You Tube ad revenue

You Tube ad revenue

Question:
Hello!

My question is related to You Tube ad revenue. It is about a natural person who works on an employment contract and is insured above the maximum insurance income, and receives income from a YouTube channel. As far as I understand, there are two options for declaring income. The first as a claimant - with him, registration must be made under Art. 97a and VAT 20% must be charged every month on the amount received, for example, if BGN 1,000 is received, BGN 200 must be paid. The second option is for the person to create a company, which must also be registered under Article 97a, and in addition to VAT, after the end of the year, 10% corporate tax must be paid, as well as 5% dividend tax, if the amount is withdrawn from the person. My questions are: is there any other taxation under option 1 when the individual's income is registered? Can this income be treated as copyright and license income, because the clips that are provided on Youtube are copyrighted, and no registration should be made under Art. 97a, and to pay advance tax?
What is the procedure if the income exceeds BGN 50,000.00?
Thanks in advance!

Answer:
Hello,
With option 1 (reporting of income as an individual), you have correctly understood that you will have to register for VAT acc. Art. 97a of the law. However, you will not owe VAT, since your client - Youtube (actually the company that owns the channel is Google, which is registered in an EU member state. From there comes your obligation to register for VAT according to Art. 97a - because you provide a service of a legal entity located outside Bulgaria, but within the EU). With this mode of registration, the declaration indicates the amount of the income, the persons from whom you generated the income (in your case, YouTube/Google), the reason why no tax is charged and, accordingly, tax is due (Art. 21 para. 2 of VAT ). In reality, when it comes to the provision of services and when the recipient is another legal entity registered for VAT in a member state of the EU, the obligation to charge and pay the tax remains with the recipient of the service. The one who provides the service must, however, declare to whom what service and at what cost, so that it can be traced whether the recipient of the service has paid the VAT in his country. This is where this article comes from. 97a and the obligation to register for VAT.

However, the service you provide itself is neither licensed nor copyrighted. The service you provide is a commission - you present your channel as a place for advertising. When your videos are viewed, various ads appear and Google pays you a commission for that. In reality, Google does not pay you for creating and uploading a video to their platform, but pays you a portion of the received amounts for ads viewed through your videos. In this registration mode, you would owe 20% VAT only if you receive any services from a legal entity outside Bulgaria. In these cases, you will have to self-assess 20% VAT on the amount of the service you received and, accordingly, pay it into the state budget.
Regarding other taxes as an individual - here it matters whether you have registered as a self-employed person or not. If you have such a registration, you will owe 10% tax on the amount of your realized income, deducted by 25% of legally recognized expenses and the costs of the due insurance contributions. Insurance contributions are 27.8% of the amount of realized income, deducted by 25% of legally recognized expenses, and the amount of monthly insurance contributions cannot be calculated on an amount lower than the minimum monthly insurance income for the country (BGN 710.00 to at the moment) and higher than the maximum monthly insurance income for the country (BGN 3400.00 at the moment)
If you are not registered as a self-employed person, the law equates you to an ET, which means that you lose the right to deduct 25% of legally recognized expenses (but you will be able to deduct expenses actually incurred by you that are related to your activity and which can be documented) and the tax will be 15% on the realized profit (income minus expense related to the activity and minus insurance contributions). In this option, you will also owe insurance contributions - according to the same scheme as for a self-employed person.
In option 2 (reporting of income through a company), the same rules regarding VAT apply as for the individual. In this case, you will owe 10% profit tax (realized income minus the expenses incurred for the activity). Additionally, you will owe a 5% dividend tax in cases where you, as an owner, want to withdraw the company's profit. The insurance contributions you will owe will again be 27.8%, but will be calculated on an amount of your choice between the minimum monthly insurance income for the country (BGN 710.00 at the moment) and the maximum monthly insurance income for the country (BGN 3400.00 at moment).
In both variants, when an individual is already insured under an employment contract at the maximum insurance income, no insurance contributions are due.
When the income reaches over BGN 50,000.00, nothing changes. The reason for this is the cited in item 2 of Art. 21 para. 2 of VAT. When the recipient of the service is a legal entity registered for VAT in an EU country, it is considered that the place of the transaction is the country where this legal entity is established. This threshold of BGN 50,000 /from 2023 - BGN 100,000/ is for transactions with a place of execution on the territory of the country. I.e. Your turnover from Youtube does not constitute turnover for VAT registration on a general basis (the questionable threshold of BGN 50,000)
We hope we have been helpful!
Greetings!