Bulgaria – Small Business Regime

Bulgaria has introduced significant changes to its Value Added Tax (VAT) rules for small enterprises effective from 1st January 2026. These amendments align Bulgarian national law with the EU Law and introduces two optional SME VAT exemption schemes, aiming to reduce administrative burdens for eligible businesses.

Key Changes and Features:

VAT Registration Threshold: 
The mandatory VAT registration threshold is EUR 51,130 (equivalent to BGN 100,000) in annual turnover within Bulgaria. This amount is legally denominated in EUR from 2026 due to Bulgaria’s adoption of the euro.

Turnover Monitoring:
The previous rolling 12-month turnover assessment has been replaced with monitoring on a calendar-year basis (January 1 to December 31). Businesses must track their cumulative daily turnover to determine their registration obligations.

SME Regimes:
Two distinct, optional VAT exemption schemes are available:

              – Domestic Scheme:
Applies to Bulgarian businesses whose annual turnover within the country does not exceed EUR 51,130 in the current and previous calendar year. This exemption is for supplies within Bulgaria only, and no formal notification is required if conditions are met.

              – EU Cross-Border Scheme:

Allows eligible businesses to claim VAT exemptions in other EU member states. This requires a total EU-wide turnover of less than EUR 100,000 and meeting the national threshold of each relevant Member State. A prior application to the tax authorities is mandatory, and businesses receive an identification number ending in “–EX” which must appear on invoices.

Mandatory Registration:
Businesses that exceed the threshold must apply for VAT registration within seven days. VAT becomes applicable from the day after the threshold is exceeded, and late registration can lead to penalties. Non-EU Businesses: Businesses not established in the EU generally have an effective nil VAT threshold and must register before their first taxable supply in Bulgaria.

The new regime, implemented through amendments to the Bulgarian VAT Act, aims to simplify compliance and support small and medium-sized enterprises (SMEs) operating within the EU internal market.