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Bulgaria sticks to 20% VAT rate and limited reduced rates


Bulgaria sticks to 20% VAT rate and limited reduced rates

The Bulgarian government has confirmed that it will retain its 20% VAT rate for the foreseeable future as part of its flat tax policy.

Bulgarian flat rate tax policy

Bulgaria has one of the lowest VAT rate in the Central & Eastern European region.  Hungary raised its VAT rate from 20% to 27% by 2012 during the financial crisis.  Romania has been forced to put its rate up to 24% in 2011.  The average EU VAT rate is over 21%.

The Bulgarian VAT rate is a universal VAT rate, meaning there are very few exemptions or use of the reduced VAT rates.  Economists believe this gives a more stable and less distorting tax regime.  The only use of a reduced VAT rate is for hotel accommodation at 9%.

The low Bulgarian VAT rate matches Bulgaria’s corporate tax rate of 10%.  This is the lowest in the EU – Ireland is next with 12.5%.

 

VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He is part of the European leadership team which this year won International Tax Review's Tax Technology Firm of the Year. Richard qualified as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.