Български
Nederlands
VAT SME Scheme in Bulgaria
From 1 January 2026, Bulgaria introduced the VAT SME Scheme, giving eligible small businesses a new opportunity to operate without charging VAT while benefiting from simplified VAT compliance.
The regime is particularly relevant for consultants, freelancers, start-ups, digital businesses and small e-commerce companies operating in Bulgaria or providing services across the EU.
How does the Bulgarian SME Scheme work?
A business established in Bulgaria may apply the domestic SME VAT exemption where its annual turnover in Bulgaria does not exceed EUR 51,130 in both the current and the previous calendar year.
Where the conditions are met, the business can make qualifying supplies without charging Bulgarian VAT.
For smaller businesses, this can provide an important commercial advantage, particularly when working mainly with private individuals or other customers that cannot recover VAT.
However, businesses applying the exemption generally cannot deduct input VAT related to the exempt supplies. Therefore, the SME regime is not automatically the best option for every company.
Cross-border business within the EU
The new rules also allow Bulgarian businesses to benefit from VAT exemptions in other EU Member States.
Under the EU SME Scheme, a business may qualify if:
- its total annual turnover across the EU does not exceed EUR 100,000;
- its turnover remains below the applicable national threshold in each Member State where the exemption is requested; and
- the relevant conditions are met for both the current and previous calendar year.
Instead of registering separately for VAT in each Member State, eligible businesses can apply through the Bulgarian National Revenue Agency and receive a special BG…-EX identification number.
The scheme also introduces simplified compliance, including a single quarterly turnover report for the Member States in which the SME exemption is applied.
Is the VAT SME Scheme right for your business?
The answer depends on your customers, expenses, business model and expected turnover.
For a service-based business with limited VAT-bearing expenses, the SME regime may offer substantial administrative and commercial benefits. For companies with significant investments, purchases or input VAT, standard VAT registration may still be more advantageous.
At Zara Consult, we can assess your business model, expected turnover and cross-border activities and determine whether the VAT SME Scheme, standard VAT registration or another VAT regime provides the most efficient solution.
Planning to start or expand your business in Bulgaria or elsewhere in the EU? Contact our team for a VAT assessment before choosing the most suitable structure.
