Within this article we will take a closer look at the procedure for value-added tax refund in Bulgaria and provide information about the deadlines for the VAT refund application, as well as the terms of its reimbursement.
I. Tax period and VAT refund procedure in Bulgaria
According to the Value Added Tax Act (VAT Act), the obligations or the receivables of the persons, registered under this Act, are declared every month by submitting of a monthly VAT declaration. According to Art. 88 of the VAT Act, the result for the tax period shall be the difference between the total amount of the tax, exigible from the person for this tax period, and the total amount of the tax credit, regarding which the right of deduction has been exercised during this period. In the event that the tax charged exceeds the tax credit, the difference shall represent the result for the period – tax for depositing. In case the tax credit exceeds the charged tax, the difference shall represent the result for the period – tax for reimbursement. The registered person shall solely determine the result for each tax period – a tax for transferring within the state budget or tax for reimbursement from the state budget.
The right for VAT refund is regulated by Art. 92 of the VAT Act. According to this, the right to reimbursement arises for that person who, within three consecutive months after the last VAT payment, has declared in his monthly VAT returns more VAT on purchases (more costs) than the VAT, accrued on his incomes. Until the 14th day of the month, following the quarterly period, the calculated VAT for reimbursement shall be declared within the monthly VAT declarations. A VAT refund procedure is being initiated. There are two types of VAT refund procedures – tax examination and tax revision.
II. Term for VAT refund
In cases where VAT is being refunded on the basis of an examination procedure, the VAT is being reimbursed within a period of 30 days since the submission of the last VAT declaration and after the offset of any potential existing due and unpaid public debts of the registered person.
For a refund of VAT due to a tax revision, the reimbursement term is 3 months, where the National Revenue Agency (NRA) could extend this term in case additional facts and circumstances are to be clarified by the registered person. In generally, a tax revision is initiated in the case of reimbursement of significantly higher amounts, in case it is the first VAT refund of the registered person and/or in the event of discrepancies or unclear characteristics of the VAT, declared for the refund.
The refund is executed on the basis of an Act for offsetting and reimbursement, issued by the NRA after the completion of the procedure of examination or the revision.
III. Accelerated VAT refund
A procedure also known as "Accelerated VAT refund" on a monthly basis under certain conditions also exists. According to Article 92 (3) of the VAT Act, regardless of par. 1, the reimbursement tax under art. 88, par. 3 shall be restored within 30-days term from submission of the declaration, where:
- during the last 12 months prior to the current month the person has carried out taxable deliveries with zero rate at total value of more than 30 percent of the total value of all taxable deliveries, including the zero rate deliveries. Zero rate deliveries shall be deemed to be also the deliveries of the following services with place of performance on the territory of another Member State:
- transportation of goods within the European Union and also logistics, courier and postal services, other than the services referred to in Art. 49, that have been rendered in relation to the transportation;
- transportation processing of goods;
- transportation related services, rendered by agents, brokers and other intermediaries, acting on behalf and at the expense of another person, as well as services on assessment, examination and work on movable articles;:
- the person who is an agricultural producer has carried out over the past 12 months before the current month taxable deliveries with a 20 per cent rate on the produced by them goods according to Attachment No. 2, Section Two, of a total value of more than 60 percent of the total value of all taxable deliveries, carried out by them;
IV. Cases of deregistration according to the VAT Act
Closure of the tax refund procedure in case of deregistration under the VAT Act, when up to the date of deregistration under Art. 92, para. 1 of the VAT Act both one-month terms have been expired – the person shall file in cell 80 of the VAT declaration for the last tax period the remaining VAT for reimbursement, taking into consideration the already executed offsets.
V. Contestation of the Act for offsetting and reimbursement under Art. 92 (11) of the VAT Act
If the Bulgarian tax office refuses to reimburse the VAT or if the VAT is not fully reimbursed, the registered person is allowed to appeal the relevant Act for offsetting and reimbursement, where the procedure under the Tax-Insurance Procedure Code for appeal of the interim measures shall apply. The appeal shall be submitted before the director of the competent territorial division within 7 days, commencing as of the serving of the notification. The competent administrative body shall pronounce with a motivated decision within 14 days as of the submission of the appeal. His decision could be appealed within 7 days term after its serving before the competent administrative court. The non-rendering of a decision of the competent body within the proposed terms shall be deemed as confirmation of the act. The latter is subject of an appeal before the competent administrative court within a 14-days term, commencing as of the expiry of the term for the rendering of decision.
VI. Moratory interest
For the unreasonably not refunded VAT (the VAT, determined as reimbursable as a result of the tax revision), the NRA owes a moratory interest.
VII. Missed of the VAT refund procedure
The registered persons are entitled to initiate an additional VAT refund procedure, in case they have failed to declare the tax to be reimbursed within the monthly VAT declaration.
The reimbursement and offsetting of amounts is regulated by Chapter 16 of the Bulgarian Tax-Insurance Procedure Code, Section I - Offsetting and reimbursement. According to Art. 129 of the Tax-Insurance Procedure Code, offsetting and reimbursement may be initiated by the NRA or through an explicit written request of the registered person. The application shall be submitted within a period of 5 years since the receivable got due, which 5 years commence as of 1st of January of the following year.
The application shall be submitted to the district office of NRA, where the registered person resides. The application contains the nature and amount of the payment, as well as the bank details of the beneficiary for the purpose of transferring of the refund. Upon the submission of the request the competent tax body orders the execution of examination or tax revision. Act for offsetting or reimbursement shall be issued within 30 days unless meanwhile a tax revision has been ordered. The Act for offsetting or reimbursement may be appealed in accordance with the provisions for the appeal of the tax revision acts.