This article outlines the special scheme for small businesses under Directive (EU) 2020/285, which came into force on 1 January 2026. A distinction must be made between the small business scheme at EU level and that applicable to persons resident in Germany.
A distinction is made between the Small Business Scheme at EU level and the corresponding scheme applicable to taxable persons established in Bulgaria.

I. Who is eligible for the small business scheme in the EU?

The EU Small Business Scheme may be applied by taxable persons established within the European Union who have a registered office and place of business or, in the absence thereof, a permanent address or habitual residence. This is possible after registration in the Member State of the registered office and place of business or of the permanent address or habitual residence, upon which they are assigned an identification number beginning with a two-letter prefix identifying that country - for example, “DE“ for Germany - and ending with the suffix “EX“.

The scheme may be applied when the person’s annual turnover from supplies with a place of performance within the EU does not exceed the Union threshold of EUR 100,000, and the turnover in the specific Member State also does not exceed the applicable registration threshold there.

II. For which supplies of goods and services does The EU Small Business Scheme apply?

1. taxable supplies of goods and services where the place of supply is within the country;
2. intra-Community supplies (ICS), except for ICS of new vehicles carried out by the person;
3. exempt supplies with the right to deduct input VAT.

An important detail is that a taxable person who applies the scheme for distance sales of goods imported from third countries or territories (import scheme) cannot apply the special scheme for small businesses in the EU.

Furthermore, a taxable person may not apply both the EU Small Business Scheme and the Union scheme (OSS) simultaneously within the same Member State.

We will discuss in more detail the application of the scheme by entities established in the country.

As of January 1, 2026, persons established in the country (by registered office and address of management/by permanent address or habitual residence) may apply the EU Small Business Scheme after registration in the country and when they make supplies with a place of performance within the territory of another EU Member State or other EU Member States, other than Bulgaria. For this purpose, they must meet the conditions for applying the scheme in each of those Member States.

A taxable person who meets the conditions for applying the EU small business scheme may apply the scheme: in the country or in other Member States, or only in other Member States, depending on whether the person is registered under Article 96(1) or Article 100(1) of the VAT Act.

As mentioned above, after registering in the country for the application of the scheme, the taxable person receives an identification number preceded by the prefix “BG” and followed by the suffix “-EX”. Only then are persons not registered under Article 96(1) or Article 100(1) of the VAT Act, with annual turnover - both in the current and the preceding calendar year - not exceeding the national threshold of EUR 51,130, entitled to apply the EU Small Business Scheme in the country as well, i.e., to be exempt from VAT in the country. However, if the same person’s annual turnover within the EU exceeds the threshold of EUR 100,000, while in the country it is below EUR 51,130, the person loses the right to apply the EU small business scheme but may continue to apply the scheme in the country.

III. Registration of the scheme application by a person established in the country.

A taxable person who meets the conditions for applying to the EU Small Business Scheme and who chooses to apply the scheme is required to register for that scheme.

Registration is carried out by submitting an application electronically. The tax authority verifies, within 35 days of the application's submission, whether the person meets the registration requirements in each of the Member States indicated in the application, including Bulgaria. Only then is a registration certificate for applying the scheme issued, and the person is informed of the identification number assigned to them. The date of delivery of the certificate is the date from which the person may apply for the EU Small Business Scheme.

The person registered in the country declares the supplies made by submitting a report on the turnover achieved for each calendar quarter. The report is submitted electronically by the end of the month following the end of the calendar quarter to which it relates.

IV. Termination of the application of the scheme by a person established in the country.

The application of the EU Small Business Scheme is terminated at the initiative of:

- a person registered to apply the scheme;
- a tax authority.

If, during the current calendar year, the taxable person’s annual turnover exceeds the national threshold of the country or the national threshold of any of the Member States in which the scheme is applied, that person must submit a request to update the previous advance application. The application must be submitted electronically, specifying the country or one or more Member States in which the application of the scheme is terminated, and the date on which the relevant circumstance occurred. The application for an update must be submitted within 15 working days of the date on which the national threshold in the country or the Member State of exemption is exceeded.

The date of termination of the application of the Small Business Scheme in the EU, where the national threshold of the country is exceeded, is the date on which that circumstance occurs, and where the national threshold of the relevant Member State is exceeded, it is the date specified in the legislation of that Member State.

The same application for an update must be submitted by the person when they choose to terminate the application of the scheme in the country, in one or more Member States. However, in that case, the termination date is:

1. The first day of the quarter following the calendar quarter in which the application to update the preliminary registration application was submitted - when the application is submitted during the first or second month of the calendar quarter;
2. The first day of the second month of the calendar quarter following the calendar quarter in which the application to update the preliminary registration application was submitted, when the application was submitted during the last month of the calendar quarter.

Termination of the application of the scheme may also be initiated by a revenue authority when it is established that:

- the person has failed to fulfill, within the prescribed time limit, their obligation to submit an application to update the preliminary application for termination of the application of the scheme in the country, upon reaching, during the current calendar year, an annual turnover exceeding the national threshold of the country or the national threshold of any of the Member States in which the scheme is applied;

- a notification has been received from the competent authority of a Member State of exemption stating that the Member State is terminating the person’s application of the scheme.

On the date of termination of the application of the EU Small Business Scheme in the country and/or in another Member State, the identification number for the application of the scheme is deactivated by the tax authority, and from that date it is invalid for the purposes of applying the EU Small Business Scheme in the relevant Member State.

Termination of registration (Deregistration) for the application of the scheme by a person established in the country

Similarly, registration for the scheme may be terminated at the request of the person or by the tax authority.

When one of the following circumstances occurs, the person may terminate their registration:

1. During the current calendar year, the person’s annual turnover in the Union exceeds the Union threshold;
2. The person chooses to terminate their registration for the application of the scheme in the country and in all Member States where they apply the scheme;
3. The person changes their Member State of establishment;
4. The person ceases their business activities through dissolution or liquidation.

To this end, an electronic application must be submitted to update the preliminary application; in the cases referred to in items 1, 3, and 4, the date on which the relevant circumstance occurred must also be specified. In the cases under points 3 and 4, the application must be submitted before the relevant circumstance occurs, and under point 1, within 15 working days of the date on which the threshold is exceeded in the Union.