Registration under Article 97a of the Bulgarian VAT Act is often overlooked by small businesses, freelancers and self-employed professionals because it is not linked to reaching a specific turnover threshold. In some cases, even a single service received from a foreign supplier or provided to an EU-based client may trigger a registration obligation.
What is registration under Article 97a of the Bulgarian VAT Act?
Registration under Article 97a of the Bulgarian Value Added Tax Act is a special VAT registration regime that differs significantly from standard VAT registration.
Its main characteristic is that the obligation is not linked to reaching a certain level of turnover.
This means that even a small business, freelancer or self-employed professional may fall within the scope of Article 97a from the very first qualifying cross-border service.
In practice, the obligation most commonly arises in two main situations:
- You receive certain services from a foreign supplier
- You provide certain services to a taxable client established in another EU Member State
When does the obligation arise when receiving services from abroad?
One of the most common cases is where a Bulgarian company or self-employed person receives a service from a foreign supplier and the VAT is payable by the Bulgarian recipient.
This is known as the reverse charge mechanism.
Such situations may arise when using:
- Google Ads
- Meta Ads
- Software subscriptions
- SaaS platforms
- Cloud services
- Hosting services
- Marketing services
- Consulting and professional services
It is important to note that, when receiving such services, the supplier does not necessarily have to be established within the European Union.
The decisive factors are the type of service, the place of supply and the rules determining who is liable to account for and pay the VAT.
Example: Google Ads
A small company that is not registered for VAT under the standard regime starts using Google Ads.
If the service falls under a regime where VAT is payable by the Bulgarian recipient, an obligation to register under Article 97a may arise.
The amount of the advertising budget is not decisive.
It does not matter whether the business spends:
- EUR 50
- EUR 500
- EUR 5,000
If the legal conditions are met, the registration obligation may arise regardless of the amount.
When does the obligation arise when providing services to EU clients?
Registration under Article 97a may also be required when a Bulgarian person or business provides certain services to a taxable client established in another EU Member State.
This is particularly common for:
- Programmers and IT specialists
- Web developers
- Designers
- Marketing specialists
- Consultants
- Copywriters
- Other self-employed professionals
For example, a Bulgarian company may develop a website for a business established in Germany, France, Italy or another EU Member State.
If the client is a taxable person and the requirements of the Bulgarian VAT Act are met, an obligation to register under Article 97a may arise.
In such cases, additional reporting obligations may also apply, including the submission of a VIES declaration.
Is there a minimum turnover threshold?
No.
This is one of the most important differences between registration under Article 97a and standard VAT registration.
Under Article 97a, the principle is not:
“I will register once I reach a certain turnover.”
The obligation arises when the relevant legal conditions are met, regardless of the value of the service.
This means that even a business with a relatively low turnover may be required to register.
Do Google Ads, Meta Ads and software services create a risk?
Yes, and this is exactly where many practical issues arise.
A large number of small business owners pay for advertising or online services using a company card without informing their accountant.
This can result in a situation where the registration obligation has already arisen but is only discovered months later.
Particular attention should be paid to services supplied by:
- Meta
- Microsoft
- Adobe
- Hosting providers
- SaaS platforms
- Cloud service providers
- Marketing platforms and tools
Practical tip: Every new software subscription or service purchased from a foreign company should be reviewed by an accountant before or immediately after activation.
What is the registration deadline?
The deadline is one of the most important aspects of Article 97a.
When receiving services for which VAT is payable by the recipient, the application for registration must be submitted within the statutory deadline.
In certain cases, this means that registration must take place no later than 7 days before the date on which the VAT becomes chargeable.
This is one of the reasons why late registrations are so common.
Many businesses become aware of the obligation only after they have already:
- Paid for the service
- Received the invoice
- Used the service for several months
What changes after registration?
Registration under Article 97a creates specific obligations under the Bulgarian VAT Act.
Depending on the business activity, these may include:
- Monthly submission of VAT returns
- Submission of VAT ledgers and reporting registers
- Self-assessment of VAT through a protocol
- Payment of the assessed VAT
- Submission of VIES declarations for certain services supplied within the EU
These obligations continue after registration and should not be ignored, even during months with limited activity.
Do you have to charge VAT to Bulgarian clients?
Not automatically.
This is one of the most common misconceptions.
Registration solely under Article 97a does not automatically mean that the business must start adding 20% VAT to all invoices issued to Bulgarian clients.
This is a key difference compared to full VAT registration.
It is therefore important to distinguish between:
- Registration only under Article 97a
- Full VAT registration
Is there a right to deduct input VAT?
Where a person is registered solely under Article 97a, the right to deduct input VAT is limited.
This can have a real financial impact.
For example, if a business receives services from abroad and is required to self-assess VAT, that VAT may, in certain circumstances, remain an actual cost for the business.
For this reason, businesses with a significant volume of foreign services should consider whether limited registration under Article 97a is sufficient or whether another form of VAT registration may be more appropriate.
Example: a Bulgarian company uses foreign software
Assume that a Bulgarian company is not registered under the standard VAT regime and pays a monthly subscription for software supplied by a foreign company.
If the place of supply is Bulgaria and VAT is payable by the recipient, an obligation to register under Article 97a may arise.
Following registration, the company must report the service and account for the relevant VAT in accordance with the Bulgarian VAT Act.
The amount of the subscription alone does not exempt the business from the obligation.
Example: a Bulgarian company works with a German client
Another common situation is a Bulgarian company providing IT or consulting services to a German business.
If the client is a taxable person and the conditions for the place of supply to be in Germany are met, registration under Article 97a may be required.
In such cases, it may also be necessary to:
- Verify the client’s VAT number
- Issue the invoice correctly
- Use the correct legal basis for not charging Bulgarian VAT
- Submit a VIES declaration
The most common mistakes under Article 97a
In practice, problems often arise not from complex transactions, but from ordinary day-to-day activities that are overlooked.
Some of the most common mistakes include:
- Using Google Ads or Meta Ads without registration
- Paying for foreign software without informing the accountant
- Registering too late
- Failing to submit monthly VAT returns
- Failing to submit VIES declarations
- Incorrectly issued invoices to EU clients
- Incorrectly charged or uncharged VAT
- Assuming that a low-value service does not trigger a registration obligation
What are the risks of late registration?
Late registration may be identified retroactively.
This can result in:
- Additional VAT liabilities for past periods
- Interest
- Administrative penalties
- Corrections to previously submitted documents
- Additional accounting costs
The longer the obligation remains unidentified, the more complicated the correction process may become.
Article 97a after the introduction of the euro
Following the introduction of the euro in Bulgaria from 1 January 2026, the regime under Article 97a continues to apply.
The main rules remain in force, but accounting and reporting are now carried out in euros.
For businesses, this means a need for:
- Accurate accounting in euros
- Updated accounting systems
- Correct processing of foreign invoices
- Better monitoring of international services
The transition to the euro does not create a new ground for registration, but it increases the importance of accurate accounting administration.
Article 97a or full VAT registration?
There is no universal answer.
If the conditions under Article 97a are already met, registration is mandatory.
A separate question is whether, for a particular business, full VAT registration may be more appropriate from a financial and tax perspective.
This may be particularly relevant for businesses that:
- Have significant expenses with VAT
- Use a large number of foreign software services
- Spend substantial amounts on advertising
- Work mainly with other VAT-registered companies
- Carry out significant international activity
In such cases, a specific financial and tax analysis is recommended.
5 red flags according to “Experta”
Pay particular attention if:
- You pay for Google Ads, Meta Ads or SaaS services but have never discussed Article 97a with your accountant
- You work with EU companies but do not verify their VAT numbers
- You do not know whether VIES declarations are being submitted
- You receive foreign invoices but do not regularly provide them to your accountant
- You registered under Article 97a only after using such services for several months
These situations do not automatically mean that a violation has occurred, but they are a clear reason to review the specific circumstances.
What does “Experta” recommend?
Before starting to use a new service from a foreign supplier or working with an EU client:
- Check who the supplier is and where it is established
- Determine whether the service falls within the scope of Article 97a
- Inform your accountant before the first payment
- Verify the VAT numbers of your EU clients
- Monitor registration and reporting deadlines
- Do not rely on the value of the transaction as the deciding factor
Do not underestimate registration under Article 97a
Registration under Article 97a is not merely a formality and does not apply only to large companies.
It may arise from the very first foreign software subscription, advertising campaign or service supplied to an EU-based client.
Correct assessment from the outset can help prevent late registration, additional VAT liabilities, interest and administrative penalties.
“Experta” provides professional accounting and tax services, including assistance with VAT registration, international services and cases involving Article 97a.
Contact us for more information or book a consultation.