referred to in Items 1 and 2.

(2) The transport of goods and motor vehicles, where they are part of the luggage of passengers, shall also be considered as transport of passengers under Paragraph (1).

International Transport of Goods

Article 30. Transport of goods shall be a supply liable to tax at the zero rate where the transport is effected:

1. from a place within the territory of the country to a destination within the territory of a third country or territory or to a destination within the territory of the islands making up the autonomous regions of the Azores and Madeira, or

2. from the territory of a third country or territory or from the territory of the islands making up the autonomous regions of the Azores and Madeira to a destination within the territory of the country, or

3. between two places within the territory of the country, where the transport is not part of a transport referred to in Items 1 and 2.

Supply Linked to International Transport

Article 31. The following shall be supplies liable to tax at the zero rate:

1. the supply of goods for the equipping with spare parts, fuelling and lubricating, and provisioning with food, beverages, water and other victuals of vessels, aircraft and railway rolling stock on international service, where the goods supplies are intended for consumption on board; this shall not apply to vessels or aircraft which are used for sporting and entertainment purposes or for private use;

2. the supply of goods for the equipping with spare parts, fuelling and lubricating, and provisioning with food, beverages, water and other victuals intended for consumption on board any vessels:

(a) used for the purposes of commercial, industrial or fishing activities outside the maritime space of the Republic of Bulgaria;

(b) used for rescue or assistance at sea;

(c) of war, as defined in subheading 89.01 of the Common Customs Tariff, leaving the country and bound for foreign ports or anchorages;

3. the supply of services for the building, maintenance, repair, modification, transformation, assembly, equipping, furnishing, transport and destruction of ships and aircraft, with the exception of those referred to in Item 2 (c); this shall not apply to any ships and aircraft which are used for sporting and entertainment purposes or for private use;

4. the chartering of vessels, aircraft and railway rolling stock for the effecting of international transport;

5. the handling of vessels, including the services covered under Chapter Nine of the Merchant Shipping Code, of aircraft and railway rolling stock on international service, as well as services for rescue and assistance at sea;

6. the supply of services linked to transport handling of goods or passengers carried by a vessel, aircraft or railway rolling stock on international service;

7. the supply of vessels and aircraft, with the exception of those used for sporting and entertainment purposes or for private use.

Supply Linked to International Goods Traffic

Article 32. (1) The supply of non-Community goods, with the exception of such specified in the Annex hereto in respect of which the circumstances covered under Article 16 (5) herein apply, shall be a supply liable to tax at the zero rate.

(2) The supply of services directly linked with the supply of goods liable to tax at the zero rate under Paragraph (1) shall be a supply liable to tax at the zero rate, with the exception of the supplies exempt within the meaning given by this Act.

Supply for Handling of Goods

Article 33. The performance of services involving work on goods, such as treatment, processing or repair or goods, shall be a supply liable to tax at the zero rate where the following conditions are fulfilled:

1. the goods are acquired or imported for the purposes of performance of such work within the territory of the Community;

2. after being worked upon, the goods are dispatched or transported to a third country or territory by or for the account of the supplier or the recipient;

3. the recipient of the goods is not established within the territory of the country.

Supply of Gold for Central Banks

Article 34. The supply of gold other than investment gold within the meaning given by this Act shall be a supply liable to tax at the zero rate where the recipient is the Bulgarian National Bank or the Central Bank of another Member State.

Supply Linked to Duty-Free Trade

Article 35. The sales of goods in duty-free distributive trade establishments shall be a supply liable to tax at the zero rate.

Supply of Goods Provided by Agents, Brokers and Other Intermediaries

Article 36. (1) The supply of goods provided by agents, brokers and other intermediaries acting in the name and for the account of another shall be a supply liable to tax at the zero rate where linked to the supplies specified in this Chapter.

(2) The supply of services whereof the place of transaction is within the territory of the country, provided by agents, brokers and other intermediaries acting in the name and for the account of another, shall likewise be a supply liable to tax at the zero rate where the said services are provided in connection with the supply of goods or services whereof the place of supply is outside the territory of the Community.

Documenting Supplies

Article 37. (1) The documents certifying the existence of circumstances under this Chapter shall be specified by the Regulations for Application of this Act.

(2) If the supplier fails to obtain the documents referred to in Paragraph (1) prior to the lapse of the calendar month succeeding the calendar month during which the tax became chargeable, including in the case of advance payment on a supply, the provisions of this Chapter shall not apply. If the supplier obtains the documents referred to in Paragraph (1) subsequently, the supplier shall adjust the result of the application of this Paragraph according to a procedure established by the Regulations for Application of this Act.

Chapter Four

EXEMPT SUPPLIES AND ACQUISITIONS

General Dispositions

Article 38. (1) The supplies specified in this Chapter shall be exempt from tax.

(2) Any intra-Community supplies shall likewise be exempt if they would have been exempt if effected within the territory of the country according to the procedure established by this Chapter.

(3) Any intra-Community acquisition of goods, whose supply within the territory of the country is an exempt supply under this Chapter, shall likewise be exempt from taxation.

Supply Linked to Health Care

Article 39. The following supplies shall be exempt:

1. the performance of health (medical) services and of services directly linked thereto, rendered by health-care facilities under the Health Act and by medical-treatment facilities under the Medical-Treatment Facilities Act;

2. the supply of human organs, tissues and cells, blood, blood components and milk;

3. the supply of prostheses, as well as the services for provision of prostheses to people with disabilities, where the said supplies are part of the health services referred to in Item 1;

4. the supply of dental prostheses;

5. the performance of transport services for sick or injured persons in vehicles specially designed for the purpose by duly authorized bodies;

6. the supply of goods and services within the framework of humanitarian activity carried out by the Bulgarian Red Cross and other not-for-profit legal entities pursuing public-benefit activities and entered into the Central Register of Not-for-Profit Legal Entities for Pursuit of Public-Benefit Activities.

Supply Linked to Welfare and Social Security Work

Article 40. The following supplies shall be exempt:

1. the performance of social services under the Social Assistance Act;

2. the supply of social assistance benefits according to the procedure established by the Social Assistance Act;

3. the compulsory and voluntary social, retirement and health insurance under the terms and according to the procedure established by a special law, including the intermediation services directly linked thereto.

Supply Linked to Education, Sports or Physical Education

Article 41. The following supplies shall be exempt:

1. pre-school instruction and character education, school or university education, vocational education and training, post-graduate training, retraining and upgrading of qualifications, provided by:

(a) kindergartens, schools or auxiliary units under the Public Education Act, institutions within the vocational education and training system under the Vocational Education and Training Act, or cultural and educational or research institutions;

(b) higher schools under the Higher Education Act;

2. tuition given privately by teachers, covering school or university education under Item 1;

3. the supply of textbooks and teaching aids, approved by the Minister of Education and Science or by the Minister of Culture in accordance with the endorsed compulsory teaching and educational syllabi and curricula, where the said goods are supplied by the organizations covered under Item 1 (a), as well as the supply of textbooks and teaching aids, where the said goods are supplied by the organizations covered under Item 1 (b);

4. the services directly linked to sports or physical education, provided by sporting organizations under the Physical Education and Sports Act which are registered under the Not-for-Profit Legal Entities Act as organizations designated for pursuit of public-benefit activities.

Supply Linked to Culture

Article 42. The following supplies shall be exempt:

1. charges by cultural organizations and cultural institutions under the Protection and Promotion of Culture Act for admissions to:

(a) circuses, music and musical performing-arts shows and concerts, with the exception of admissions to bars, variety show bars and erotic shows;

(b) museums, art galleries, libraries and theatres;

(c) zoos and botanical gardens;

(d) architectural, historical, archaeological, ethnographic and museum reserves and complexes;

2. the activities of the Bulgarian National Radio, the Bulgarian National Television and the Bulgarian News Agency for which they receive payment from the executive budget.

Supply Linked to Religious Denominations

Article 43. The supply of goods and the performance of services by the Bulgarian Orthodox Church and other registered religious denominations under the Religious Denominations Act shall be an exempt supply where the said supply is linked to the performance of their religious, social, educational and health activities.

Supply of Non-Profit-Making Nature

Article 44. (1) The following supplies shall be exempt:

1. the supply of goods and the performance of services by the organizations covered under Articles 39, 40, 41 and 42 herein, where the said supply is linked to fund-raising events organized for the benefit of the activities of the said organizations;

2. the supply of goods and the performance of services by organizations which are not merchants and which have aims of a political, trade-union, religious, patriotic, philosophical, philanthropic or civic nature, where the said supply is linked to fund-raising events organized for the benefit of the activities of the said organizations;

3. the supply of goods and the provision of services by the organizations referred to in Item 2 for the benefit of their members in return for a subscription fixed in accordance with the rules of the said organizations;

4. the provision of services by independent groups of persons whose activities are exempt from or are not subject to tax for the purpose of rendering their members the services directly necessary for the exercise of their activity, where these groups merely claim from their members exact reimbursement of their share of the joint expenses.

(2) The supplies covered under Paragraph (1) shall be exempt insofar as they do not lead to distortion of competition.

Supply Linked to Land and Buildings

Article 45. (1) The transfer of the right of ownership of land, the creation or transfer of limited rights over to land, as well as the letting or leasing of land, shall be an exempt supply.

(2) The creation or transfer of a building right shall be considered an exempt supply under Paragraph (1) until the time of completion of rough construction work on the building for which the building right is created or transferred. The building right shall not cover the building and erection works performed.

(3) The supply of buildings or parts thereof, which are not new, the supply of building land, as well as the creation and transfer of other rights in rem thereto, shall likewise be an exempt supply.

(4) The letting of a building or part thereof for residential use to a natural person who is not a merchant shall likewise be an exempt supply.

(5) Paragraph (1) shall not apply in respect of:

1. the transfer of a right of ownership of a regulated lot within the meaning given by the Spatial Development Act, with the exception of the building land of buildings which are not new;

2. the transfer of a right of ownership or other rights, as well as the letting of plant, machinery, equipment and structures immovably fixed to or built under the ground;

3. the transfer of a right of ownership or other rights, as well as the letting of camping sites, caravan parks, holiday camps, sites for parking vehicles and other such;

4. the transfer of a right of ownership of building land of new buildings, as well as the creation and transfer of other rights to such land.

(6) Paragraph (4) shall not apply to provision of accommodation in hotels, motels, cottage villages and holiday villages, rented rooms in family houses, villas, houses, cabanas, camping sites, hikers’ chalets, guest houses, inns, boarding houses, caravan parks, holiday camps, holiday accommodations owned by businesses for their employees, spa centres and sanatorium complexes.

(7) In the cases of supplies covered under Paragraphs (1), (3) and (4), the supplier shall be allowed a right of option for taxation.

Supply of Financial Services

Article 46. (1) The following supplies shall be exempt:

1. the negotiation, the granting and the management of credit for a consideration (interest) by the person granting it, including the granting, negotiation and management of credit upon supply of goods pursuant to a lease contract;

2. the negotiation of guarantees and transactions in guarantees or securities establishing title to money receivables, as well as management of guarantees by the creditor;

3. the transactions, including negotiation, concerning bank accounts, transfers, payments, debts, receivables, cheques and other such negotiable instruments, excluding transactions concerning debt collection and factoring and the hire of safes;

4. the transactions, including negotiation, concerning currency, banknotes and coins used as legal tender, with the exception of banknotes and coins which are not normally used as legal tender or are of numismatic interest;

5. the transactions, including negotiation, concerning corporate interests, shares or other securities and derivatives thereof, with the exception of management and safekeeping; this shall not apply to any securities establishing titles to goods or services other than such specified in this Article;

6. management of the activity of collective investment schemes, investment companies of the closed-end type, and the provision of investment advice according to the procedure established by the Public Offering of Securities Act;

7. the transactions, including negotiation, concerning financial-futures contracts and options.

(2) In the cases of a supply pursuant to a lease contract under Item 1 of Paragraph (1), the supplier shall be allowed a right of option for taxation of the granting of the credit.

(3) In respect of the supplier of the financial services covered under Item 1 of Paragraph (1), credit for input tax shall become fully deductible in compliance with the requirements of Article 71 herein for the goods subject to the lease contract.

Supply of Insurance Services

Article 47. The performance of services under the terms and according to the procedure established by the Insurance Code shall be an exempt supply where performed by:

1. insurers;

2. insurance brokers and insurance agents.

Gambling

Article 48. The organizing of games of chance, within the meaning given by the Gambling Act, shall be an exempt supply.

Supply of Postage Stamps and Postal Services

Article 49. The following supplies shall be exempt:

1. the supply at face value of postage stamps or an indication equivalent to a postage stamps;

2. the performance of a universal postal service under the terms and according to the procedure established by the Postal Services Act.

Supply of Goods or Services for which Credit for Input Tax Has Not Been Used

Article 50. The following supplies of goods or services shall be exempt:

1. where the said goods or services have been used entirely for the performance of exempt supplies and, on these grounds, the right to deduct credit for input tax has not been exercised in respect of the tax charged upon their production, acquisition or importation;

2. where a right to deduct credit for input tax pursuant to Article 70 herein was not in place upon the production, acquisition or importation of the said goods or services.

Chapter Five

TAXATION OF INTRA-COMMUNITY SUPPLIES

Chargeable Event and Charge ability for Intra-Community Supplies

Article 51. (1) The chargeable event for an intra-Community supply shall occur on the date on which the chargeable event would have occurred for a supply within the territory of the country.

(2) The chargeable event for an intra-Community acquisition referred to in Article 7 (4) herein shall occur on the date on which the transport of the goods from the territory of the country starts.

(3) The tax upon an intra-Community acquisition shall become chargeable on the 15th day of the month following the month during which the chargeable event occurs according to Paragraphs (1) and (2).

(4) Notwithstanding Paragraph (3), the tax shall become chargeable on the date of issue of the invoice, where the said invoice is issued before the 15th day of the month following the month during which the chargeable event occurs.

(5) Paragraph (4) shall not apply where the invoice is issued in connection with payment on the supply received before the date of occurrence of the chargeable event.

Taxable Amount of Intra-Community Supplies

Article 52. (1) The taxable amount for intra-Community acquisitions shall be determined according to the procedure established by Article 26 herein.

(2) The taxable amount of intra-Community supplies under Article 7 (4) herein shall be the taxable amount upon acquisition of the goods, the cost price thereof or the taxable amount thereof upon importation, credited according to the procedure established by Article 26 (3) herein.

(3) The taxable amount referred to in Paragraph (2) shall not be credited with the value of the services covered under Articles 22, 23 and 24 herein, whereof the place of transaction is within the territory of the country, for which the person registered under this Act is obliged to charge tax as a payer covered under Article 82 (2) herein.

Rate of Tax and Documenting of Intra-Community Supplies

Article 53. (1) The intra-Community supplies referred to in Article 7 herein, with the exception of the exempt intra-Community supplies referred to in Article 38 (2) herein, shall be liable to tax at the zero rate.

(2) The documents certifying the effecting of the intra-Community supply shall be specified by the Regulations for Application of this Act.

(3) If the supplier fails to obtain the documents referred to in Paragraph (2) prior to the lapse of the calendar month succeeding the calendar month during which the tax on the supply became chargeable, Paragraph (1) shall not apply. If the supplier obtains the documents referred to in Paragraph (2) subsequently, the supplier shall adjust the result of the application of this Paragraph according to a procedure established by the Regulations for Application of this Act.

PART THREE

TAXATION OF IMPORTS

Chargeable Event for Importation

Article 54. (1) The chargeable event for importation of goods shall occur and the tax shall become chargeable on the date on which the obligation to pay import duty within the territory of the country arises, or should have arisen, including where such an obligation does not exist or the rate of the said obligation is zero.

(2) Where an obligation to pay import duty within the territory of the country does not arise upon importation of goods under Article 16 (3) herein, the chargeable event shall occur and the tax shall become chargeable on the date on which the customs formalities are completed.

Taxable Amount

Article 55. (1) The taxable amount upon importation of goods under Article 16 herein shall be the value for customs purposes credited with:

1. the customs duties, excise duties and other charges due in connection with the importation of the goods within the territory of the Community, as well as those due by reason of importation into the territory of the country;

2. the expenses incidental to the importation, such as commission, packing, transport and insurance costs, incurred up to the first place of destination of the goods within the territory of the country.

(2) The taxable amount shall furthermore be credited with any costs referred to in Item 2 of Paragraph (1) where the said costs result from transport of the goods from the territory of the country to the territory of another Member State, if the documents accompanying the goods show that the goods are intended for that other Member State.

(3) When goods have been temporarily exported from the territory of the country to a place outside the territory of the Community for treatment, processing or repair under the outward processing procedure and are re-imported into the territory of the country, the taxable amount shall be the value of the treatment, processing or repair, credited according to the procedure established by Paragraph (1).

(4) The taxable amount under the Paragraphs (1), (2) and (3) shall not include the trade discount or rebate, if allowed to the recipient not later than the date of occurrence of the chargeable event.

(5) Upon importation of goods under Article 16 (3) herein, the taxable amount shall be determined according to the procedure established by Article 26 herein.

Charging of Tax upon Importation by Customs Authorities

Article 56. The tax upon importation under Article 16 herein shall be charged by the customs authorities, with the amount of tax being accounted for according to the procedure established for the customs debt.

Charging of Tax upon Importation by Importer

Article 57. (1) The tax upon importation may be charged by the importer if the said importer is a registered person and is granted authorization to apply this regime in connection with the implementation of an investment project under Article 166 herein.

(2) In the cases under Paragraph (1), the importer shall exercise the right thereof according to the procedure established by Article 164 (2) herein.

(3) The importer shall charge the tax in respect of the import for which the importer has exercised the right thereof under Paragraph (1) by a memorandum on the tax period during which the chargeable event under Article 54 herein occurred.

(4) In the cases referred to in Article 58 (2) herein, the tax shall be charged by the importer by a memorandum on the tax period during which the tax became chargeable.

Exemption from Tax upon Importation

Article 58. (1) Exemption from tax shall be granted in respect of the importation of:

1. goods subject to exemption from customs duties other than as provided for in the Common Customs Tariff;

2. goods which are imported by the persons under Article 174 herein, which qualify for exemption from import duties;

3. human organs, tissues and cells, blood, blood components, milk, dental prostheses;

4. textbooks and teaching aids referred to in Item 3 of Article 41 herein by the organizations covered under Item 1 of Article 41 herein;

5. sea fishing products and other products harvested outside the territorial waters of the Community by ships, where the said products are imported into ports unprocessed or after undergoing preservation for marketing;

6. goods, where the following conditions are simultaneously fulfilled:

(a) the importer is a person registered under this Act;

(b) the documents accompanying the goods show that the goods are intended for another Member State;

(c) the importer will effect a subsequent intra-Community supply of the goods;

7. gold by the Bulgarian National Bank;

8. aircraft, vessels, as well as of spare parts for them, with the exception of such for sporting and entertainment purposes;

9. investment gold;

10. electricity and natural gas, through a distribution system;

11. data storage mediums as part of the participation of Bulgaria in the international exchange of publications where exempt from customs duties;

12. goods within the duty-free allowances upon:

(a) receipt of international postal items and other consignments, or importation of goods of negligible value, within the meaning given by customs legislation;

(b) importation of personal luggage by travelers;

(c) importation of goods acquired abroad by travelers;

(d) importation of personal property acquired by inheritance;

(e) importation of used personal property by natural persons transferring their normal place of residence to the Republic of Bulgaria;

(f) importation of property on the occasion of a marriage;

(g) importation of used household effects after the end of temporary residence outside the Republic of Bulgaria;

(h) importation of orders, medals and honorary awards;

(i) importation of own works of art and goods and works of science, regardless of the type of the data storage medium, by persons who are permanently resident within the territory of the country;

(j) importation of gifts received within the framework of international relations;

(k) importation of goods intended for the personal use of heads of State;

(l) importation of goods for the benefit of disaster victims;

(m) importation of goods related to services supplied by undertakers;

(n) importation of goods required for the carrying out of transport operations;

(o) importation of documentation;

13. goods which are destroyed or abandoned to the Exchequer according to the procedure established by customs legislation, as well as of goods provided free of charge, which are abandoned and confiscated, with the exception of motor vehicles;

14. goods placed under customs control, which are destroyed or irreversibly lost by reason related to the nature of the goods or through force majeure;

15. goods in an unaltered state, which have been exported and are re imported in an unaltered state, within the time limits provided for in customs legislation;

16. goods which have been temporarily exported for repair or putting in order, if the conditions provided for in customs legislation are fulfilled;

17. goods which have been exported and returned within one year on a claim;

18. motor vehicles subject to misappropriation or theft and for which the import duties due have been repaid or remitted according to the procedure established by customs legislation.

(2) Where the importer of the goods covered under Item 6 of Paragraph (1) fails to obtain the documents referred to in Article 53 (2) herein prior to the lapse of the month succeeding the month of occurrence of the chargeable event under Article 54 herein, the tax on the importation shall become chargeable by the importer.

(3) The tax referred to in Paragraph (2) shall become chargeable on the last day of the calendar month succeeding the month of occurrence of the chargeable event under Article 54 herein.

Provision of Security in Respect of Tax upon Importation

Article 59. (1) Where provision of security in respect of customs duties is not required or is required according to customs legislation, security shall not be provided or shall be provided in respect of the tax in accordance with the amounts specified in customs legislation and according to the procedure established for provision of security in respect of customs duties.

(2) Where an obligation to pay interest on customs duties under a customs debt arises according to customs legislation, an obligation to pay interest on the uncollected tax shall arise as well.

(3) Any person, who has been granted authorization to open and manage a customs warehouse (warehouse keeper) according to the procedure established by customs legislation, shall be solidarity liable with the depositor of the goods in the warehouse for the tax due upon removal of the goods from customs supervision during the storage thereof in the warehouse.

(4) Where exemption from tax is provided for according to the procedure established by Article 173 (1) herein upon importation of motor vehicles and the said vehicles remain under customs supervision, such exemption from tax shall furthermore apply if the motor vehicles, imported by any persons enjoying privileges according to the Vienna Convention on Diplomatic Relations, the Vienna Convention on Consular Relations, consular conventions or other international treaties whereto the Republic of Bulgaria is a party, were subject to misappropriation or theft within the period of customs supervision and this has been established by the competent authorities according to the procedure provided for this.

Payment of Tax upon Importation

Article 60. (1) The tax charged by the customs authorities shall be remitted to Executive Budget Revenue according to the procedure and within the time limits provided for payment of customs duties.

(2) The tax charged by the customs authorities upon importation into the territory of the country may not be set off against other receivables by the revenue or customs authorities.

Release of Goods

Article 61. The customs authorities shall release the goods after payment of the tax charged or after provision of security in respect of the said tax according to the procedure established for the customs debt, save in the cases where the tax is charged by the importer.

PART FOUR

TAXATION OF INTRA-COMMUNITY ACQUISITION

Place of Supply of Intra-Community Acquisition

Article 62. (1) The place of supply of an intra-Community acquisition shall be the territory of the country, where the goods arrive and the transport thereof ends within the territory of the country.

(2) Notwithstanding Paragraph (1), the place of supply of the intra-Community acquisition shall be the territory of the country, where the person acquiring the goods is registered under this Act and made the acquisition of the said goods under an identification number issued in the country.

(3) Paragraph (2) shall not apply where the person holds proof that an intra-Community acquisition of the goods has been subject to tax in the Member State where the goods have arrived or the transport thereof has ended.

(4) If the intra-Community acquisition is subject to tax according to Paragraph (2) and the person subsequently establishes that this intra-Community acquisition has been subject to tax as well in the Member State where the goods arrive or where the transport thereof ends, the person shall adjust the result of the application of Paragraph (2).

(5) Notwithstanding Paragraph (2), the place of supply of the intra-Community acquisition shall be the Member State where the goods arrive or where the transport thereof ends, where the following conditions are simultaneously fulfilled:

1. the intermediary in a triangular operation acquires goods under the identification number thereof referred to in Article 94 (2) herein;

2. the person referred to in Item 1 effects a subsequent supply of the goods to the acquirer in the triangular operation;

3. the person referred to in Item 1 issues an invoice on the supply referred to in Item 2, satisfying the requirements of Article 114 herein, stating therein that the said person is an intermediary in a triangular operation and that the acquirer in the triangular operation is the person liable for the tax due on the supply;

4. the person referred to in Item 1 declares the supply referred to in Item 2 in the VIES return for the relevant tax period.

(6) The documents certifying the circumstances covered under Paragraphs (3), (4) and (5), and the procedure for effecting the adjustment under Paragraph (4), shall be specified by the Regulations for Application of this Act.

Chargeable Event and Charge ability of Tax upon Intra-Community Acquisition

Article 63. (1) The chargeable event upon an intra-Community acquisition shall occur on the date on which the chargeable event would have occurred upon a supply within the territory of the country.

(2) The chargeable event upon an intra-Community acquisition referred to in Article 13 (3) herein shall occur on the date on which the transport of the goods ends within the territory of the country.

(3) The tax upon an intra-Community acquisition shall become chargeable on the 15th day of the month following the month during which the chargeable event occurs.

(4) Notwithstanding Paragraph (3), the tax shall become chargeable on the date of issue of the invoice, where the said invoice is issued before the 15th day of the month following the month during which the chargeable event occurs.

(5) Paragraph (4) shall not apply, where the invoice is issued in connection with payment effected before the date of occurrence of the chargeable event.

Taxable Amount for Intra-Community Acquisition

Article 64. (1) The taxable amount for an intra-Community acquisition shall be determined according to the procedure established by Article 26 herein.

(2) The taxable amount for an intra-Community acquisition referred to in Article 13 (3) herein shall be equal to the taxable amount formed for the purposes of the intra-Community acquisition in the Member State from which the goods were dispatched or transported.

(3) The taxable amount for an intra-Community acquisition of excisable goods shall also include the excise duty due or paid on the goods in the Member State from which the goods were dispatched or transported. If after acquisition the excise duty is refundable to the recipient, the taxable amount shall be debited according to a procedure established by the Regulations for Application of this Act.

(4) The taxable amount referred to in Paragraphs (1), (2) and (3) shall not include the taxable amount of the services covered under Articles 22, 23 and 24 herein whereof the place of transaction is within the territory of the country, in respect of which the person registered under this Act is obliged to charge the tax as a person covered under Article 82 (2) herein.

Exempt Intra-Community Acquisitions

Article 65. (1) Exemption from tax shall be granted in respect of any intra-Community acquisitions of goods whereof the place of transaction is within the territory of the country, whose supply within the territory of the country is among those specified in Chapter Four herein.

(2) Exemption from tax shall be granted in respect of any intra-Community acquisitions, whereof the place of transaction is within the territory of the country, of goods:

1. where any persons covered under Article 172 (2) and Article 174 (1) herein are recipients;

2. the importation of which into the territory of the country would be exempted from tax according to the procedure established by Article 58 (1) herein;

3. where any institutions of the European Union are recipients;

4. from an intermediary in a triangular operation, who is a person registered for VAT purposes in another Member State.

PART FIVE

RATES OF TAX AND ASSESSMENT OF TAX LIABILITY

Chapter Six

RATES OF TAX

Rate of Tax

Article 66. (1) The rate of tax shall be 20 per cent applicable to:

1. the taxable supplies, except for those expressly specified as subject to the zero rate;

2. the importation of goods into the territory of the country;

3. the taxable intra-Community acquisitions.

(2) The rate of tax applicable to accommodation provided by a hotelier, where part of a package tour, shall be 7 per cent.

Amount of Tax

Article 67. (1) The amount of tax shall be determined by multiplying the taxable amount by the rate of tax.

(2) Where upon contracting a supply the tax was not expressly stated as due separately, the said tax shall be presumed to be included in the agreed price.

(3) The tax shall furthermore be presumed to be included in the named price where goods subject to a supply are offered in the retail network.

Chapter Seven

CREDIT FOR INPUT TAX

Credit for Input Tax and Right to Deduct Credit for Input Tax

Article 68. (1) “Credit for input tax” shall be the amount of tax which a registered person has the right to deduct from the tax liabilities thereof under this Act in respect of:

1. goods or services received thereby in a taxable supply;

2. a payment effected thereby prior to the occurrence of the chargeable event for a taxable supply;

3. importation effected thereby;

4. the tax chargeable there from as a payer under Chapter Eight herein.

(2) The credit for input tax shall become deductible where the tax subject to deduction becomes chargeable.

(3) In the cases of legal succession under Article 10 herein, the credit for input tax shall become deductible:

1. on the date of recording of the circumstance referred to in Article 10 herein in the Commercial Register: where the legal successor is a person registered under this Act;

2. on the date of registration under Article 132 (3) herein.

(4) In the cases referred to in Article 116 (2) herein, credit for input tax shall become deductible on the date of issue of the new tax document.

(5) In the cases referred to in Article 131 herein, credit for input tax shall become deductible on the date of issue of the document referred to in Item 2 of Article 131 (1) herein.

Supplies Conferring Right to Deduct Credit for Input Tax

Article 69. (1) Where the goods and services are used for the purposes of the taxable supplies effected by the registered person, the person shall have the right to deduct credit for:

1. the tax in respect of goods or services which the supplier, who is a person registered under this Act, has supplied or is to supply to the said person;

2. the tax charged upon importation of goods under Articles 56 and 57 herein;

3. the tax chargeable there from as a payer under Chapter Eight herein.

(2) For the purposes of Paragraph (1), the following shall furthermore be considered taxable supplies:

1. the supplies within the framework of the economic activity of the registered person, whereof the place of transaction is outside the territory of the country but which would have been taxable if effected within the territory of the country;

2. the supplies of financial services under Article 46 herein and of insurance services under Article 47 herein, where the recipient of the services is established outside the Community or where the supplies of such services are directly linked with goods for which the conditions of Article 28 herein are fulfilled.

Block on the Right to Deduct Credit for Input Tax

Article 70. (1) The right to deduct credit for input tax shall not be exercisable even though the conditions under Articles 69 or 74 herein are fulfilled, where:

1. the goods or services are intended for effecting of any exempt supplies under Chapter Four herein;

2. the goods or services are intended for supplies effected free of charge or for activities other than the economic activity of the person;

3. the goods or services are intended for business entertainment purposes;

4. a motorcycle or a passenger car has been acquired, imported or rented;

5. the goods or services are linked with the maintenance, repair, improvement or operation of the means of transport referred to in Item 4, as well as for transport services or taxi transport by any means of transport referred to in Item 4;

6. the goods have been confiscated, or the building has been demolished as unlawfully constructed.

(2) Items 4 and 5 of Paragraph (1) shall not apply where:

1. the means of transport referred to in Item 4 of Paragraph (1) are used solely for transport and security services, taxi transport, rental, courier services or motor vehicle driving instruction, including upon their subsequent resale;

2. the means of transport referred to in Item 4 of Paragraph (1) are intended solely for resale (merchandise in stock);

3. the goods or services are intended solely for re-sale (merchandise in stock), including after processing;

4. the goods or services are linked to the maintenance, repair, improvement or operation of the means of transport referred to in Item 1.

(3) Item 2 of Paragraph (1) shall not apply to:

1. the special-purpose, working, uniform or presentable clothing provided, free of charge, by an employer to the factory and office workers thereof, including such under management contracts, for the purposes of the economic activity of the said employer;

2. the provision, free of charge, of transport services from the place of residence to the place of work and back, by an employer to the factory and office workers thereof, including such under management contracts, for the purposes of the economic activity of the said employer;

3. the goods or services used in the performance, free of charge, of services by a tenant/user for repair of an asset hired out or allocated for use in the cases where the said asset was hired out or allocated for use to the tenant/user on a continuing basis for a period of not less than three years;

4. the goods or services used in the performance, free of charge, of services by a concessionaire for improvement of an asset allocated for use, where this is a condition and/or obligation under the contract of concession;

5. the provision, free of charge, of goods or services of negligible value for advertising purposes and upon distribution of samples;

6. the food and/or food additives which are provided according to the procedure established by Article 285 of the Lab our Code;

7. the transport and overnight stays of persons seconded by the person;

8. the goods or services used in connection with the performance of warranty services under Article 129 herein.

(4) Any person registered in pursuance of Article 99 and Article 100 (2) herein shall have no right to credit for input tax.

(5) The right to credit for input tax shall not be exercisable in respect of any miss charged tax.

Conditions for Exercise of Right to Deduct Credit for Input Tax

Article 71. The person shall exercise the right thereof to deduct credit for input tax where one of the following conditions is fulfilled:

1. the said person holds a tax document drawn up in accordance with the requirements of Articles 114 and 115 herein, wherein the tax is indicated on a separate line: in respect of supplies of goods or services for which the person is a recipient;

2. the said person has issued a memorandum under Article 117 herein and has fulfilled the requirements of Article 86 herein: in the cases where the tax is chargeable from the person as a payer under Chapter Eight herein;

3. the said person holds a customs declaration wherein the person is specified as importer and the tax has been remitted according to the procedure established by Article 90 (1) herein: in the cases of importation under Article 16 herein;

4. the said person holds a customs declaration wherein the person is specified as importer, has issued a memorandum under Article 117 herein, and has complied with the requirements of Article 86 herein: in the cases under Article 57 herein;

5. the said person holds a document which satisfies the requirements of Article 114 herein, has issued a memorandum under Article 117 herein, and has complies with the requirements of Article 86 herein: in the cases of an intra-Community acquisition;

6. the said person holds a document referred to in Item 2 of Article 131 (1) herein;

7. the said person holds the documents specified in the Regulations for Application of this Act: in the cases of legal succession under Article 10 herein.

Period of Exercisability of Right to Deduct Credit for Input Tax

Article 72. (1) A person registered under this Act may exercise the right thereof to deduct credit for input tax for the tax period during which the said credit becomes deductible or during one of the three succeeding tax periods.

(2) The right referred to in Paragraph (1) shall be exercised by the person by means of:

1. including the amount of the credit for input tax upon assessment of the net tax for the tax period under Paragraph (1) in the VAT return under Article 125 for the same tax period;

2. indicating the document under Article 71 herein in the purchase day book under Article 124 herein for the tax period referred to in Item 1.

Right to Deduct Partial Credit for Input Tax

Article 73. (1) A registered person shall have the right to deduct a partial credit for input tax in respect of the tax on goods or services which are used for effecting of both supplies in respect of which credit for input tax is deductible and of supplies or activities in respect of which such a credit is not deductible.

(2) The amount of the partial credit for input tax shall be determined by multiplying the amount of the credit for input tax by a factor rounded up to the second decimal place, made up of a fraction having, as numerator, the turnover attributable to the supplies in respect of which credit for input tax is deductible and, as denominator, the turnover attributable to all supplies and activities effected by the person.

(3) The turnover attributable to supplies in respect of which credit for input tax is deductible shall include:

1. the taxable amounts of the taxable supplies effected by the person;

2. the taxable amounts of the payments received by the person in respect of which the tax became chargeable before occurrence of the chargeable event for a taxable supply;

3. the taxable amounts of the supplies effected by the person whereof the place of transaction is outside the territory of the country, treated as equivalent to taxable supplies according to Article 69 (2) herein, with the exception of the supplies whereof the place of supply is outside the territory of the country, effected from a fixed establishment of the person outside the territory of the country;

4. the taxable amounts of the payments received by the person before effecting of the supplies referred to in Item 3;

5. the taxable amounts of the supplies under Item 2 of Article 50 herein.

(4) The turnover attributable to all supplies and activities of the person shall include:

1. the turnover referred to in Paragraph (3);

2. the taxable amounts of the supplies effected by the person whereof the place of transaction is outside the territory of the country, which are not treated as equivalent to taxable supplies within the meaning given by Article 69 (2) herein, with the exception of any supplies effected from a fixed establishment by the person outside the territory of the country;

3. the taxable amounts of the exempt supplies effected, with the exception of any supplies referred to in Item 2 of Article 50 herein;

4. the value of the supplies and the activities outside the framework of the economic activity of the person;

5. the taxable amounts of the payments received by the person before effecting the supplies and the activities referred to in Items 2, 3 and 4 herein;

6. the amount of the subsidies received other than those included in the taxable amount.

(5) The factor shall be calculated on the basis of the turnovers referred to in Paragraphs (3) and (4) for the entire preceding calendar year and, where there are no such turnovers for the preceding calendar year, on the basis of the turnovers referred to in Paragraphs (3) and (4) for the tax period during which credit for input tax becomes deductible.

(6) The right to partial credit for input tax under Paragraph (2) shall be recalculated during the last tax period of the current calendar year on the basis of the parameters covered under Paragraphs (3) and (4) for the current calendar year.

(7) In the cases of de registration, the amount of the partial credit for input tax under Paragraph (2) shall be recalculated at the end of the last tax period on the basis of the parameters under Paragraphs (3) and (4) in respect of the part of the current calendar year during which the person was not registered.

(8) The difference resulting from the recalculation under Paragraphs (6) and (7) shall be included as an adjustment (upwards or downwards) in the amount of the credit for input tax in the VAT return for the last tax period.

Right to Deduct Credit for Input Tax for Assets Available and Services Received before Registration Date

Article 74. (1) Any person registered under Articles 96, 97, 98, Article 100 (1) and (3), Articles 102 or 132 herein shall have the right to deduct credit for input tax in respect of any assets, within the meaning given by the Accountancy Act, which were purchased or otherwise acquired or imported prior to the date of registration of the said person under this Act, which are available at the date of registration.

(2) The credit referred to in Paragraph (1) shall become deductible solely in respect of assets available at the date of registration, in respect of which the following conditions a