Bulgarian Legal Services and US Service Provision

Bulgarian Legal Services and US Service Provision

 

 

Question:
Hello,

A Bulgarian company without VAT registration receives a service from an American company. Do Bulgarian companies have to register under the VAT Act here?

  The service is legal to register a company in the US.

Thanks!

 

Answer:

Hello,

According to Art. 97a, para 1 of compulsory registration under the VATA shall be subject to each GP which receives services with a place of performance on the territory of the country, which are taxable and for which the tax is required by the recipient under Art. 82 para 2 of the VAT Act.

Art. 82 para 1 states that when the supplier is a GP and is not established on the territory of the country and the delivery is with a place on the territory of the country, the tax is required by the recipient.

Apart from Art. 21 para. 2 stipulates that the place of performance when delivering a service when the recipient is a GP is the place where the recipient has established his independent economic activity.

Finally, Art. 3 stipulates that the GP is any person engaged in independent economic activity.

Summary: DZL from America provides services to DZL in Bulgaria, which is obliged to register under the VAT Act on the basis of Art. 97a, para 1 up to 7 days before receiving the first service and self-assessing VAT on the basis of Art. 82. para 2 VAT with protocol.

You should bear in mind that under Article 70 para 4 for self-assessed VAT with a protocol you are not entitled to a tax credit.

If you want to use a tax credit for self-assessed VAT you will have to make registration under VAT according to the choice based on Art. 100 para 1 within 7 days before receiving the first service from America.

Since the DZL (US company) provides another DZL (Bulgarian company) with a service, the place of provision of the service is the place where the recipient of the service is established.

There are some exceptions:

1.If the services are related to real estate, the place of service is where the real estate is located.

2.If passenger transport - the place where the transport takes place - is proportional to the distance traveled (when between different countries).

3. The place where the event takes place - when providing a service for providing access to cultural, artistic, artistic, sports, scientific educational and other entertainment events.

4. The place where the catering and catering services are provided.

We hope we have been helpful.

Greetings!