Bulgaria: New energy contribution for transfers of natural gas of Russian origin

EY

Local Contact

31 Oct 2023
Subject Tax Alerts
Categories Indirect Tax
Jurisdictions Bulgaria
  • A new duty of €10 per megawatt hour applies to transfers of Russian natural gas to Bulgaria.
  • The measure was introduced together with a special law implementing sanctions against Russia due to its invasion of Ukraine..
The new measure

On 13 October 2023, the Bulgarian Parliament passed a bill that introduces a new "energy contribution" of €10 per megawatt hour on the import or transit of Russian origin natural gas covered by commodity codes (CN codes) 2711 11 00 and 2711 21 00. An exception is provided for compressed natural gas transported in storage containers.

Liable persons and reporting requirements

The persons liable for the duty are importers of gas under the customs legislation and the operators of gas transmission and distribution networks. Although the contribution is not defined as an excise duty (i.e., it is determined by means of separate legislation), the assessment and reporting are to be done under the Bulgarian excise law.

In this regard, liable persons are required to register under the Bulgarian Excise Duties and Tax Warehouses Act. The registration application must be filed by 9 November 2023 — within 30 days from the promulgation of the amendments, which occurred on 10 October 2023.

Comments

Currently, the newly introduced energy contribution is a controversial topic, including at the level of European Union (EU). For example, some Member States have expressed concern over about how these duties will impact their markets.

It may be argued that the wording of the legislation is not yet sufficiently precise and could therefore create uncertainty among affected businesses. Potential uncertainty remains around (1) which documents must be used to prove the origin of the gas, (2) how the scope of taxable persons is defined, and (3) how the collection mechanism will work.

The Bulgarian President has even challenged the compatibility of the new measure with the Bulgarian Constitution. Given these concerns, it is likely that there will be further developments on this topic.

For additional information with respect to this Alert, please contact the following:

Ernst and Young Law Partnership Bulgaria, Sofia
  • Milen R. Raikov
  • Mihail Kalapchiev
  • Lora Terzieva

Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor

For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.