Tax News 2021: Introduced and published in the Bulgarian State Gazette in December 2020
In this publication of Tax News for 2021 we summarize the more substantial amendments in the Corporate Income Tax Act (CITA), Personal Income Tax Act (PITA), Value Added Tax (VAT), Accountancy Act (AA) and Tax Procedure Code (TPC) introduced and published in the Bulgarian State Gazette in December 2020.
Extended deadlines for filing returns and paying taxes
The deadlines for filing annual corporate tax returns have been extended. They shall be submitted from March 1 to June 30 next year. This applies to the declarations under Art. 92 of CITA and under Art. 50 of PITA for self-insured persons and registered farmers. The annul taxes will be paid in the same term.
The deadlines for publishing the annual financial statements are extended until September 30 of the following year, and for the declaration of inactivity – until June 30 of the following year. The extended deadlines also apply to the annual accounting closing for 2020.
Individuals who file their annual tax return by March 31 of the following year electronically shall have a 5% discount on the top-up tax, if they have no enforceable public obligations at the time of filing the return and the top-up tax has been paid. by March 31. The total amount of the used discount cannot exceed BGN 500.
Advance payments for corporate tax
Advance payments are made on the estimated tax profit for the respective year. To determine whether advance payments will be made, the net sales revenues for the year before the previous year are taken into account.
Within 1 March to 15 April the taxpayers are required to submit a new declaration for declaring advance payments.
The deadline for paying the last advance payment is changed on December 1, instead of December 15.
The declaration under Art. 88 of CITA for changes in advance payments is due till November 15. The admissible excess of the corporate tax over the determined advance payments is changed from 20% to 25%.
Retail Sales Management Software (RSMS)
The usage of RSMR shall be entirely voluntary. Persons who use RSMS from the NRA list shall have certain tax benefits as follows:
1) Opportunity for accelerated repayment of a tax credit within 30 days from the submission of the reference-declaration
2) In case of a first violation for non-issuance of a fiscal voucher, they will not be imposed a coercive administrative measure “sealing of a commercial site”
3) They will be able to depreciate rapidly with the annual tax depreciation rate up to 100% the following tax depreciable assets of category VI (including when determining the tax financial result for 2020):
– RSMS or the right to use RSMS, included in the list of the NRA;
– computers, peripherals for them or mobile phones on which is installed RSMS included in the list of the NRA.
For those who have chosen RSMS, it is important to note the following new VAT sanction: A liable person who has chosen to use RSMS from the NRA list in a commercial site, but who nevertheless uses other software not included in the NRA list, is fined – for individuals who are not traders, in the amount of BGN 1,000 to 3,000, or a property sanction – for legal entities and sole traders, in the amount of BGN 5,000 to 10,000. In case of repeated violation, the amount of the fine is from BGN 2,000 to 6,000, and of the property sanction – from BGN 10,000 to 20,000.
Taxes on expenses
Exemption from taxation of social expenses for contributions and premiums for additional social insurance and life insurance will be available only if at the end of the month during which the expenses are accrued, the liabilities are not reflected in the tax-insurance account or are not reflected as filed for enforcement with the National Revenue Agency.
The tax-free amount of food vouchers has been increased from BGN 60 to BGN 80 per month, provided in the form of food vouchers to each employee.
New tax relief in connection with repairs and improvements
A new tax relief for individuals is introduced, deducting from the total annual tax base the payments made during the year for work in connection with improvements and / or repairs of a real estate in the total amount of up to BGN 2,000 when the following conditions are met:
- the immovable residential property is on the territory of the Republic of Bulgaria;
- the taxable person is the owner or co-owner of the immovable residential property;
- the improvements and / or repairs have been carried out by local persons of an EU Member State or a SEIP country;
- the immovable residential property is not included in the enterprise of a person who carries out economic activity as a trader within the meaning of the Commercial Law;
- the taxable person has a legal document for the paid work;
- the taxable person and the person who performed the repair are not related persons.
The relief is applied to income realized after 01.01.2021.
Increased tax relief for children
Significantly increase for 2021 the amount of tax relief for children, as follows:
– BGN 4,500 for one child;
– BGN 9,000 for two;
– BGN 13,500 for three or more children;
– for a child with disabilities – BGN 9,000.
Currently these dimensions are:
– BGN 200 for one child;
– BGN 400 for two;
– BGN 600 for three or more children;
– for a child with disabilities – BGN 2,000.
Important: The new amounts of benefits apply only to income realized in 2021.
The amount of the minimum wage for the country (minimum wage) is increased to BGN 650.
In 2021, the period of unpaid leave of up to 60 working days will be considered as insurance length of service.
The minimum monthly amount of the insurance income for the self-insured persons is increased to BGN 650 and respectively:
For the days of the persons on unpaid leave health insurance is due on BGN 325.
For the days of the persons in temporary incapacity for work due to illness, pregnancy and childbirth and raising a small child, health insurance is due by the employer on BGN 650.
The minimum insurance income (MOP) and the contributions to the Accident at Work and Occupational Diseases Fund (TZPB) are also changed.
There are no changes in:
- The amounts and distribution of social security and health contributions;
- The maximum monthly amount of the insurance income of BGN 3,000;
- The minimum monthly amount of the insurance income for the registered farmers and tobacco producers of BGN 420;
- The zero contribution to the “Guaranteed receivables of employees” fund.
New sanction in the TPC related to the application of DTT without grounds
Effective from 01.01.2021 a taxpayer which does not pay or pays a smaller amount of tax in accordance with the CITA or the PITA within the established deadline for payment of the tax, without certifying the grounds for application of DTT, shall be punished by a fine – for natural persons, or by a sanction – for legal entities and sole traders, in the amount of 5 per cent of the amount of unpaid tax, but not more than BGN 15,000. natural persons or property sanction for legal entities and sole traders in the amount of 10 per cent of the amount of the unpaid tax, but not more than BGN 30,000.
Food and VAT
The reduced VAT rate of 9% also applies to home delivery of food from 01.12.2020 to 31.12.2021.
Distance sales under VAT
in force from 01.07.2021
In connection with Directive (EU) 2017/2455 and Directive (EU) 2019 / 1995B, new rules and regimes are introduced in the VAT Act, concerning supplies with non-taxable persons in the EU. Briefly the following:
1) Intra-Community distance sales of goods within the EU (Article 14, paragraph 1)
Until 31.12.2020 this is a distance selling mode.
2) Distance sales of goods imported from third countries or territories (Article 14, paragraph 3)
The goods are dispatched or transported from third countries or territories from the supplier to the consignee (non-taxable person) in a Member State.
3) Domestic distance sales (Art. 14a, para. 5, item 3)
The goods are dispatched or transported to the territory of the same Member State by a taxable person not established in the territory of the European Union.
4) Deliveries facilitated by an electronic interface (Article 14a)
An electronic interface is a device or program that allows communication between two independent systems or a system and an end recipient and may include a website, portal, platform, application interface, and other similar means.
5) Rules for import of goods under a special regime for distance sales of goods imported from third countries or territories and a special regime for declaration and deferred payment of import tax shall also be introduced. They refer to consignments with an intrinsic value not exceeding the BGN equivalent of EUR 150, excluding excise goods, for non-taxable persons who are established, have a permanent address or habitual residence in a Member State, including in the country.
There are also changes in the Non-Union Regime and the Union Regime, as their scope from 01.07.2021 is extended to all other services provided to non-taxable persons established in the EU. The regime in the Union includes, in addition to the supply of services, intra-Community distance selling of goods and domestic distance selling of goods.
With the extension of the scope of supplies, individuals will only declare and pay VAT in one Member State, regardless of where the tax is due. This eliminates the obligation to track turnover for distance selling and the corresponding registration in another Member State.
Taxable persons who are registered to apply a regime outside the Union and a regime within the Union may continue their registration for the application of a Union or non-Union regime by applying electronically to update the data in the initial application for registration, from 1 April 2021 to 30 June 2021.
A threshold of EUR 10 000 is introduced to determine the place of performance for supplies of intra-Community distance sales of goods and supplies of telecommunications services, radio and television broadcasting services and electronically supplied services to non-taxable persons, if the provider, including who operates the electronic interface, is established, has a permanent address or habitual residence in the territory of only one Member State.
Until this threshold is reached, deliveries shall take place in the supplier’s Member State. After exceeding the threshold – deliveries have a place of performance in the country of consumption. The condition that the total value excluding VAT of supplies does not exceed in the current calendar year and did not exceed in the previous calendar year EUR 10,000 or their equivalent in the national currency of the Member State in which the supplier is established.
After 31.12.2020, the date of expiry of the transitional period under Article 126 of the Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community, the VAT identification numbers of UK traders starting with prefix “GB” will not be valid for the purposes of intra-Community trade and it will not be possible to check their validity through the European Commission’s VAT number verification site.
As of 1 January 2021, traders in Northern Ireland who trade in goods within the European Union under the Ireland / Northern Ireland Protocol will be issued with VAT identification numbers beginning with the prefix “XI”. The validity of these numbers can be checked on the website of the European Commission.
After the end of the transitional period – 31.12.2020, the provisions of Union law in the field of VAT will no longer apply to the United Kingdom or its territory, and from 01.01.2021 the Kingdom is a third country. Under certain conditions, the supply of goods to and from Northern Ireland will be treated as GP, respectively APR. There are special clauses for the treatment of persons from the United Kingdom of Great Britain and Northern Ireland, who are registered under Art. 97b of the VAT Act in connection with registration under Art. 96, para. 9 or deregistration, VAT refund, as well as the treatment of supplies for which the transport starts before 01.01.2021 and ends after that date.
This publication is only for information and contains general resume of legislation changes thus it does not represent a specific advice or consultation. Should any questions arise, please do not hesitate to contact us for further explanations at +359 887 59 30 65, firstname.lastname@example.org, 1125 Sofia, 54 G. M. Dimitrov Blvd., 5th floor.