It is official – weekend tax in Bulgaria has been approved.

The National Assembly of the Republic of Bulgaria has adopted so called ’’weekend tax’’. It is valid from 01.01.2016.

The members of the parliament agreed that company vehicles and mobile phones will have 10% weekend tax. This tax is calculated depending on the specific tax base and different company assets.

There are three groups from the company assets that are included – property, cars, others.

Property
When properties are used for personal purposes, it is important the size of the area or how long it is used.

Vehicles
The employer can decide how much the vehicles are used privately. Also, it is possible to declare 50/50% – private/company needs.

Others
Mobile phones and laptops are in this category. The employer can declare directly 20% private usage of these devices.

One thing is for sure, the weekend tax will have its influence on how the company/private costs are calculated.

Please contact us when you want to know more what the weekend tax means for you company.

Source: http://www.economy.bg/business/view/25403/Danyk-uikend%E2%80%9C-vliza-v-sila-sys-zadna-data

Invoices in Bulgaria

By courtesy of Alexander Todorov.

This article is for everyone establishing first business as a self-employed, small businesses etc, to know how to be able to issue properly invoices. The requirements for invoices in Bulgaria are not something difficult but certain rules need to be followed.

Minimum requirements for invoices in Bulgaria

In the accounting law, Art. 7, paragraph 1. On invoices (such as a document addressed to external parties) the following information is compulsory;

1. Name (invoice)
2. Number (only the type Arabic numerals 1234567890)
3. Date of issue
4. Name of provider and recipient
5. Address of the supplier and recipient
6. Unique identification code of the provider and recipient
7. The subject and value of the transaction (what sells, how much is 1 unit, how much in quantity sold, total)

The VAT act adds several requirements (You can find more information on VAT registration here.);

1. Name (invoice)
2. Number (10 digit serial number with Arabic numerals only the type 1234567890, first invoice must be at № 0000000001 if the objects of the company are few invoices can start from a different number, for example object 1, can start the first invoice with № 1000000001 in object 2- with 2000000001 etc. but compulsory numbers must be consecutive and follows a strict hierarchy, if the company issued 10 billion number all invoices can be started again from № 0000000001 after the NRA  has been informed, otherwise the duplication of numbers is unacceptable).
3. Date of issue
4. Name of provider and recipient
5. Address of the supplier and recipient
6. Unique identification code of the provider and recipient
7. The subject and value of the transaction (what sells, how much is 1 unit, how much in quantity sold, total)
8. VAT registration number of the supplier
9. VAT registration number of the recipient (if it registered on VAT)
10. Date of delivery or the date of received payment according invoice
11. Tax base of the delivery (this is the total of all goods and services from the invoice ex VAT)
12. Tax rate (may be 0%, 9% or in most frequent cases 20%)
13. If the tax rate is different from the 20% then must be written justification for implementing another rate (for example if the supplier is not registered on VAT, on a separate line should be written something like “non-deductible VAT pursuant to Art. 113, paragraph 9 of the VAT Act “)
14. VAT rate (equal to the tax base is multiplied by the tax rate or if the tax base is 100 BGN and the tax rate is 20%, then the rate of VAT is 20 BGN)
15. Amount of the payment
16. Only if it delivers a new vehicle from an EU country, the factors that determine the vehicle as a new.

Although often still asked for and given, signature and stamp are not obligatory on invoices in Bulgaria anymore.

When you have questions about issuing invoices in Bulgaria you can always contact us.

Health insurance in Bulgaria

The system for health insurance in Bulgaria aims at improvement of the Bulgarian citizens’ life through regulation and enhancing of the social, health and economic efficiency of health expenses.

The improvement of the service quality and the equality of their usage; introducing of the mechanisms for fair payment to the medical specialists; the positive change in doctor – patient relations  are the main priorities which should be the leading principles during the implementation of health insurance policy in Bulgaria.

What is the health insurance?

The health insurance is a process of collecting of the so called health insurance installments; their management and spending for services, products and others in favor of the insured persons in case of need  or in case of definite conditions.

Generally, the health insurance means that installments are collected monthly by each Bulgarian citizen. The collected money are kept and managed by the National Health Insurance Fund.

The health insurance is two types – obligatory and voluntary.

The obligatory health insurance guarantees to everybody access to a basic package of medical services.  All Bulgarian citizens who are not citizens of any other country are obliged to pay health insurance installments.

The voluntary health insurance is at people’s choice. Everybody who wants can pay additionally in order to receive extra health services. In Bulgaria there are companies licensed under the Health Insurance Law which regulates the collected funds.

Why shall we pay for health insurance?

According to Bulgarian legislation, every Bulgarian citizen, permanent resident, or foreign students (citizens who are not insured in another country) are subject to obligatory health insurance.

In case of need for medical services, every insured person can use his rights. The National Health Insurance Fund pays for the services partially or entirely.

How much shall we pay for health insurance?

In case you work under labor contract

The amount of the health insurance is calculated as 8 % of your gross salary. The employer is obliged to pay 4,8 % of this amount and you as a worker shall pay the rest 3,2 %, which are normally taken from the salary.

In case of self-insured persons (including foreigners):

The health insurance is also 8 % of your insurable earnings. The only difference is that you shall completely pay for it yourself.

Health insurance for students and pupils:

If you are a regular student / pupil you should be health insured by your university / school. In case you study by correspondence you should pay on your account.

Health insurance in case of unemployment:

The unemployed are also subject to obligatory health insurance, which they have to pay on their account. The amount they have to pay monthly is BGN 16.80.

Important:
The amount for health insurance has a dynamic value which is defined by the Bulgarian law.

When the insurance rights are terminated?
In case of non-payment of the health insurance for more than three months, you automatically lose your health insurance rights. So you have to pay completely all the health services and products you might need. In some cases it could be too hard. Over all non-paid installments, you owe a high interest rate which is stored each month over the amount you have to pay. At the moment, it is defined on the basis of the basic interest rate (BIR) + 20 points:

BIR + 20% = 0.17 % + 20 % = 20,17% – yearly penalty interest for non-paid installments.

The non-paid health insurance is due forever.

Consequences of the terminated insurance rights
You lose your rights of using free medical services defined by the National Health Insurance Fund. You will be obliged to pay completely of every type of medical help you might need.

What shall we do in case of terminated insurance rights?
Your health insurance rights will automatically be restored as soon as you pay the amounts due (installments and interest).

Changes for 2012
Art. 40а, par. 1 of Law of Health Insurance (LHI) – the words „including those people with double citizenship” are erased in order to make the decree more precise. Based on the art. 33, par. 1, p. 2 of LHI, Bulgarian citizens, who are citizens to another country and do not live permanently in Bulgaria, are not a subject to obligatory health insurance in Bulgaria and it is not necessary to be released of the payment of health insurance installments according to art. 40a of the law.

Art. 40, par. 1, p. 3, letter „в” of LHI – the decree is changed. As a result of that, the deadline for payment of the health insurance installments, due by people who work without a labor contract, becomes equal to the deadline for payment of the health insurance for State Social Security. Installments must be paid till 10^th of every month, following the month when the remuneration had been paid;

Art. 40, par. 3, p. 10 of LHI – precision of the regulation for synchronization with the relative regulations of the Legislation for Home Land Defense and Armed Forces of the Republic of Bulgaria;

Art. 40, par. 1, p. 2а of LHI – the regulation is changed. As a result, the seamen are insured not on the basis of pre-determined average insurable earnings (between the minimum and maximum amount of the insurable earnings) of the self-insured people, fixed by the Law for the Budget of the State Social Security for the respective year. They are insured on the basis of chosen monthly insurable earnings on the ground of Art. 4 A, par.1 of the Social Insurance Code. In other words, the insurable earnings of the seamen for health insurance are equal to the same insurable earnings, on which they insure themselves for State Social Security.

Please contact us when you have any questions about your Health insurance in Bulgaria.

Asset depreciation rates

Assets of companies are being depreciated according fixed rates and terms. Below an overview of the Asset depreciation rates in Bulgaria.

Our company is continuously growing. We currently have a job vacancy for an accountant in Sofia.

We are looking for an experienced, active and flexible person for all activities related with accountancy/bookkeeping, and taxes.

The software we work with are Business Navigator and Micro invest. A professional level of English is a must, but also other languages are welcome. Part-time work is a possibility.

When you are interested, please send your CV to jobs@aidosbg.com before April 30st, 2012

From today requests for a new personal identification number can be filed at the Bulgarian National Revenue Agency (NRA).

The new PIN is a 12- digit code and gives individuals and companies access to the databases of the NRA without the need of an electronic signature. You can for example check how your employer has declared your labor contract; at what salary you are insured, and for how many hours. More information will become available in the coming months.

The information will be accessible from February 2012. The form to request for your PIN can be found at the website of the National Revenue Agency here. You have to go in person to the office of the NRA where you are registered to get your PIN. The service is free.

When incorrect information is found, this can be declared to the NRA. After which the company who filed incorrect information will be checked.

Update 01/01/2016

From January 1st 2016 the limit of cash payments in Bulgaria has been changed to 10’000 BGN

Law on restrictions of cash payments in Bulgaria

On February 9th 2011 the Law on restrictions of cash payments in Bulgaria came into force. Payments in Bulgaria should only be done by bank transfer when;

• The amount is equal or higher than 15’000 BGN;
• The amount is under 15’000 BGN, but part of a contract with a total contract amount equal or higher than 15’000 BGN;
• Payments in foreign currency, which has equivalent value equal or higher than 15’000 BGN

The law does not apply in case of;

• Deposits and withdrawals to/from personal bank accounts;
• Deposits and withdrawals to/from bank accounts by partners and first line family members of people with no or limited capabilities;
• Transactions in foreign currency in cash by occupation;
• Operations with banknotes and coins, which is part of the Bulgarian National Bank;
• Replacement by banks of damaged Bulgarian banknotes and coins;
• Payment of wages under the Labor Code.

When you have cash payments higher than 15’000 BGN, and you are not sure whether the above law applies contact us or your accountant to be sure. Violating this law will lead to fines from 25% to 100% of the total amount.

The complete Law on restrictions of cash payments in Bulgaria (in Bulgarian) can be found here: lex.bg

One of first and most important question for people looking for an accountant in Bulgaria is: “What are the accountancy fees?”.

You will often get this question answered with: “That depends, we need some more information before we can tell you”. And yes it actually depends on a few basic things; number of personnel, number of invoices and a few more.

In general the accountants in Bulgaria work with a fixed monthly fee based on a few simple parameters. To be able to give you a quote fitting you situation, please fill in our online inquiry form

Please contact us for an offer and an overview what is included in your subscription.

In the State gazette of July 26, 2011 changes in the law for measures against money laundering were published.

For us the most important change is that now also accountants in Bulgaria have to comply with this law. Accountants have to deposit their internal rules for measures against money laundering at the State agency for National security for approval.

More information about the internal rules, companies and people which have to comply with this law can be found on the website of the State agency for National Security.

How exactly this is going to affect our activities I cannot say yet, but for sure it will give additional paperwork…

The year is getting to an end and we are getting ready for the, traditionally busy, first months of the coming year preparing the annual tax returns 2011.

For companies in Bulgaria the deadline for filing the annual tax return is March 31, 2012. Individuals file their personal income tax return before April 30, 2012. Check with your accountant when you are in doubt whether you are obliged to file a personal income tax return. Basically this is the case when you have income generated other than from a labor contract. When individuals submit the annual tax return and pay the tax up to 10th February 2012, there will be 5% discount over the tax amount.

Besides filing annual tax returns, companies have to publish their financial statements at the Bulgarian Registry Agency. Sole proprietor (ET) publish their financial statements before May 31, 2012.  For Ltd’s (EOOD/OOD) the deadline is June 30, 2012. For Jsc. (AD)The deadline is July 31^st 2012.

When you want to know what the status of your company is then this would be a good time to check with your accountant.

Company in Bulgaria

The information about all companies in Bulgaria is free available on the website of the Bulgarian Trade Register – http://www.brra.bg/ . The website is only in Bulgarian, but with a little help from Google translate or a friend you should be able to find the information on your company in Bulgaria.

1. Click “Справки” (references) This is the third link in the left hand menu.
2. Here you click on “Справка по физическо или юридическо лице” (reference on physical or legal entity).
3. For companies you choose here “юридически лица” (legal entity).
4. Now fill in the bulstat number of your company or the company name in Cyrillic (without OOD/EOOD).
5. After filling in the code at the top you click “Търси” (search).

Now you’ll see all what is publicly available on your company. The information includes; the incorporation deed and filed financial reports. When nothing appears likely your company has not been registered yet or not been re-registered yet (deadline for re-registration is 31/12/2011).

In case you don’t manage to find what you need just give us a call.

More information about starting a company in Bulgaria you can find here: Starting a business in Bulgaria.

Representative expenses

On representative expenses such as; dinners, gifts, cloths, food and drinks, a tax of 10% has to be paid. The expense is, together with the paid tax, deducted from the companies’ taxable income. The VAT on these expenses cannot be offset nor claimed. The tax is due up to the 15th of the following month.

We regularly get the question whether it’s worth to recognize representative expenses for your company. It appears there is a general opinion that it is not worth the effort. Why to pay first a tax and later to deduct it from your income seems to only generate work without any benefit?

In our opinion it is worth the effort;

• When you spend companies money on representation, without recognizing it. The corporate tax will apply to this. Effectively you lose 10% when not recognizing the expense.
• The tax paid and the expenses are deducted from your taxable income. The difference is not much but you benefit 1%.
• When you spend companies’ cash without documentation against it, you create an unclear cash situation. You have cash which is physically not there anymore.

To get your expenses recognized you need to keep the cash receipts (in Bulgarian it should have “fiskalen bon/фискален бон” written on it) and get the receipts to your accountant.

Please contact us when you are in doubt what exactly can be recognized, or when you have any further questions.

Per the 1st of January 2011 the amendments on Law on Income Tax of Individuals are in effect. The amendments have been published in the State Gazette (Държавен вестник) number 94, 30/11/2010.
The law affects companies paying rent to physical persons. As of the 1st of January 2011, companies who pay rent to physical persons are now obliged to withhold the tax on the taxable amount of the rent. The taxable amount is 90% (10 % are reserved for expenses of the landlord) of the rent as in the rental agreement. The tax payable is 10% over the taxable amount.

Example:

1. Rent: 1000 leva
2. Taxable amount (90% by p.1): 900 leva
3. Tax to be paid (10% by p.2): 90 leva
4. Amount to pay to landlord (p.1 – p.3): 910 leva

The tax has to be paid to the National Revenue Agency (NRA) by the company who pays the rent. The tax has to be paid until the 10th of the month following the month when the rent is paid for. The company shall provide to the landlord the relevant documents for paid rent and tax to NRA.

In case the tenant is a not a Bulgarian company, the tenant should not deduct the tax from the payable amount, as it is not a tax obliged entity in Bulgaria. It then is the responsibility of the lessor to pay his income tax.

Please feel free to contact us when you have any further question on the subject.

Maternity leave in Bulgaria – отпуск за бременност и раждане

To be entitled to maternity leave allowance it is necessary to have worked at least 18 months prior to taking the maternity leave.

The allowance is 90% of the average gross salary of the 12 months before taking maternity leave. The period for maternity leave in Bulgaria is 410 days of which 45 days can be taken before giving birth. With the mother’s consent, when the child reaches six months, the leave can be transferred to the father, or grandparents for the rest of the period. During the first 135 days you have to take 3 illness notes from a doctor or hospital.

Fathers are entitled to 15 days paid paternity leave following the birth of the baby.

After the first 410 days there is an allowance of 240 leva/month until the baby becomes 2 years old. When the mother starts working after 410 days, she still has right on 120 leva/month until the baby becomes 2 years old.

After 2 years the mother has right on 1 year more parental leave without allowance.

During the period of maternity leave the employer is obliged to continue to pay health insurance until the mother returns to work.

The allowance is paid by the National Health Insurance Fund (Национална здравноосигурителна каса)

Relevant laws:
– Law on allowance for families with children – Закон за семейни помощи за деца(Bulgarian)

VAT in Bulgaria

Newly registered companies do not automatically enter the VAT system; your company has neither obligations nor rights concerning VAT in Bulgaria.

Registering for VAT becomes compulsory when;

• Your company has more than 50’000 BGN turnover over the last 12 months.
• Your company has business outside of Bulgaria. You send invoices to countries other than Bulgaria.

You can voluntarily register your company for VAT at any time and at any turnover. This option is preferable for most companies.

• The VAT rate in Bulgaria is currently 20%.
• The VAT on Tourism services is 9%.
• The VAT on deals in most other EU-countries is 0%.

For information on other taxes in Bulgaria check here: Taxation in Bulgaria

Taxation in Bulgaria

The overview below is just a summary of the most common taxes and VAT in Bulgaria. For detailed information you can check the websites of the National revenue agency (NRA) and Invest Bulgaria Agency or contact us when you have any further questions.

Corporate tax – 10%
The taxable profit has to be declared before March 31 of the following year.

Personal income tax – 10%

Tax on dividend – 5%
The tax has to be paid within a month after the dividend has been remitted.

VAT – 20%
Companies with activity only in Bulgaria and a yearly turnover of less than 50’000 BGN are not obliged to register for VAT.

VAT Tourism – 9%

Acts
The taxation is organized in the following acts;

–          Corporate Income Tax Act (CITA)
–          Personal Income Tax Act (PITA)
–          Value Added Tax Act (VATA)

Starting Thursday, the minimum monthly wage in Bulgaria grows from BGN 240 to BGN 270 (EUR 137).

According to the country’s Finance Minister Simeon Djankov, the minimum wage rise will cost its state budget approximately BGN 15 – 20 M. However, the private sector’s expenses will be much higher, the Dnevnik daily points out.

Some 120 000 Bulgarians officially receive minimum wage in Bulgaria, according to the country’s National Statistical Institute. A total of 20 000 of them are on a state payroll.

Also starting Thursday, the retirement allowances for widows and widowers in Bulgaria increase from 20% of the deceased spouse to 26.5%.

According to a recent study conducted in the Sofia-based University of National and World Economy Bulgaria will need 41 years to reach the minimum wage rates of EU’s most advanced countries.

Currently, the minimum wage in the country is nearly half of the amount of money deemed by the National Statistical Institute as necessary for an individual to survive a month in “normal” conditions.

source: novinite.com

Re-registration

The issue of Re-registration for companies in Bulgaria is still pending. At the end of 2010 the deadline was set at December 31, 2011.

Re-registration is obligatory for all companies registered before January 1st 2008.

Not fulfilling this obligation will lead to liquidation of the company. The company-owner will be held responsible for all expenses made concerning the liquidation.

After re-registration the financial reports over the 3 previous years have to be published at the Trade Register/Търговски регистър within 3 months after re-registration.

Ask your lawyer or accountant about the current status of your company or contact us when you have any further questions.

The Bulgarian government will update the minimum wage for the country from BGN 240 to 270 and will make a similar rise in retirement pensions, according to Minister of Labor Totyu Mladenov.

Mladenov stated the rise will be active starting July 1, and that a formal decision is to be taken between June 15-20 at a sitting of the three way council between government, employers and trade unions.

Minister of Finance Simeon Djankov, who has this far been opposed to the raise pushed by Mladenov for some months now, refused to comment.

According to his colleague in charge of labor and social affairs, the Ministry of Finance has the funds needed for the update.

source: novinite.com

related: Bulgarians Struggle with Shrinking Average Incomes

Publication of Annual financial reports

Companies in Bulgaria are obliged to declare their annual reports at the National revenue agency (NRA)/ Националната агенция за приходите (НАП) and at the National Statistical Insitute (NSI)/ Национален Статистически Институт (НСИ) before the 31st of March of the year following the booking year.

Besides these declarations companies should publish their annual financial reports 2010 at the Trade Register/Търговски регистър before 30 of June 2011. The fee to the trade register for publication is 50 leva. Not fulfilling these obligations can lead to penalties.

Please contact us when you have any questions.

Cash registers Bulgaria

The use and registration of cash registers in Bulgaria is organized in decree nr. H-18 (НАРЕДБА № Н-18). For company owners and managers it is important to know that after the petrol stations all companies have to connect their cash register with the National Revenue Agency (NRA)

For companies registered for VAT this should be done latest in September 2011.
For all other companies the deadline to connect with the NRA is April 2012.

Feel free to contact us when you have any questions.