On 30 December 2025, substantial amendments to the Value Added Tax Act (VATA) were promulgated in the State Gazette and entered into force on 1 January 2026, introducing an entirely new framework for the special VAT regimes for small enterprises. A new Chapter Twenty-One “b” was created, through which Bulgarian legislation transposes Directive (EU) 2020/285 and the related Regulation (EU) No 904/2010.
The purpose of the amendments is clearly formulated both in the Act itself and in the explanatory guidance of the National Revenue Agency (NRA) – to reduce the administrative burden on small businesses and to facilitate cross-border economic activity within the EU, while maintaining effective tax control.
Which special regimes are introduced?
The VATA provides for two separate special regimes (Art. 168b VATA):
Regime for small enterprises in Bulgaria
Under this regime, supplies with a place of supply on the territory of Bulgaria are exempt from VAT.
Regime for small enterprises in the European Union
This regime covers supplies with a place of supply both in Bulgaria and in one or more EU Member States, subject to compliance with a common EU-wide turnover threshold.
Under both regimes, the exemption is linked to specific turnover and registration conditions and is not an automatic right without limitations.
According to the explicit guidance of the NRA, persons registered under the regime for distance sales of goods imported from third countries may not apply the regimes for small enterprises.
Annual turnover – the key criterion
The decisive factor for the application of the regimes is the annual turnover, determined in accordance with the rules of Art. 168c VATA.
Applicable thresholds:
- EUR 51,130 – national threshold for Bulgaria;
- EUR 100,000 – overall threshold for the European Union.
Included in the turnover are:
- supplies of goods and services with a place of supply in Bulgaria;
• intra-Community supplies; - exempt supplies with a right of deduction of input VAT.
Excluded from the turnover are:
- supplies of fixed assets;
- ancillary and incidental supplies;
- other exclusions expressly provided for by law.
According to the NRA’s guidance, where the same activity is carried out successively or in parallel by related or concertedly acting persons, the turnover is attributed to the person who first commenced the activity at the premises. This rule aims to prevent circumvention of the thresholds through formal “fragmentation” of the business.
Which supplies fall within the scope of the regimes?
The special regimes cover taxable supplies of goods and services, intra-Community supplies, and exempt supplies with a right of deduction of input VAT (Art. 168d VATA).
Excluded from the scope are:
- supplies under Art. 7(2) VATA;
- distance sales from third countries that are taxed under the special EU regime under Chapter Eighteen.
The regime applies to all supplies of the person, not selectively to individual transactions, which ensures consistency and legal certainty.
Regime for small enterprises in Bulgaria
The regime may be applied by any taxable person established on the territory of the country, provided that all of the following conditions are met simultaneously:
- the person carries out supplies of goods and services with a place of supply on the territory of Bulgaria, in respect of which the regime may be applied;
- the person’s annual turnover in Bulgaria does not exceed the national threshold either in the current calendar year or in the preceding calendar year.
When applying the regime:
- no VAT is charged on supplies in Bulgaria;
• no special registration for the regime itself is required;
• the obligation for ongoing VAT reporting is eliminated.
The regime is terminated upon:
• registration under the general VAT procedure;
• transition to the EU small enterprises regime.
Regime for small enterprises in the EU
The EU regime allows exemption from VAT for supplies in Bulgaria and/or other Member States where:
- the national turnover does not exceed EUR 51,130;
• the total EU turnover does not exceed EUR 100,000 (Art. 168e VATA).
Who may apply it?
- persons established in Bulgaria – in Bulgaria and in other Member States;
• persons established in another Member State – only for supplies in Bulgaria.
Registration and identification
Application of the regime requires a prior application to the NRA (Art. 168ж VATA). Upon confirmation, a special identification number ending in “–EX” is issued, which must be indicated on invoices for supplies falling within the scope of the regime.
Conclusion
The new framework of special VAT regimes for small enterprises as of 1 January 2026 introduces not so much a revolutionary change with regard to the national regime as a systematisation and renaming of the previous regime for non-registered persons. In essence, for persons established in Bulgaria whose annual turnover in the country exceeds the national threshold of EUR 51,130, the obligation to register under the general procedure of Art. 96(1) VATA continues to arise, without a substantial departure from the previous logic of the Act.
The genuine novelty of the reform lies in the regime for small enterprises in the European Union, which introduces an EU-wide turnover threshold of EUR 100,000 and places emphasis on the cross-border activity of small economic operators. Persons established in Bulgaria who exceed this threshold at EU level may not apply the EU small enterprises regime, but under certain conditions retain the possibility to apply the national regime. This necessitates a clear distinction between the two regimes and a precise assessment of which one is applicable in each specific case.
Particular attention should be paid to the entirely new approach to monitoring turnover, which replaces the previous model of a “rolling” 12-month period. As of 1 January 2026, turnover is monitored on a calendar basis – from the beginning of the year – both with regard to domestic turnover and EU turnover. In practice, this means that taxable persons are required to monitor accumulated turnover on a daily basis, which significantly increases the need for ongoing accounting control.
A significant impact on many enterprises also stems from the change in the method for determining annual turnover for the purposes of the regime. When applying the special regimes for travel services, second-hand goods, works of art, collectors’ items, antiques, and investment gold, supplies are now included in the turnover at the full amount received or due, rather than by reference to the margin, as was previously the case. This leads to a much faster reaching of the applicable thresholds and requires a prior tax assessment of the business model.
Last but not least, the amendments also introduce a noticeable restriction on the possibilities for VAT deregistration. Persons who have exceeded the national threshold in the preceding year are not entitled to terminate their registration before the end of the current calendar year, and in certain cases – not before the end of the following one. This removes the previous practice of rapid deregistration in the event of a temporary decline in turnover and enhances the stability of the registration status.
In conclusion, the new framework offers real relief and greater legal clarity for small enterprises, but at the same time imposes higher requirements for planning and ongoing control over business activities.
