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What entrepreneurs of small businesses should know in 2026
Since 1 January 2026, Bulgaria has introduced new VAT rules for small businesses, including the EU SME VAT scheme. The changes can significantly simplify VAT compliance for entrepreneurs, freelancers and smaller companies operating in Bulgaria and across the European Union.
VAT exemption for small businesses in Bulgaria
Businesses established in Bulgaria may benefit from the domestic small enterprise VAT regime if their annual turnover in Bulgaria does not exceed EUR 51,130, both in the current and the previous calendar year, provided the other statutory conditions are met.
Under this regime, eligible businesses can operate without charging Bulgarian VAT on qualifying supplies, reducing both administrative work and ongoing VAT compliance obligations.
Once the Bulgarian annual turnover exceeds EUR 51,130, mandatory VAT registration generally becomes applicable, with the registration application due within 7 days of exceeding the threshold.
A new opportunity for businesses operating across the EU
One of the most important developments is the possibility for eligible Bulgarian businesses to use the EU SME scheme when supplying goods or services in other EU Member States.
To qualify, the business must generally:
- have total annual turnover across the EU not exceeding EUR 100,000;
- remain below the applicable national VAT exemption threshold in the Member State where the exemption is requested; and
- satisfy these turnover conditions for both the current and previous calendar year.
This can be particularly attractive for consultants, freelancers, digital businesses and smaller e-commerce companies serving customers in several EU countries.
Instead of automatically facing multiple local VAT registrations, eligible businesses may benefit from a simplified system with a single SME registration and streamlined reporting.
VAT planning is becoming increasingly important
The new regime creates opportunities, but choosing the correct VAT treatment still depends on the type of activity, customer location, B2B or B2C status and expected turnover.
At Zara Consult, we help international entrepreneurs and Bulgarian companies assess their VAT position, monitor registration thresholds and determine whether the domestic VAT exemption, EU SME scheme or another VAT regime is the most efficient solution.
Planning to start or expand your business in Bulgaria? Contact our team to review your VAT position before registration obligations arise.
