Guide for beginner online traders in Bulgaria

Taxation of Internet sales
Taxation of Internet sales
With the rapid growth of online commerce, the sale of goods and services over the Internet has become increasingly popular in Bulgaria. However, many online merchants may not be aware of the complexities of taxation when selling online. This article aims to provide you with a general overview of your obligations relating to internet sales, focusing on key aspects of Value Added Tax (VAT) and income taxes in Bulgaria. The article does not claim to be complete, as the legislation in this area is impossible to cover. We will not dwell on the insurance obligations that arise in this kind of trade, but in general, we will mention that insurance is due.
Taxation of Internet sales with VAT
What is VAT?
Value-added tax is an indirect consumption tax that is levied on goods and services when they are sold. Many people think that this affects only enterprises, but not only they are obliged by this law, but also individuals who carry out independent economic activity.
What is independent economic activity?
The concept of independent economic activity is given in Article 3 of VAT. If we try to retell it briefly, this is when you perform some activity on your account and receive a reward for it. In this line of thought, anyone who sells any goods, and/or produces something to sell, and/or provides a service, must ask himself the question: “Am I performing an independent economic activity?”. There are no clear criteria in the law for what is meant by “regular” performance of an activity. If you make more than 3-4 sales per year, it is good to contact an accountant and discuss this matter. And remember that doing business online in no way exempts you from your tax obligations.
Do you have to register under the Value Added Tax Act (VAT) if you are self-employed? When do you start paying VAT?
VAT is charged to the customer by the registered persons. Who are they?
We list non-exhaustively:
- Those who have made a voluntary registration.
- Those who have reached a taxable turnover for the last 12 months before the current one of over BGN 100,000.
- Those who sell goods or services online to individuals in the European Union (EU) have reached a turnover of more than €10,000 in total for all sales in the EU.
- Those who receive advertising or other services from abroad, which is in almost all cases online sales or services to customers in the EU. In this case, you must make a special registration under Art. 97a of the VAT. It is done before receiving or performing the service.
In all these cases, you should contact an accountant when you approach the mentioned turnovers or circumstances. Follow them carefully, as any delay leads to serious penalties and fines, and the deadlines for mandatory registration are short.
Taxation of internet sales with income taxes
Which Online Marketers Owe Income Taxes?
You could say almost all of them, with few exceptions.
How to calculate and pay income taxes?
Calculating income taxes depends on a variety of factors, including your income, tax bracket, and personal circumstances. In general, prepare to set aside 10-15% of your profit for tax. The procedure for declaring and paying the tax depends on many factors that are individual and should be discussed with a tax professional. However, keep in mind that you shouldn’t wait until the end of the year to clear this up, as by then you’ll have already missed a lot of deadlines.
E-shop registration
If you carry out online trade through your own or rented electronic store, you should know that you must register it with the National Revenue Agency. In some cases, depending on the type of payment, you will have to obtain and issue cash receipts from a cash register or electronic receipts from specialized software at sales, as well as transfer the monthly reports of these sales to the NRA/audit file.
This accounting of the activity is independent of the obligation to register under VAT, i.e. it also affects non-VAT registered persons.
Conclusion
Selling goods and services online offers many advantages for both businesses and consumers. However, it is important to understand the tax implications of this activity to avoid potential penalties and fines. By following the guidelines mentioned in this article, you can ensure compliance with your tax obligations and keep your online business successful.
Please note that tax treatment in Bulgaria may differ depending on the specific requirements for different e-commerce platforms. Always consult a tax professional or the National Revenue Agency (NRA) for the most accurate information.