On December 30, 2025, a Law Amending and Supplementing the Value Added Tax Act was promulgated, which entered into force on January 1, 2026. The amendments transpose the provisions of Directive (EU) 2020/285, which focuses on the special regime for small enterprises.
The most significant changes concern the threshold for mandatory VAT registration, the method of calculating turnover, the deadlines and date of registration, as well as the introduction of entirely new regimes for small enterprises – both within Bulgaria and for activities in the EU.
1. Thresholds and registration
The threshold for mandatory VAT registration remains the same, but is now in euros – €51,130, which is a direct consequence of the introduction of the euro as the official currency in the country from January 1, 2026.
Instead of the previous calculation of turnover for the last 12 months, turnover is now considered for the calendar year (from January 1 to December 31). This means that companies should monitor their turnover daily (rather than monthly) for registration purposes.
Once the threshold is exceeded, the registration obligation arises immediately, and the deadline for submitting an application is 7 days from the date of exceeding the threshold. In this case, the date of registration is no longer the date of delivery of the act by the National Revenue Agency, but the day after the threshold is exceeded.
In the period between exceeding the threshold and receiving the registration act, companies should issue or correct their invoices with VAT charged within 5 days of the act being delivered. This is important for the proper documentation and application of the law.
The new rules inevitably require businesses to pay close attention to their accounting records in order to bring their activities into line with the amended regulatory framework.
2. Annual turnover in the country
Particular attention should be paid to the amended concept of what supplies are included in the concept of "annual turnover in the country" of the taxable person, namely:
a/. supplies that are taxable under the general VAT taxation rules, including intra-Community supplies of goods;
b/. supplies that are exempt with the right to deduct tax credit;
c/. supplies of financial services;
d/. supplies of insurance services;
e/. exempt supplies of immovable property.
At the same time, exempt supplies of immovable property, as well as financial and insurance services, are not included in the annual turnover when these activities meet the definition of "ancillary supplies". This requires that the supply is not related to the main economic activity of the taxable person and is of a secondary or incidental nature.
Thus, many companies that have not been close to the VAT registration threshold so far may be required to register from the beginning of 2026 due to the inclusion of additional components in their turnover.
3. New regimes for small enterprises
The amendments to the VAT Act also introduce two new regimes for small enterprises:
- a regime for small enterprises in the country and
- a regime for small enterprises in the European Union (EU).
When applying each of these two regimes, taxable persons may benefit from VAT exemption:
- on supplies made with a place of performance within the country - when applying the regime for small enterprises in the country, or
- on supplies made with a place of performance within the country and within the territory of one, several or all other EU Member States - when applying the regime for small enterprises in the EU.
It should be noted that taxable persons registered for the application of the regime for distance sales of goods imported from third countries or territories cannot apply these regimes.
More information on the two regimes, as well as the NRA's interpretation of the new provisions, can be found at the following link.
The changes to the VAT Act from 2026 fundamentally alter the logic of VAT registration in particular. They create new opportunities for small businesses, but also impose significant requirements for tracking turnover and meeting deadlines.
This article has been prepared for and is part of the Legal Digest issued by Penkov, Markov & Partners. The publications therein do not constitute legal advice and are not binding. Penkov, Markov & Partners reserves all rights to this material, and any distribution thereof is subject to the prior written consent of the law firm.
