Effective as of January 1, 2023, Bulgaria's Value Added Tax
Act (VATA) was overhauled, introducing a comprehensive system for
reducing VAT related to outstanding invoices. This framework
targets scenarios in which suppliers render it unattainable to
collect payments for taxable supplies, offering a mechanism to
reduce both taxable base and VAT amounts.
To qualify for a VAT reduction, several specific
criteria must be satisfied:
Invoice Issuance: An essential requirement is the issuance of a
formal invoice for the supplied goods or services, adhering to the
specifications outlined in Article 86 of the VATA.
No Related Parties: The recipient of the supply and the supplier
should not be considered related parties at the time of delivery or
when the circumstances leading to the classification of the claim
as uncollectible occur. This condition prevents undue advantage
within connected business entities.
