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Bulgaria to offer VAT relief on bad debts

Bulgaria enters public consultation on providing bad debt relief for VAT paid on sales invoices

Currently, Bulgaria does not provide bad debt reflief when VAT on sales invoices have been declared and paid, but the customer does not settle their debt. It is one of the few EU member states not to. 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 retur of the period where the debt satisfies the qualifying requirements.

The Finance Ministry has now initiated a public consultation. Learn more about Bulgarian VAT in our country guide.

Options that may be considered include:

  • Relief only when the customer is declared insolvent by an official court
  • Relief only after a set period
  • Taxpayer can produce evidence of reasonable efforts undertaken to recover debt (multiple reminders; legal actions).

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