New requirements in the field of the e-commerce

The rapid grow of the electronic commerce over the recent years has increased the risk of unfair tax competition and has led to new difficulties for the tax authorities to exercise control over it. 

At the end of the preceding year, two directives have been transposed into the Bulgarian legislation, which envisage new obligations for some of the participants in the electronic commerce. The purpose of these obligations is to establish a greater efficiency in the control over the e-traders and to increase the voluntary observance of the tax legislation.

New requirements for the platform operators

The Tax and Social Insurance Procedural Code introduces the Council Directive (EU) 2021/514’s rules, which aim to ensure the regular reporting of information by platform operators to the national tax authorities of the EU Member States. The latter will automatically exchange this information with each other and with partner jurisdictions outside the European Union.

• Liable persons

Entities that provide to sellers of goods or services an access to their platforms.

• Information

Platform operators are obliged to report to the National Revenue Agency the collected information about the sellers to whom they have provided platform access and who perform the following activities exceeding certain thresholds:

-  Real estate renting;

-  Provision of personal services;

-  Sale of goods;

-  Rental of transport;

The information, which shall be collected and reported shall include data, identifying the sellers, the ban account, all fees, commissions or taxes, withheld or charged by the operator, data regarding the real estate rented such as location and number of days during the calendar year in which it was rented.

"Seller" means a Platform user, either an individual or an Entity, that is registered at any moment during the Reportable Period on the Platform and carries out the activities listed above. Certain sellers are excluded from the report obligations.

• Time frames and means of provision of data

The information shall be reported and submitted electronically in the format approved by the executive director of the NRA. Platform operators should provide the collected information until January 31 of the year following the calendar year for which information shall be provided, i.e., for 2023 information will have to be reported to the NRA by January 31, 2024.

• Administrative penalties

A penalty from BGN 300 to BGN 10,000 may be imposed to the platform operators in case of violation of the envisaged obligations.  In case of repeated violation, a penalty to double amounts shall be imposed.

New requirements for payment service providers

As we have already mentioned, the legislative changes in the VAT Act introduced new requirements toward the payment service providers resulting from the Council Directive (EU) 2020/284 of 18 February 2020 amending Directive 2006/112/EC ("the VAT Directive") as regards introducing specific requirements for payment service providers. The new rules aim to to supplement the VAT package for taxation of e-commerce within the EU by combating VAT frauds by strengthening cooperation between tax authorities and payment service providers. 

• Liable persons

The requirements regard to the following payment services providers:

- credit institutions;

- e-money institutions;

- ayment institutions;

-  account information service providers;

the European Central Bank and the national central banks of Member States when not acting in their capacity as monetary authority or other public authorities.

• Requirments

The payment service provider shall maintain an electronic register for the cross-border payments and the for the payees. A 'cross-border payment' means a payment where the payer is located in one Member State and the payee is located in another Member State or in a third country.

The register shall be kept in electronic format and the details on its contents are expected to be adopted with the Regulation on the VAT Act. The register shall include information allowing the identification of the payee, the IBAN or similar data in order to determine the location of the payee, circumstances regarding the cross-border payment such as date and time, amount, currency, country of origin of the payment, etc.

• Time frames and means of provision of data

The electronic register shall be provided to the National Revenue Agency by the end of the month following the end of the respective quarter. The information is provided electronically to the National Revenue Agency when the country is Member State of origin of the payment service provider or is a host country when the payment service provider provides payment services in a Member State other than the Member State of origin.

The new rules will enter into force on 1 January 2024.