Posted on August 25, 2011 by i.zlatkova

We will continue our previous post about the VAT Registration Procedure and VAT Registration Types in Bulgaria

2. Voluntary registration

According to VATA, Art. 100, para 1: “Any tax liable person, to whom the terms for compulsory registration under art. 96, par. 1 are not applicable is entitled to be register under VAT”.

3. Registration procedure

According to VATA, Art. 101: “The registration shall be carried out by submission of an application for registration according to an Application form to the competent territorial directorate of the National Revenue Agency by the person, who is obliged or entitled to do the registration”.

In compliance with para 2 from the same article the application shall be submitted:

- personally, in case that the tax liable person is legally capable individual or a sole trader;

- by a person, who has PoA by a law, in case the tax liable person is a legal person or a cooperation;

- by a person, who is authorized according to articles of association, in case the tax liable person is unregistered partnership or insuring fund;

- by the fiscal representative under Art. 135 and in compliance with chapter IV from this study ;

- by a person, explicitly authorised by the persons under the above mentioned bullets by means of a notary certified PoA.

Upon receipt of the Application the authorities of the National Revenue Agency usually request additional documents and/or information from the applicant for the purposes of the registration (such as copy of the court registration or other registration document for companies established after 01.01.2008; turnover records; list of all employees; list of the assets available with the company; trial balances, rental agreements, etc.). Respectively, when applying for VAT registration, it is advisable that a certain set of documents (such as the listed above) are prepared in advance and filed together with the application form, because the process for preparing the whole application set may take some time. The VAT registration should be timely planned in order to avoid missing application deadlines and suffering penalties.

The statutory term for completion of the above VAT registration procedures is up to 14 days (in which the revenue authorities may request the additional documents) after the submission of the standard Application form before the respective revenue authorities.

The VAT registration date will be the date on which the respective certificate is received by the Bulgarian company. The Bulgarian company is NOT allowed to issue invoices with VAT on it before the registration date (i.e. during the registration procedure).

If a Bulgarian company acquires any assets before its VAT registration in Bulgaria, then the Bulgarian company would be generally entitled to refund the input VAT in respect of these assets, which are available with the Bulgarian company at the date of its VAT registration. In order to have the right to refund such VAT, the goods (assets) supplied to the Bulgarian company before the VAT registration date must be used for the economic activity of the Bulgarian company with a right to VAT credit. Additionally, a registration inventory form of the available assets has to be prepared in standard form as at the date of the VAT registration and has to be submitted within seven days to the authorities of the National Revenue Agency.

Please note that the VAT registration is usually performed by the company’s accountant or lawyer at the National Revenue Agency after the company has been established. After the VAT registration was completed, the Bulgarian company would be obliged to comply with the statutory documenting and reporting requirements as per the VATA and the AA.

Posted on August 23, 2011 by i.zlatkova

After a company has been established, it can be registered as a VAT payer. The registration under the Bulgarian VATA is compulsory or voluntary. The National Revenue Agency of the Republic of Bulgaria creates and maintains special register under VATA. Along with the entry in the register the legal entities shall acquire identification number for the purposes of VAT in front of which shall be placed the sign “BG”.

1. Compulsory VAT registration

According to VATA, Art.96, para 1: “Any tax liable person, who has a taxable turnover of BGN 50.000 or more, for a period, not exceeding the last 12 consecutive months prior to the current month, shall be obliged to submit an application for registration under this law within 14-days term from the expiry of the tax period, during which he has reached this turnover”.

1.1 Compulsory VAT registration based on executed intra-community acquisitions

Bulgaria is an effective member of the EU since January 1st, 2007. In this sense if a Bulgarian company purchase goods or services from EU-based companies registered under VAT there, then the Bulgarian company would have to perform the so called intra-community acquisition for the received goods or services in Bulgaria. In compliance with the Bulgarian VATA, art.99, para 2, upon exceeding the threshold of BGN 20.000 of intra-community acquisition performed in a calendar year, each person is obliged to initiate a registration procedure for VAT purposes on these special grounds.
If an obligation for VAT registration on the above mentioned grounds occurs, then the Bulgarian company should apply for VAT registration not later than 7 days prior to the date of the tax event, the acquisition of which will exceed this threshold.

Posted on August 18, 2011 by i.zlatkova

The topic about stability of all kind is widely discussed nowadays. The modern societies are increasingly talking about the presence or the absence of economic, financial, fiscal, political and banking stability in a certain country or countries.

Regarding the banking systems, recently an interesting trend is being noticed and this is the significant growth in deposits in Bulgaria over the last two months thanks to Greek and Romanian nationals, who rush to stash their savings here, officials and bankers say.

The deposits of foreign citizens and companies in local banks have increased by BGN 18 M and BGN 49 M respectively in June over the previous month, according to figures, cited by 24 Hours daily.

“There has been recently a noticeable trend among Greek citizens and businesses, who prefer to open deposit accounts in Bulgarian banks,” Maria Ilieva, CEO of MKB Unionbank, the 12th largest bank by assets in the country, said the daily.

The Bulgarian banks stability and their more attractive interest rate policy are the main reasons for the interest of Greek and Romanian citizens and companies, according to the bankers. This seems like a greatly appreciated advantage by foreign investors and individuals and leads to the conclusion that Bulgaria is among the few countries in Europe with good corporate deposit rates and a pretty stable and reliable banking system. This important advantage together with others, such as the lowest tax rates within the EU, many market opportunities, competent and skilled workforce, etc. lead to the conclusion that Bulgaria is a strategically good destination for foreign investments and this is being proven every day with the growing number of direct foreign investments flow.

Posted on August 16, 2011 by i.zlatkova


EUROPE SOVEREIGN RATINGS – EVOLUTION OF ABILITY TO PAY
Country Total Score Rating Market View Ability To Pay
2011 2011 2011 2008 2009 2010 2011
Estonia 90 A+ 3 - 58 67 89
Russia 80 A- 3 66 64 80 85
Kazakhstan 75 B 3 64 58 76 76
Czech Republic 74 B 3 73 49 56 60
Slovakia 72 B- 3 - 45 64 56
Bulgaria 71 B- 3 65 64 64 65
Macedonia 67 C+ 3 73 69 55 51
Poland 67 C+ 2 53 47 56 45
Romania 65 C 3 51 34 56 53
Latvia 65 C 3 69 60 45 65
Turkey 62 C- 3 62 42 53 56
Croatia 59 D+ 4 62 44 51 55
Hungary 58 D+ 3 56 56 40 38
Lithuania 54 D 3 - 45 45 44
Serbia 52 D- 3 55 47 42 33
Ukraine 49 E+ 4 12 23 29 45
Bosnia-Herzegovina 37 E- 4 62 44 36 38
Sovereign ratings in ranges from A to E, with + indicating that a credit is in the top of its range (eg B+ is 77, 78, 79), and – indicating it is near the bottom (e.g. B- is 70, 71, 72). Market outlook is on a scale of 1 to 5, from very bullish to very bearish, with 3 being neutral. Ability to Pay is a mark out of 55. Total is out of 100. Source: BMI, 

With this report presentation we will continue with the macroeconomic analysis of Bulgaria as it is today, compared to the economic, financial and political current situation in the other countries from the so-called emerging European market. It is our belief that such independent reports are truly enlightening and useful in understanding and assessing the Bulgarian market together with the investment opportunities, challenges and risks, related to it.

According to the Europe markets’ latest report regarding “the ability to pay” matter among emerging European sovereigns, Bulgaria is ranked 6th in the overall ranking. But let us first clarify the term “ability to pay”.

The “ability to pay” term indicates the level to which a certain country is capable of meeting its current and future debt obligations. It is pretty much related to the fiscal situation of the certain country and to another economic term “willingness to pay”, which basically describes the maximum amount that a country would be willing to pay, sacrifice or exchange in order to receive a good or avoid something undesired. The ability to pay term is indicative for the overall fiscal position of the country, as well as its fiscal discipline, financial and political stability and home demand levels. The bigger “the ability to pay” indicator is, the lower the sovereign risk rating, which is an essential decision-making tool for a future investment opportunity.

Bulgaria demonstrates a very decent position in this ranking by being placed ahead of countries like Poland, Latvia, Turkey, Hungary, Croatia, Ukraine, Romania, etc. The overall conclusion of the report is very optimistic, not only regarding Bulgaria, but also regarding the entire emerging European market, which demonstrates a serious improvement and strategic growth.

Posted on August 16, 2011 by i.zlatkova

Financial stability and risk management are among the topics which provoke intense debates and analysis on a global scale. This is mainly because of the fact that the uncertainty and the impossibility to predict certain economic events are growing every day. The heavy hit of the world financial crisis brought the need of increasing assurance and expert advice to investors and their planned business undertakings. In order to maintain a high market confidence and high rates if direct domestic and foreign investments, governments are nowadays obliged to ensure working risk management practices and to request a regular feedback from investors, audit firms, financial institutions, industry associations and other stakeholders on their practical experiences as users of the resulting disclosures or in implementing the risk disclosure recommendations. As the Financial Stability Board advices, based on its last report on Risk Disclosure Practices, countries should most of all focus on their economic risk management and the level of the public risk disclosure.

The above presented is very much related to one very positive political and economic act of the Bulgarian government which is predicted to contribute greatly to the country’s economic and fiscal discipline and respectively to attract a lot of foreign investment flows. This is the so-called Financial Stability Pact. The three main pillars of this pact are planned to be forced into action so that a further fiscal stability is reached through the highest country law – the constitution. Most certainly, this amendment, together with its consequences, will mostly influence the foreign direct investments rate by providing a high level of insurance and additional guarantee for financial stability.

As an idea and an investment assurance tool, the Financial Stability Pact is planned to deliver the following outcomes. It will ensure that limits of the allowed budget deficit are in place, which having the nature of a law will definitely contribute to preventing a probable deep financial crisis, regardless of the government in charge. It will also restrict the ability of the state to redistribute public funds as a percentage of the GDP and last, but not least, it will ensure that no changes of Bulgarian tax rates will be accepted unless two-thirds of the Parliament members submit their vote for this.

These government measures are aimed to secure that the budget deficit will not exceed 2% of the country’s GDP and that the tax environment, being famous as the most favourable in the EU, will not easily and unjustified change. According to the Bulgarian financial minister, the Financial Stability Pact is certainly going to “cement” Bulgaria as having one of the strictest fiscal policies in the European Union.

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