Questions and answers related to the financial system, accounting and taxes
Question: Which is the official currency in Bulgaria?
Answer: The official currency in Bulgaria is the lev divided in 100 stotinki and the currency code is BGN.
Question: Can invoices be issued in foreign currency?
Answer: Yes, invoices can be issued and paid in both BGN and foreign currency. The tax base and the amount of the value added tax must also be indicated in BGN.
Question: Where are the taxes and insurances (social security contributions) paid?
Answer: The taxes and insurances are paid in the account of the National Revenue Agency (NRA). The taxes and insurances are to be paid obligatory in lev. The payment order (the payslip) indicates the code for the type of payment.
Question: Can the taxes and insurances be paid in cash?
Answer: The taxes and insurances are to be paid via bank transfer. The National Revenue Agency does not have cash and pay office, nor does it have money salons. The taxes and insurances can be paid in cash via the pay office of a commercial bank in the accounts of the NRA. There is a bank office in the NRA building where taxes and insurance can be paid in cash.
Question: What is the exchange rate lev - euro?
Answer: Bulgaria has a currency board and the exchange rate of the lev is fixed to the euro at the ratio 1 euro = 1.95583 lev. The exchange rate of the lev to other currencies is floating. In commercial banks and currency exchange offices, there is a small difference between the buy and sell rates for the euro.
Question: What are the limits for cash payments?
Answer: If the value of one commercial transaction exceeds BGN 10,000, all payments on it, including the partial ones, shall be made via bank transfer.
Question: Where are the companies registered?
Answer: The companies are registered with the Trade Register at the Registry Agency at the Ministry of Justice.
Question: How long does the registration of a company take?
Answer: The registration of a company in the Trade Register is done for 2-3 working days after submission of the documents.
Question: What is the minimum capital for an OOD (Ltd)?
Answer: The minimum capital for an OOD (Ltd) is 2 lev which is deposited in an accumulation bank account.
Question: When is the declaration for starting the activity of the company filed at the NRA?
Answer: The Company’s start of activity is not declared at the NRA. At the NRA, a declaration is submitted for the beginning of the insurance payments of the partners in the company. The declaration shall be filed within 7 days of the beginning of the respective partner's business.
Question: Does the accountant need a power of attorney legalized by a notary public?
Answer: The NRA requires a power of attorney legalized by a notary public in 2 cases: When requesting access to tax-insurance information and for VAT registration.
Question: How can be obtained tax and insurance information form the NRA?
Answer: The easiest way to obtain tax and insurance (social security) information from the NRA is by accessing the NRA's electronic services, which can be done by electronic signature or by a Personal Identification Code.
Question: Is the newly registered company also VAT registered?
Answer: Upon registration of a new company in the Trade Register, it is not registered under the VAT Act. The company can be VAT registered, by choice, and the registration is done at the NRA.
Question: What is the turnover for the mandatory VAT registration?
Answer: The threshold for mandatory VAT registration is a total turnover (sales amount) of BGN 50,000 or more in the last 12 calendar months before the current one.
Question: How long does the VAT registration take?
Answer: The VAT registration is done within 14 days of submission of the documents to the NRA.
Question: Who can be the company's accountant?
Answer: The Company’s accountant may be a person who works there under a labour contract, an individual with whom the company is in a legal relationship (civil contract) or an accounting enterprise.
Question: Is it mandatory to sign a contract between the company and the accounting enterprise?
Answer: The conclusion of a contract between the company and the accounting enterprise is not mandatory, but it is recommended for at least two reasons. First of all, the contract is needed in the event of a dispute between the company and the accounting enterprise. Secondly, if there is no contract for accounting services, the state institutions can blame both the company and the accounting enterprise in unregulated relationships. Even if no written contract has been concluded, the issuance of tax documents for the services and payments made is obligatory.
Question: What is the term for filing the VAT declarations?
Answer: The declarations under the VAT Act shall be filed monthly until the 14th of the following month.
Question: What is the content of a VAT declaration?
Answer: The declaration under the VAT Act contains: Statement of accounts, purchase and sales logs, and in case of intra-community transactions made - the VIES declaration also.
Question: Should a VAT declaration be submitted even if the company has no operations?
Answer: If the company is registered under the VAT Act, it has to submit VAT declarations even if it has no operations.
Question: What is the VAT rate?
Answer: The VAT rate is 20%, for hotel accommodation - 9%.
Question: What taxes and insurances (social contributions) are paid on the salaries?
Answer: Based on the salaries the employer pays insurances for: State social insurance [SSI] (pension, general sickness and maternity, occupational accidents and occupational disease), additional mandatory pension insurance and health insurance, and the employee pays for: State social insurance [SSI] (pension, general sickness and maternity), additional mandatory pension insurance, health insurance and income tax on natural persons. No fund contributions are currently being made for the Guaranteed Claims Fund for Employees and Workers in case of Employer Bankruptcy.
Question: Is it obligatory for a foreign manager to be insured in Bulgaria?
Answer: No, it is not. The foreign manager shall pay his or her social insurances in his or her country.
Question: How can the manager of the company be insured?
Answer: The manager of the company can be insured as a partner in the company (if he/she is a partner), under a management and control contract or under an employment contract.
Question: What is the period of time when the social security and the taxes on the salary are paid?
Answer: The insurance shall be paid by the 25th of the month following the month to which it relates. The tax on salaries is paid by the 25th of the month following the month in which they are paid.
Question: What annual declarations are submitted by companies?
Answer: Companies submit the annual financial statements to the NSI, annual tax returns at the NRA and annual financial statements in the Trade Register.
Question: What are the deadlines for companies submitting their annual declarations to the NSI?
Answer: Before submitting their annual declarations to the NRA, companies submit their annual statement of accounts to the National Statistical Institute (NSI). Commercial companies submit the report by March 31 of the following year. Sole proprietors submit the report by April 30 of the following year.
Question: What are the deadlines for the companies to submit their annual declarations?
Answer: The companies submit their annual statement of accounts to the NSI and the annual tax return to the NRA by March 31 of the following year. The annual financial report is submitted in the Trade Register by June 30 of the following year.
Question: What is the deadline for natural persons and sole proprietors to submit their financial reports?
Answer: Natural persons and sole proprietors submit the annual financial report by April 30 of the following year.
Question: What is the profit tax percentage?
Answer: The profit tax percentage is 10%.
Question: What is the tax on dividends percentage?
Answer: The tax on dividends percentage is 5%.
Question: What does the Annual Financial Statement contain?
Answer: The annual financial statement contains the balance sheet, the income and expenditure statement, statement of cash flows, statement of changes in equity and the annex - statement containing the accounting policy and the reference for fixed assets. The micro-enterprise annual statement of accounts may contain only a condensed balance sheet.
Question: Which companies are micro-enterprises?
Answer: Most companies are micro-enterprises. The definition is given in the Accountancy Act. Micro-enterprises are companies with a balance value of assets of up to BGN 700,000, net sales revenues of up to BGN 1,400,000 and an average staff of up to 10 people or companies that meet at least 2 of these 3 criteria.
Question: Do the sole proprietors submit an annual financial statement at the Trade Register?
Answer: Sole proprietors are not obliged to submit their annual financial statement at the Trade Register (unless they are subject to a mandatory audit).
Question: What is the deadline for the profit tax payment?
Answer: Commercial companies pay their profit tax by March 31 of the following year.
Question: Do companies need to make advance payments for the profit tax?
Answer: Companies with revenues for the previous year of up to BGN 300 000 do not make advance payments for the profit tax. Companies with revenues between BGN 300,000 and BGN 3,000,000 make quarterly contributions and companies with revenues over BGN 3,000,000 make monthly prepayments.