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Changes in four tax laws have been adopted recently. The amendments aim to implement the requirements of a number of European directives, the provisions of which our country has to transpose by the end of 2021, as well as to bring it in line with the case law of the Court of Justice of the European Union (CJEU), established on Bulgarian preliminary rulings.
Below is a brief summary of the proposed changes.
Perhaps the most significant change relates to the possibility for correction of wrongly invoiced VAT, including when there is a tax audit act entered into force. The lack of such possibility so far in practice leads in many cases to double taxation of the same supply of goods or services.
The amendment ensures another opportunity for defense and mitigation of the negative consequences for persons to which VAT has been additionally assessed or VAT credit has been denied because of a tax audit procedure.
The period until which the reduced rate of 9% can be applied to certain goods and services (e. g. books, baby goods, etc.) is extended. Rather than until the end of the year, the reduced rate could be applied until the end of the epidemic emergency, which requires careful monitoring of the associated timelines, but also opens up opportunities for sales efficiency planning.
From 1 January 2022, the specific rules for the taxation of vouchers in the VATA should also apply to food vouchers.
In relation to e-commerce, the wording of provisions relating to the application of regimes outside the Union, within the Union and for distance sales of goods imported from third countries or territories is being clarified.
VAT exemption on imports of goods intended for donation and dealing with the consequences of COVID-19 by the European Commission or an agency and authority established under EU law is provided. Local purchases of such goods and services should be zero-rated.
A VAT exemption is introduced for imports of goods by the armed forces of EU Member States for use by them or their accompanying civilian personnel when the forces are engaged in defense activities within the framework of the EU's common security policy. Local purchases of such goods and services are intended to be zero-rated.
A new ground for compulsory deregistration under the VAT Act is envisaged, namely the deregistration of a branch of a foreign legal entity.
In relation to trade with goods after Brexit, a drafting change is proposed for supplies to or from the United Kingdom of Great Britain and Northern Ireland.
Certain hybrid entities incorporated or established in the country, which are outside the scope of the taxable persons specified in the previous CITA are equated to taxable persons, subject to specific conditions.
Clarification is provided as to which costs, revenues, gains and losses in relation to sale and leaseback contracts are recognized for tax purposes.
The provisions on controlled foreign companies are clarified in order to limit the cases of tax planning leading to non-taxation or significantly lower taxation.
The tax on expenses in kind related to the so-called personal use of business assets is reduced from 10% to 3%. On the one hand, this requires companies to review and update (if necessary) their internal policies for the personal use of such assets, and on the other hand, it creates opportunities to optimize and rethink the benefits provided to employees
The information regarding the income paid and the respective tax and compulsory social security contributions withheld during the year is provided by heirs, by law or by will, of a deceased person
As of 1 April 2022 interest income from deposits in EU and EEA banks becomes exempt from personal income tax. Such proposal has been discussed for considerable time. The latest amendments to the law introduce such change and it will significantly ease the administration of reporting and taxing such foreign income, which is usually of a negligible amount and often already taxed at source.
Tax relief for children and disabled children will now be available not only for the years in which the child was born and became 18 years old but also in the year of child’s death. Tax relief can be claimed also for the year 2021.
The provisions of several European legislative acts are transposed, including the new horizontal Council Directive (EU) 2020/262 of 19 December 2019 laying down the general rules for excise duty. Most of the related changes take effect on February 13, 2023.
A special regime is provided for the movement of excise goods which are released for consumption in the territory of one Member State and are moving to the territory of another Member State for commercial purposes. New categories of taxable persons are also provided in this regard (certified sender and certified recipient).
In the case of partial loss due to the nature of the goods, no excise duty is payable where the amount of the loss is within the general thresholds for partial loss set by an act of the European Commission.
New and updated provisions on alcoholic products, including tariff codes, exemptions for fully and partially denatured alcohol and the procedure for calculating Plateau degrees for beer are adopted.
Provisions are envisaged in order to achieve compatibility between customs and excise procedures, including the application of the external transit customs procedure after the export regime.
Procedure for exemption from excise duty on goods used by the armed forces of a Member State other than the Member State in which excise duty is due or for the needs of civilian personnel accompanying them is adopted.
New rules on collaterals, including for licensed warehouse keepers, certified consignees, etc. are provided in the legislation.
