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Bulgaria VAT relief on bad debts 2023

Bulgaria allows for VAT invoice bad debt relief to fall into line with EU

Following a September 2022 public consultation, Bulgaria has amended its VAT Act to provide relief on VAT remitted to the tax authorities for sales invoices which subsequently are not settled by the taxpayer’s customer – bad debts.

Previously, Bulgaria did not provide bad debt relief/ It was of the few EU member states not to do so. This restriction is contrary to the EU VAT Directive which requires neutrality.

Bad debt relief allows for the taxpayer to offset the VAT on the original invoice against output VAT in the return of the period where the debt satisfies the qualifying requirements. Bulgaria has now set out in the VAT Act:

  • The new criteria to qualify for VAT bad debt relief cover minimum criteria to meet on retrieving
  • Steps to report the bad debt
  • Excluded transactions.

Learn more about Bulgarian VAT in our country guide.

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