From January 2016, all VAT-registered companies in Bulgaria have to declare the amount of VAT for the private usage of business assets with submission of monthly VAT returns and purchases and sales ledgers to the NRA. The guide for application of this system was adopted by NRA.

Where the purchase of an asset it is known that it will be used solely for personal purposes and for the purchase of those goods VAT credit was not used, then it is not expected by NRA that the companies will charge VAT for such usage.

In cases where the goods will be used for both business and private purposes, there are two options:

·        Full VAT deduction, with VAT to be charged for personal usage of the goods;

·        VAT to be deducted in proportion corresponding to the ratio of private-business usage of the goods.

  VAT registered companies in Bulgaria can create their own mechanism for allocating costs depending on the degree of use of the goods and/or services for personal needs. It is important to note that companies are free to choose the criteria for the application of this mechanism, but this must be done in advance, as the document that regulates the mechanisms of allocation of costs must be available for inspection and audits by the NRA. Concurrent use for business and personal use of a property, for example, the basis for the allocation of direct costs could be the area in square meters or during use reported in hours / days or combined between the two bases - such as hotel rooms which are used as accommodation for guests, and personal needs of the owner.

Contact us for more details and visit VAT Compliance