Property Guide – Bulgaria
November 2023
This is a general guide only and not designed to cover every scenario and the nuances of property VAT. Specific advice according to each transaction or supply should always be sought from a VAT specialist.
| Supply | Commercial/non-residential | Residential | Charitable |
|---|---|---|---|
| Freehold Sale (sale of legal title) | S/R if property is 5 years old or less. EX in other cases, but can Opt to Tax making S/R. Sale of land suitable for construction is always taxable with S/R. Sale of agricultural land is EX. Transfer of limited real rights over such land is EX. | S/R if property is 5 years old or less. VAT can’t be deducted. There is no economic activity so there is no right to deduct VAT. EX in other cases, but can Opt to Tax making S/R. | S/R if property is 5 years old or less. VAT can’t be deducted. There is no economic activity so there is no right to deduct VAT. EX in other cases, but can Opt to Tax making S/R. |
| Leases | EX for leases of agricultural land. S/R in other cases | S/R | S/R |
| Transfer/sale of property including tenants and where leases continued by buyer. | The same rules as above | The same rules as above | The same rules as above |
| Rent | Delivery is taxable with S/R. Rent of agriculture land is always EX. | Supply is taxable at S/R. VAT can’t be deducted. There is no economic activity so there is no right to deduct VAT. The lessor can choose to treat the delivery as EX, which means there is no right to deduct VAT for the related purchases. This option can only be applied if the tenant uses the flat to live in. | Delivery is taxable with S/R. VAT can’t be deducted. There is no economic activity so there is no right to deduct VAT. |
| Construction services | The delivery is taxable with S/R. | The delivery is taxable with S/R. | The delivery is taxable with S/R. |
| Conversion services | The delivery is taxable with S/R. | The delivery is taxable with S/R. | The delivery is taxable with S/R. |
| Refurbishment services | The delivery is taxable with S/R. If this service is provided free of charge at the hirer’s expense, he may deduct VAT on the purchases that relate to this supply. | The delivery is taxable with S/R. | The delivery is taxable with S/R. |
| Materials only for building | The delivery is taxable with S/R. | The delivery is taxable with S/R. | The delivery is taxable with S/R. |
| Overseas suppliers of property related services e.g. architect, surveyor | S/R if the place of supply is BG. If the services are related to buildings which are outside BG then it is outside the scope of VAT in BG. If a foreign vendor is providing services related to a building located in BG, it is obliged to register for VAT in BG. | S/R if the place of supply is BG. If the services are related to buildings which are outside BG then it is outside the scope of VAT in BG. If a foreign vendor is providing services related to a building located in BG, it is obliged to register for VAT in BG. | S/R if the place of supply is BG. If the services are related to buildings which are outside BG then it is outside the scope of VAT in BG. If a foreign vendor is providing services related to a building located in BG, it is obliged to register for VAT in BG. |
Taxable with the right to recover related VAT on expenditure
Standard rate (“S/R”) = 20%
Reduced rate (“R/R”) = %
Exemption, with no right to recover VAT on expenditure
Exempt (“EX”) = 0%
Option to Tax/other exceptions
For some exempt supplies the legislation gives the right to choose how to treat the sale, whether you exempt it or you apply 20% VAT. Such an option is given for the treatment of the old buildings (buildings that are older than five years).
