The Tax Hub

Bulgaria's draft Budget for 2020 has been submitted in parliament following approval from the Council of Ministers on 31 October 2019. Two of the main tax-related measures of the budget include the introduction of exit tax rules in line with the EU Anti-tax Avoidance Directive (Directive 2016/1164 - ATAD1) and the hybrid mismatch rules of the Directive as amended (Directive 2017/952 - ATAD2) with effect from 1 January 2020 (previous coverage).

Other measures include:

• Extension of the period of application of the reverse charge VAT mechanism to supplies of cereal and industrial crops to 30 June 2022 to counter fraud;
• Implementation of the measures of Council Directive (EU) 2018/1910 as regards the harmonization and simplification of certain rules in the value added tax system for the taxation of trade between Member States;
• Introduction of a VAT registration anti-avoidance rule, which provides that in calculating whether a taxpayer has met the registration threshold, the turnover of related parties or unrelated parties performing similar activities in concert in the same site is included for each party;
• Measures to improve the business environment and reduce administrative burdens, including the extension of tax relief for farmers to the end of 2020, a reduction in the value of the excise duty on fuel used in agricultural production, and the harmonization of individual income tax rules for the taxation of hidden profit distributions;
• Measures in the area of debt collection, including the continued monitoring of debtors with outstanding tax and social insurance contribution obligations; and
• Increases in the minimum wage for social and health insurance contributions to BGN 610 for 2020 and to BGN 650 for 2021 and 2022, with the maximum insurable amount maintained at BGN 3,000.

Subject to approval, the measures will generally apply from 2020.