Parliament backed at first reading changes to the VAT law put forward by the cabinet. The threshold for compulsory VAT registration will rise in three steps: to €60,000 in 2027, €70,000 in 2028 and €75,000 in 2029.
The cabinet approved the text on Wednesday, 4 November. On Tuesday the budget committee backed it with 13 votes in favour, 6 abstentions and none against.
Earlier on this story: Budget committee backs VAT threshold rise in stages to €75,000 by 2029
In the chamber, the bill got 122 votes in favour, all from Progressive Bulgaria. Against were 49 MPs from GERB-SDS, DPS, the Vazrazhdane group, five from Democratic Bulgaria and two from We Continue the Change. Eighteen MPs abstained: 11 from DB and seven from PP.
From 2028, VAT-registered firms will have to issue e-invoices for domestic sales and report them in real time. The invoices will go through a national portal run by the National Revenue Agency (NRA). The change is part of Bulgaria's alignment with the EU's "VAT in the Digital Age" package. It requires member states to bring in e-invoices for cross-border sales from 1 July 2030.
Deputy finance minister Lyudmila Petkova said VAT would be tracked in real time, deals would be watched digitally, and fraud and errors in returns would fall. She said firms would have less paperwork and the budget would collect more revenue.
The higher threshold should ease the load on micro, small and new firms and create better conditions for business start-ups, Petkova said. The €85,000 ceiling, the highest the EU allows, was not chosen because of the characteristics of the Bulgarian economy. Firms with turnover below the threshold will be able to choose to apply the general VAT regime.
The changes also make registration compulsory for deals in new-build property, including for private individuals. Temenuzhka Petkova of GERB-SDS gave the example of a person who buys two flats off plan and then sells them. Her group rejects this, because she says it restricts enterprising people and will push up property prices. Temenuzhka Petkova called e-invoicing commendable, since an EU directive requires it, and added that the fight against oligarchy is being waged on every possible front.
"There will be no duty to register in advance for private individuals who make one or two property deals," Milen Trifonov of Progressive Bulgaria replied. Registration becomes compulsory from the third deal in one calendar year, he said. Trifonov called e-invoices a bold step by the finance ministry.
In all, MPs discussed five bills to change the law. The four put forward by MPs from various groups were rejected.
Martin Dimitrov (DB) proposed a threshold of €85,000 and a daily turnover limit of €232 for people who do not want to register. He said this would free about 400 small firms from registration, and that nine EU states already have a higher threshold. He named Romania, which sharply raised its threshold in its worst crisis, and Italy, and said Bulgaria is starting to fall behind. The proposal got 40 votes in favour, 7 against and 131 abstentions.
Dimo Drenchev of Vazrazhdane wanted a threshold of €85,000, because he says it is time to cut regulation. For this proposal 39 MPs voted, none was against and 146 abstained.
Drenchev and Petar Petrov wanted a zero VAT rate, but only for a time, on the food and drinks in the National Statistical Institute's small consumer basket, including cooking oil, beans and sugar. They cited urgent help for the poorest, about 29% of Bulgarian citizens, lower inflation and the fight against social inequality. The result was 13 in favour, 5 against and 169 abstentions.
Tsoncho Ganev of Vazrazhdane proposed a cap on fuel prices and a temporary 9% VAT rate on motor fuels, excluding methane and aviation fuel, for 12 months. After that, the standard rate would return automatically, with no vote in parliament. The aim was to soften the effect of dearer fuel on consumer prices. Eleven MPs voted in favour, 10 against and 170 abstained.
Konstantin Prodanov, chair of the budget committee, said the finance ministry does not back the MPs' proposals because of the risk of tax fraud and lower budget revenue.
Asen Vasilev (PP) called the higher threshold a good step, but said it could go up to €85,000, the level it was between January and March 2025 before it was cut. He said the finance ministry has heard an argument about obstruction from the EU. Vasilev wants this to happen between the first and second readings.
"I propose that between the two readings it be raised to €85,000 so that small business is freed from dealing with accountants every month," Vasilev said.