VAT Registration – Distance Sale of Goods
Definition
The term “Distance Sale” describes the case when a VAT-registered entity within an EU-member state delivers goods to an entity with no VAT registration in another member state and those goods cannot be subject to the “ICA” regime (Intra-Community Acquisition).
Threshold Levels
VAT registration is normally related to a registration threshold. The EU Distance sales threshold varies between 35,000 EUR and 100,000 EUR. In Bulgaria this figure is 70,000 BGN (35,000 EUR).
This means that suppliers who execute distance sales are obligated to register under VAT in the member state by location of the client once the annual volume of the realized sales exceeds the solely defined by the state “Distance Sales Threshold”.
VAT Registration Terms
The VAT act strictly determines the terms that could classify one delivery as ‘distance sale’. The latter are stated in article 14 and article 20 of the VAT act:
1. The goods are sent and transported by or at the expense of the deliverer from the territory of a member state different from the one that is the last transport destination (Example – goods are delivered by a company registered in Germany towards the territory of Bulgaria at the expense of the goods deliverer).
2. The goods deliverer represents a VAT registered entity in a member state different from the one that is the last transport destination (Example – the company is registered under VAT in Germany).
3. The delivery recipient is an entity that is not obliged to charge VAT in Intra-Community Acquisition of goods in the state where the transportation ends (Example – the goods recipients in Bulgaria are non-VAT registered entities: people, small non-registered firms, government and municipal institutions, ministries, agencies, associations, budget organizations, etc.).
4. The goods are not cars, machines for installation or artifacts.
5. The deliveries under the distance sales terms executed on the territory of the state (Bulgaria) have exceeded for the current year or exceeded in the previous year the amount of 70,000 BGN (Example – the deliverer has reached deliveries for 70,000 BGN (35,000 EUR) turnover in the present year).
Registration Time Scale
Provided that it meets all of the above mentioned requirements the company can proceed with VAT registration. This must be done not later than 7 days after the date of the delivery which accumulated amount makes the total turnover for the current year higher than 70,000 BGN.