Providing consulting services to an English company

Providing consulting services to an English company

 

Question:
Hello,

I am a consultant working in Bulgaria and I have a contract with a company from England, which provides my service to a country outside the EU. My contract is with the English company. I realized that I had to be a self-employed person with VAT registration. I'm interested in what taxes I have to pay. I have to pay my insurance and 10% tax. The question of VAT comes. Do I have to pay VAT on my income after they come from a country in the EU and will be over BGN 50,000? The English company is registered for VAT. Do I also have to pay final tax on the amount?

Thanks in advance!

 

Answer:

Hello,

There are two options. One is to work as an individual, in a freelance profession, the other is to start a company and work through it. In particular, the provision of consulting services implies that you will not generate any costs, which makes the choice of a freelance profession more attractive (because in this case, if you are given the opportunity to tax, the income generated by you to reduce by 25% and the tax will be charged on the amount received). However, in order to be able to register as a freelancer, you must meet one main criterion - to have a certificate / diploma / certificate that proves your ability to work in your chosen field. That is, if you offer, for example, consulting services in the IT field, you will need to present a diploma or certificate of education or a completed course in this IT field. In both cases - company / freelance, you will have to insure yourself. The minimum amount on which insurances will be due on a monthly basis is the minimum insurance income for the respective year.

At the end of the year, if you are a freelancer, the paid insurances are equalized. If the income received during the year is greater than the one on which you have paid social security contributions, the difference is added (we have already mentioned that the minimum amount is the minimum insurance income, there is also a maximum amount - the maximum insurance income, as for amounts above the maximum insurance income no insurance is due). The tax due is determined as the income received during the year is reduced by 25% of statutory expenses and paid and due but unpaid social security contributions and 10% tax is due on the amount thus received.

At the end of the year, if you are a company, it is calculated how much is the generated profit (realized income minus expenses incurred related to the company's activity) and 10% profit tax is charged on the amount received. Then the amount after the paid profit tax can be distributed to you as a dividend, and you will have to pay another 5% dividend tax.

About VAT. Provided that you will provide services to an EU country, you are obliged to register for VAT up to 7 days before the first service provided by you. You will not charge VAT on your income, as long as this income is from services provided within the EU (excluding Bulgaria) and as long as the recipient is a VAT registered person in the respective country. If you provide services in Bulgaria, they will be subject to 20% VAT and you will have to pay this VAT accordingly.

We hope we have been helpful.

Greetings!