Quick VAT refund mechanism for taxpayers in Bulgaria

New refund mechanism for qualified taxpayers in Bulgaria

Currently, all businesses requesting a VAT repayment are subject to an audit investigation where the authorities check that all formalities have been met and confirm the right to deduct input VAT of the relevant business. These audits take a minimum of 30 days and can be extended to other tax areas of the business. Following the announcement made on 1 September 2016, a selection of qualifying taxpayers will receive VAT refunds automatically into the local currency bank account stated in their VAT return.

The quick refund mechanism is only available for companies qualified as low-risk taxpayers. The conditions to be considered as low-risk taxpayer are not made public by the Bulgarian authorities, however, we should expect the turnover, industry and goods traded as some of the criteria taken into account. In addition to these conditions, the company must not have any outstanding tax debt in Bulgaria.

Other European countries approach to VAT refunds for taxpayers

Although most aspects of VAT are harmonized in all Member States, the conditions, timeline and procedure to get a VAT repayment change from one country to another. Some jurisdictions like France or Italy require an additional form to be submitted. Other countries only allow refunds once a year (eg. Spain, unless monthly refunds are allowed). There are also bank account requirements. UK, for example, only makes VAT repayments to UK bank accounts, which obliges non-UK companies to open a bank account in the country or apply for a refund via cheque.