Every country has laws that govern value added tax. Here is how things are in Bulgaria:
When buying a property:
If you run a business, you can deduct the VAT paid on purchases of your business from the VAT you use to sell your goods/services.In this case, you only have to pay the difference to the tax authorities and report these amounts in the VAT return you file periodically.Sometimes the VAT paid by your business is higher than the VAT you charge your customers. If this is the case, you should be refunded the difference or it will be deducted from future VAT payments.
When selling a property:
In the case of a sale, the taxable amount is determined in accordance with Article 26(2) of the VAT Act and is everything that includes the consideration received by or payable to the supplier in connection with the supply, by the recipient or by another person, determined in leva and cents, exclusive of the tax under this Act. This means that the taxable amount of the sale is equal to the consideration payable or received by the customer to the company.That is to say, VAT is always 20% of the amount payable – on purchase or on sale.
The same is true for all real estate- land, apartment, buildings, etc. and VAT is due on the amount of the transaction, not on the original amount at which it was purchased, for example.
In which cases can VAT not be charged?
Of course, there are exceptions! Here is an example:
The purchase and sale of an apartment is a VAT-exempt transaction where old buildings are concerned.
Any building for which at least 5 years have elapsed since the date on which the occupancy permit provided for in the Land Development Act (LDA) was issued is considered “old”.
For more information you can contact us at TPA Bulgaria and we will answer your questions!
We look forward to hearing from you!
TPA Bulgaria:
+359 2 981 66 45/46/47office@tpa-group.bg
ul. G.S. 128, floor 2
1000 Sofia