Bulgaria tightens VAT rules on supply & install projects for foreign businesses
If your business supplies goods to Bulgaria and installs them on‑site, a major change is coming your way.
From 1st January 2026, foreign suppliers will have to register and charge Bulgarian VAT on supply and install contracts. This marks the end of the reverse‑charge system that allowed Bulgarian customers to report VAT on such transactions.
For years, foreign companies could deliver machinery, equipment, or other goods to Bulgaria, and install them without the requirement to register for VAT in Bulgaria. The Bulgarian established customer was required to self‑account for VAT in their local Bulgarian VAT return.
What’s changing?
Under the new rules, if a foreign business delivers goods to Bulgaria and installs or assembles them as part of the same contract, the supplier must register for VAT before starting the work. Once VAT registered, the foreign business will need to issue Bulgarian VAT invoices to the customer and file local VAT returns.
The reverse‑charge mechanism, while convenient, makes it harder for authorities to monitor cross‑border installation projects. Moving the responsibility to the supplier gives the Bulgarian tax authorities clearer oversight.
What this means for foreign suppliers?
If you’re business is in sectors such as engineering, industrial equipment, or construction, this change will likely affect you. You will need to plan ahead to VAT register in Bulgaria, update your invoicing systems, and factor VAT into your pricing and cash‑flow planning.
Many suppliers who previously avoided any Bulgarian compliance obligations will now have to build them into their operations.
Bulgarian customers will no longer self‑account for VAT on these projects. Instead, they will pay VAT directly to the foreign supplier and recover it through their local Bulgarian VAT return.
Looking ahead
With the new rules taking effect at the start of 2026, foreign businesses should review any upcoming installation projects in Bulgaria and prepare early.
It is important to understand that a Bulgarian VAT registration is required before the first taxable supply takes place. Businesses should not wait until the project is underway or completed as penalties and interest are likely to apply for late registration and payment of VAT.
If you think your company is required to VAT register in Bulgaria due to this change or if you require any additional information regarding same, please do not hesitate to get in touch with us.