AMENDMENTS OF THE VALUE ADDED TAX ACT effective from 1 January 2015
A Law for Amendment and Supplementation of the Value Added Tax Act was promulgated in State Gazette 105 from 19 December 2014 and State Gazette 107 from 24 December 2014. The major amendments are related to the changes in Directive 2006/112/EC with regard to telecommunication services, radio and television broadcasting service and electronically supplied services. Part of the provisions related to issuance of permits by the Minister of Finance for applying the specific rules for self charge of VAT on import and/or accelerated refund of tax are also amended. Additional requirements for reporting of fuel transactions are introduced.
1. The provision of telecommunication services, radio and television broadcasting service and electronically supplied services (referred to herein below as “TRTE services”)
The new rules concern only the cases where the TRTE services are supplied to non-taxable persons established in other EU member states. There are no changes in the VAT rules for TRTE services supplied to taxable persons, or to non-taxable persons established in Bulgaria or outside EU.
1.1. TRTE services
The definitions of TRTE services are provided for in Аrt. 6а, Аrt. 6b and Аrt. 7 from Regulation 282/2011 laying down implementing measures for Directive 2006/112/EC on the common system of value added tax.
Telecommunication services include all types of telephone services (fixed, mobile, VoIP), paging, audiotext, facsimile, telex, telegraph, internet access, private networks, etc.
Radio and television broadcasting services include services consisting of audio or audiovisual content (e.g. radio or TV programmеs) provided to the general public via communication networks under the editorial responsibility of a media service provider, for simultaneous listening and viewing, on the basis of a programme schedule.
Electronically supplied services include services delivered over the Internet or the nature of which renders their supply essentially automated and involving minimal human intervention, and impossible to ensure in the absence of information technology. The non-exhaustive list of the services in Аrt. 7 from Regulation 282/2011 contains the supply of software, digital products, services ensuring internet presence, computer generated services, transfer of the right to offer goods/services in internet bazaars (i.e. publishing sales announcements on internet sites), internet service packages and other.
Our comments in this point contain a summarized interpretation of the definitions, but do not contain the full list of the service types mentioned in Regulation 282/2011. For more details please refer to Аrt. 6а, Аrt. 6b и Аrt. 7 from Regulation 282/2011 or contact us.
1.2. Place of supply
The place of supply of TRTE services supplied to non-taxable persons established in other member states shall be in the member state where the recipient is established (or has a permanent address or usually resides).
In order to avoid practical difficulties in determining the state in which the recipient is established, Regulation 282/2011 provides for specific rules taking into account the specific characteristics of some of the services.
1.3. Person liable to charge the tax
The tax for TRTE services supplied to nontaxable persons shall be charged by the supplier.
There are two possibilities to arrange the supplier’s obligation to charge the tax:
1.3.1. Registration in the member states where the recipient is established
In such case the supplier will have the obligation to submit VAT returns and pay tax to the tax administrations of the respective member states.
1.3.2. Application of the so-called “mini one-stop shop” scheme (MOSS)
Under this scheme the taxable person files a single VAT return to the member state of identification (this is the member state in which the person is registered for MOSS). The VAT return is submitted on a quarterly basis and is in different format compared to the standard monthly VAT returns.
The VAT return is submitted to the tax administration of the member state of identification and contains details for the TRTE services supplied to non-taxable recipients in other member states. The tax shall be paid to a bank account of the country of identification.
Afterwards the information and the amount of tax are transferred ex-officio to the tax administrations of the member states in which the supply takes place.
There are two sub-regimes “Union scheme” and “non-Union scheme”. The major difference between the two regimes is that the regime “Union scheme” is to be applied by persons established in EU, while the regime “non-Union scheme” is to be applied by persons established outside EU. As a whole the administrative requirements under the two sub-regimes are identical, except for some formalities on the initial registration process.
1.4. Documentation
The documentation (incl. issuance of invoices) of the supplies of TRTE services shall be subject to the rules of the member state in which the supply takes place (incl. the contents of the invoice, tax rate, etc.).
2. Self charge of VAT upon import and/or refund of tax within 30 days period for investment projects subject to permission from the Minister of Finance
As it was till now, under certain conditions the taxable persons are allowed to obtain a permission from the Minister of Finance to self charge VAT on import and / or to refund tax within 30 days from the submission of each VAT return. The change concerns the compliance of the rules for issuance of the permit with the requirements of EU Regulation 1407/2013 on application of Articles 107 and 108 from the Treaty on the Functioning of the European Union to de minimis aid (until now the rules for issuance of the permits were regulated by Regulation 1998/2006).
3. Amendment of the rules for reporting of fuel transactions
The persons using fuel reservoirs (incl. tank trucks or in-house gas stations) to fuel their own vehicles, machinery or other facilities shall install an electronic fiscal memory system and measuring devices in order to report the volumes of fuel received and used. Detailed rules would be introduced with the expected amendments of Ordinance H-18 of the Minister of Finance.