site.btaEU Council: Bulgaria May Up VAT Registration Threshold to BGN 100,000

The Council of the European Union has adopted an implementing decision authorizing Bulgaria to exempt from VAT taxable persons whose annual turnover is no higher than the equivalent in national currency of EUR 51,130, i.e. BGN 100,000. The authorization is granted by way of derogation from Article 287, point (17), of Directive 2006/112/EC on the common system of value added tax.

The special measure will apply until December 31, 2024. By that date, Member States are to transpose Council Directive (EU) 2020/285 under which they will be allowed to exempt from VAT the supply of goods and services made by taxable persons whose annual turnover in a given Member State does not exceed a threshold of EUR 85,000 or the equivalent in national currency.

"The increase of the VAT registration threshold from BGN 50,000 to BGN 100,000 will have a positive effect in the present difficult economic situation and will reduce the compliance burden on business, and especially on small enterprises," the Bulgarian Finance Ministry said in a press release on Thursday.

Small businesses whose turnover does not exceed the threshold would still have the option to register for VAT under the normal arrangements.

Bulgaria requested the authorization by letter sent to the European Commission on May 13, 2022. Receipt of the letter was confirmed by the Commission on May 23. 

The National Assembly has already adopted amendments to the Value Added Tax Act, raising the VAT registration threshold from BGN 50,000 to BGN 100,000, effective January 1, 2023, subject to authorization from Brussels. The motion was entered by Martin Dimitrov and a group of MPs, all from Democratic Bulgaria.

Depending on the number of companies that opt for deregistration, the loss of budget revenue from the measure is estimated at BGN 85 million to BGN 130 million.