Article 97a VAT registration in Bulgaria: working with EU clients and platforms
· 8 min read · The Danak team
Article 97a VAT registration (регистрация по чл. 97а ЗДДС) is a separate type of VAT registration that arises when working with certain services from and to the European Union. Unlike general VAT registration, which has a threshold of 51,130 €, Article 97a registration has no threshold and the obligation arises before the service itself. This is a common question for freelancers working through platforms like Upwork and Fiverr, or for people who pay for advertising on Facebook and Google.
When the obligation for Article 97a registration arises
The obligation for registration arises in two cases.
You receive services from the EU. When you are a taxable person and receive services with a place of performance in Bulgaria for which the tax is chargeable from you as the recipient (Art. 97a(1) of the VAT Act, чл. 97а, ал. 1 ЗДДС). These are services under Art. 82(2) of the VAT Act (чл. 82, ал. 2 ЗДДС). Typical examples: advertising on Facebook and Google Ads, software subscriptions from foreign suppliers, commissions from platforms like Upwork, Fiverr, Freelancer and others. With these services the supplier is from the EU, but the place of performance of the service is in Bulgaria because you are the recipient.
You provide services to the EU. When you provide services under Art. 21(2) of the VAT Act (чл. 21, ал. 2 ЗДДС) with a place of performance in the territory of another member state, for which the tax on the supply is due from the recipient — a taxable person or a non-taxable legal person registered for VAT purposes in that member state (Art. 97a(2) of the VAT Act, чл. 97а, ал. 2 ЗДДС). This is the case when you provide services to companies from Europe and the place of performance of the service is in the recipient's state.
A taxable person under the VAT Act (ЗДДС) is any natural person who carries out independent economic activity, regardless of its purposes and results (Art. 3 of the VAT Act, чл. 3 ЗДДС). The exercise of a liberal profession is considered independent economic activity, so the obligation arises from the start of the activity, not after registration with the National Revenue Agency (НАП).
If you already have VAT registration on another basis (Art. 96, 97, 99, Art. 100(1) and (2), Art. 102, 132, 132a or 133 of the VAT Act — чл. 96, 97, 99, чл. 100, ал. 1 и 2, чл. 102, 132, 132а или 133 ЗДДС), you are deemed to be registered on the basis of Article 97a as well. You do not submit a separate application.
Why there is no threshold and what the deadline is
This is the main difference from registration upon exceeding turnover. Article 96 VAT registration (чл. 96 ЗДДС) arises when taxable supplies for the last 12 months exceed 51,130 €. With Article 97a registration there is no such threshold. The obligation arises with the first received or provided service of the described type, regardless of the amount.
The deadline for submitting an application for registration is no later than 7 days before the date on which the tax for the supply becomes chargeable. This means: before the service itself. If you are going to receive a commission from Upwork, you must be registered 7 days before receiving it. If you are going to issue an invoice to a company from another member state, you must be registered 7 days before the date on which the tax becomes chargeable.
Article 97a registration is performed by the revenue authority within 3 days of submitting the application. The application is submitted at the competent territorial directorate of the NRA (НАП) in person, electronically with a qualified electronic signature, or through the Registry Agency (Агенция по вписванията) upon initial registration.
What must be filed after registration
Once you are registered under Article 97a, you file a VAT return-declaration (справка-декларация по ДДС) every month by the 14th of the following month. This is the same deadline as for all other persons registered for VAT.
When you provide services with a place of performance in the territory of another member state (Art. 97a(2) of the VAT Act, чл. 97а, ал. 2 ЗДДС), a VIES declaration in the prescribed form (Appendix No. 14, Приложение № 14) is submitted together with the return-declaration. The VIES declaration reflects intra-Community supplies of services. Danak prepares the return-declaration, sales ledger and VIES declaration for persons registered for VAT. Filing remains with you.
The VAT return-declaration and accounting registers are submitted electronically through the NRA (НАП) portal.
Why there is no right to tax credit
A person registered only on the basis of Article 97a has no right to tax credit. This is a fundamental difference from general registration under Article 96 of the VAT Act (чл. 96 ЗДДС). Tax credit is the right to deduct VAT paid to suppliers from the amounts you owe to the NRA (НАП).
Persons registered only under Article 97a do not charge VAT on their invoices to Bulgarian clients. They have no right to indicate the tax in invoices and notices to invoices they issue. You charge VAT only on invoices to recipients from the EU when the place of performance of the service is in Bulgaria — and then as a recipient of the service, not as a supplier.
In other words: if you are registered only under Article 97a, you are not "a VAT company" in the usual sense. You work without VAT charged in your prices to Bulgarian clients and you do not get VAT back from your expenses.
A common surprise when working through platforms
Many freelancers working through Upwork, Fiverr, Freelancer and other platforms learn about Article 97a of the VAT Act (чл. 97а ЗДДС) after they have received income for several months. Here is why:
When the platform withholds a commission (for example 10% of the project amount), this is a service provided by a person from the EU with a place of performance in Bulgaria. The tax is chargeable from you as the recipient. The obligation for registration arises before receiving the first such service.
The same applies if you pay for advertising on Facebook, Google or another platform from the EU: the obligation arises before the first payment.
When providing services to companies from the EU — for example as a consultant or developer — registration must be performed before issuing the first invoice, regardless of the size of the project.
What to do
If you work with platforms from the EU, receive services from suppliers from Europe or provide services to companies from the EU, first check whether you are a taxable person under the VAT Act (ЗДДС). If you carry out independent economic activity (including a liberal profession), the answer is "yes".
Then determine when the first supply will arise. Registration must be submitted no later than 7 days before the date on which the tax for the supply becomes chargeable. If you are not sure when exactly that is, ask an accountant, because delay leads to penalties.
The application for registration is submitted at the competent territorial directorate of the NRA (НАП). The NRA has 3 days to perform the registration. After that, every month by the 14th you file a VAT return-declaration, and when providing services to the EU — also a VIES declaration.
Danak tracks your income, calculates your taxes and contributions and prepares the VAT declarations for registered persons, including the VIES declaration. The app:calculator is free and shows what you owe by month. Filing the declarations and verifying the amounts remain with you. For a specific case, ask a licensed accountant.
Frequently asked questions
What is the difference between Article 96 and Article 97a VAT registration?
Article 96 registration arises upon exceeding turnover of 51,130 € for the last 12 months and gives the right to tax credit. Article 97a registration has no threshold, arises before the first service from and to the EU, and does not give the right to tax credit. With Article 96 registration you charge VAT on all invoices to Bulgarian clients; with Article 97a you do not.
Must I register under Article 97a if I work through Upwork?
Yes, if Upwork withholds a commission from your projects. The commission is a service provided by a person from the EU with a place of performance in Bulgaria, and the tax is chargeable from you. The obligation arises before receiving the first such service, regardless of the size of the commission. The same applies to Fiverr, Freelancer and other platforms from the EU.
What declaration is filed after Article 97a registration?
You file a VAT return-declaration every month by the 14th of the following month. If you provide services to companies from the EU, you file a VIES declaration in the prescribed form (Appendix No. 14) together with it. Both are filed electronically through the NRA portal. Danak prepares the return-declaration, sales ledger and VIES declaration for persons registered for VAT.
What does "no right to tax credit" mean?
That you cannot deduct VAT paid to your suppliers from the amounts you owe to the NRA. If you buy a service with VAT charged, you cannot deduct the tax paid from your liabilities. Persons registered only under Article 97a work without VAT charged in their prices to Bulgarian clients and do not get VAT back from their expenses.
What is the deadline for Article 97a VAT registration?
No later than 7 days before the date on which the tax for the supply becomes chargeable. This means: before the service itself. If you are going to receive a commission from a platform, you must be registered 7 days before receiving it. The NRA has 3 days to perform the registration after submitting the application, so submit the application in advance.