Bulgaria Ends Reverse Charge for Supply and Installation Contracts from 2026

Bulgaria Ends Reverse Charge for Supply and Installation Contracts

A significant change to the Bulgarian VAT treatment of goods supplied with installation or assembly will take effect from 1 January 2026. The long-standing reverse charge mechanism for these transactions will be abolished for EU-established suppliers. As a result, foreign businesses carrying out installation projects in Bulgaria will face new VAT registration and compliance obligations.

Background: Previous VAT Treatment

Under the previous rules, EU suppliers delivering goods to Bulgaria and installing or assembling them on-site have been able to rely on the reverse charge mechanism. In practice, this meant that the Bulgarian customer accounted for the VAT in its local VAT return, removing the need for the foreign supplier to register for VAT in Bulgaria.

This approach has been widely used in sectors such as engineering, industrial equipment, and construction, where cross-border installation projects are common.

What Changed from 1 January 2026

From 2026, the reverse charge mechanism does no longer apply to supplies of goods with installation or assembly carried out by EU-established suppliers in Bulgaria.

Instead, the following rules apply:

• EU suppliers must register for VAT in Bulgaria.
• Suppliers must charge 20% Bulgarian VAT on their invoices.
• Transactions must be reported in Bulgarian VAT returns.
• The VAT registration application must be submitted at least seven days before VAT becomes due on the first taxable supply.

This change shifts the VAT liability from the customer to the supplier.

The removal of the reverse charge mechanism for supply and installation contracts represents a major shift in Bulgarian VAT practice. EU suppliers will now bear full responsibility for VAT compliance in Bulgaria, requiring early preparation and careful planning.

Businesses involved in cross-border installation projects should take immediate steps to assess their exposure and ensure they are correctly applying the new rules since January 2026.