Quite often the question arises whether individuals are subject to VAT registration. This issue is relevant when planning future business plans and whether they are to be performed by an individual or dedicated establishing of a company.
In this regard, it is necessary to note the following key points:
– The Bulgarian law does not distinguish natural and legal persons in connection with VAT registration;
– The assessment of the liability for VAT registration is made on the activity performed by the natural or legal person;
– In case a natural person who does not register on his / her own VAT initiative, when the conditions are present, the registration may be done by the NRA (National revenue agency) authorities.
In view of the abovementioned, it is essential whether the activity of an individual can be qualified as an independent economic activity. According to the law, such is the activity of producers, traders and all persons providing services. Independent economic activity is any activity carried out on a regular or occasional basis against remuneration, including the exploitation of tangible and intangible property in order to obtain regular income from it. There is no general criterion to determine whether a person carries out an independent economic activity in the light of the judgment being made on a case-by-case basis. In its practice, the revenue administration has set benchmarks for the purpose of carrying out inspections and preparing opinions. For example, for independent economic activity they qualify the following cases:
1) A natural person who has acquired ownership of an immovable property by inheritance, which is subsequently built up against compensaion with apartments in the building. In case of sales of more than one object, this activity with regard to advertising of the sales and the terms between the individual transactions, can be qualified as an independent economic activity, which imputes the individuals obliged to register under VAT Act. In this order in opinion No. 3_1529 / 28.05.2011, the NRA acknowledges that “The performance of disposals of real estate transactions will not constitute an independent economic activity within the meaning of Art. 3, para. 2 of the VAT Act, only if it is done once, not regularly or by occupation. ”
(2) A natural person who performs consultancy services for remuneration, such as assistance and preparation of advertising campaigns and marketing studies, business planning, etc., is also treated as a person engaged in an independent economic activity.
When do physical persons have to register under VAT Act?
An individual must register when his taxable turnover reaches BGN 50,000 or more for a period not longer than the last 12 consecutive months prior to the current month.
What happens after the VAT registration?
Once an individual is registered under the VAT Act, he is obliged to keep accounting records, to issue invoices for the provided services and sold goods. In addition, it is obliged to submit a so-called VAT declaration to the NRA on a monthly basis.
Official VAT registration.
It is important to note that if an individual fails to register under the VAT Act, this registration can also be made by the competent revenue authority when passive behaviour occurs. In such cases, the VAT that the individual had to pay if he had registered according to the law would be charged.
When does the VAT registration occur?
After submitting the application the NRA checks if the grounds for registration have occured. Upon completion of the inspection, again within 7 days, the revenue authorities shall issue an act with which allows registration or reasonably refuse to do so. The date of registration under the VAT Act shall be the date of which the registration act is served.
