How to benefit from tax relief via VAT registration?
VAT is one of the most recognizable taxes that we encounter on a daily basis, whether we are a trader or just a consumer. VAT stands for Value Added Tax and its expression is always, in most cases, 20% on the net value of the product. From a consumer point of view, we can find the charged value of VAT in any receipt or invoice marked before the final price. In reality, all of us as consumers are the main taxpayers, thus providing a part of the stated budget. From the trader's side, VAT requires strict compliance with multiple VAT registration procedures and subsequent monthly declarations and annual reports. The consumer pays the indirect tax, but the traders are the ones who report it to the state.
What are the benefits of VAT registration?
VAT registration is a process that allows the buyer to recover the indirect tax they have paid if the purchase they make is subject to a subsequent resale. Companies that have VAT registration have the opportunity to expand their business, making more profit. This is done by passing on only the difference between the VAT they paid in advance and the VAT charged on the new sales price to the end user. The law allows VAT-registered companies to take advantage of such tax relief, but this requires monthly reporting.
In order to benefit from the right to a VAT refund, entrepreneurs must not only have a VAT registration, but also account for this process for the same tax period. This requires detailed bookkeeping and a good knowledge of the laws and practices in order for VAT registered companies to take full advantage of the reliefs provided to them. On the other hand, the process provides full control over the invested funds, which is of utmost importance for the efficiency of any business, regardless of whether the company has a VAT registered or not.
Conditions for VAT registration
Generally speaking, companies are required to proceed with VAT registration in cases where the income from their activity for the last 12 months exceeds BGN 100,000. This is a mandatory condition for VAT registration of any company. This is a mandatory condition for VAT registration of any company. Another case of mandatory VAT registration is the execution of commercial transactions with counterparties from foreign countries. In similar situations of international trade relations within the borders of the European Union, counterparties submit special VIES declarations for tax reliefs, which contain the VAT registration number of the partners. Therefore, even in the presence of such international partnerships, VAT registration is a mandatory procedure. There are also cases where entrepreneurs are entitled to VAT registration when they officially start their business, but in these cases VAT registration is voluntary.
The VAT application for registration is submitted in person or through a person authorized according to legal requirements in some of the following ways:
- electronically through the NRA electronic service;
- in the competent territorial directorate/ office of the NRA of the person;
- The law allows VAT-registered companies to take advantage of such tax reliefs, but this requires monthly reporting.
It is important to comply with the deadlines for submitting VAT registration, which differ depending on the basis according to VAT. To ensure that the VAT registration process runs smoothly and to eliminate the risk of rejecting the VAT application for registration, it would be beneficial to seek advice from professionals who are well versed in VAT registration legal requirements and regulations. BulAdvice is an accredited accounting company that has a rich portfolio of services related to any administrative and accounting processes that are directly related to the company's responsibility to the relevant institutions. In addition to consulting services on VAT registration, we could fully delegate the processes of registration and regular reporting to an external accounting company.
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