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Invoicing without VAT in Bulgaria

02.11.2023
Invoicing without VAT in Bulgaria

VAT (value added tax) is part of every businessman’s and consumer’s everyday life. However, the issue of issuing an invoice without VAT often causes confusion and many questions. In this comprehensive article we will look at the key points related to the topic and provide you with complete and clear information.

When is it possible to issue an invoice without VAT?

VAT is one of the main taxes that every company or entrepreneur is obliged to charge and remit to the budget. But there are cases where issuing an invoice without VAT is allowed and even advisable,

The first and most obvious case is when it comes to companies or individuals that are not VAT registered. They are not obliged to charge and remit this tax, so their invoices are VAT-free,

Other circumstances in which an invoice may be issued without VAT include certain types of activities or transactions which are exempt or zero-rated. Here, however, you should be particularly careful and consult a specialist on the matter.

Advantages and disadvantages of invoices without VAT

Advantages:

  • Simplification of the administrative burden: companies that are not VAT registered or VAT exempt do not need to deal with the additional administrative obligations associated with VAT.
  • Competitive prices: Prices for goods or services can be more competitive as they do not include VAT.

Disadvantages:

  • Lack of deductibility: Companies cannot use input VAT as a deductible as they do not charge it.
  • Limited scope: Some companies or customers may prefer to work only with VAT registered partners.

What are the steps involved in issuing such an invoice?

  • Determine whether you are liable to charge VAT: First of all, specify whether your business is covered by VAT or not.
  • Prepare the invoice: Although the invoice will not contain VAT, it must comply with all other invoice requirements.
  • Indication of no VAT: Although the invoice does not contain VAT, it is important to have a clear indication of this on the document.

Why do some people prefer invoices without VAT?

One of the main reasons is to simplify the administrative process. The charging, recording and remittance of VAT requires additional effort and resources on the part of businesses. For many small businesses or sole traders who do not have a high turnover or do not carry out many transactions, this effort may not be justified.

How to distinguish a VAT invoice without VAT from one with VAT?

Invoices without VAT often have a clear indication that no tax has been charged. This may be indicated by a phrase such as “No VAT charged” or similar wording. In addition, the final invoice amount does not include any value added.

Additional aspects when issuing invoices without VAT

Whilst many see the advantages in issuing invoices without VAT, it is important to note that this type of invoicing can cause some difficulties. For example, international transactions often require specific VAT details, especially when cross-border services or goods are involved. This can mean that businesses that invoice without VAT may encounter problems when trying to expand their operations abroad.

In addition, businesses that decide to issue such invoices need to be aware of all their tax obligations. Even if they are not obliged to charge VAT, they may still have other tax liabilities, such as corporation tax, income tax or other local charges. Proper and timely information and consultation with tax professionals is key to avoiding future problems and penalties.

In conclusion, issuing a VAT-free invoice is a process that depends on many factors. It is important that any company or entrepreneur is aware of its VAT rights and obligations and acts accordingly. If you need advice, it is always a good idea to contact a specialist or review the current VAT legislation.

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