Amendments to the Value Added Tax Act (VAT Act) regarding Consortiums are in force as of the 1st of January 2017. The amendments mainly focus on the rules regulating the right of tax deduction for Consortiums, established under the Obligations and Contracts Act. The amendments create a new Article 10a.
This new provision is specifically designed for Consortiums and concerns the hypothesis of the import of goods by a partner in the Consortium. As Consortiums are established as unincorporated companies, they have no rights and obligations under the VAT Act. However, rights and obligations arise for the partner who imports goods into the Consortium. The amendments allow for the partner to deduct VAT tax paid for the goods and make corrections to the VAT tax credit. The coefficient under Article 37 of the VAT Act is applied, calculated on the base of the Consortium’s turnover for the year correction applies.The VAT registration rules for Consortiums are also changed. If one of the partners in the Consortium is already VAT registered, the Consortium is obliged to register under Article 132 of the VAT Act. The registration is to be made within 14 days of the establishment of the Consortium. Consortiums, that correspond to these requirements, but are registered before the Amendments came into force, are obliged to register by the end of January 2017.
The news above is intended for information purposes only. It should not be construed as (binding) legal advice. For a thorough understanding of the subjects covered and prior acting on any issue discussed we kindly recommend Readers consult Ilieva, Voutcheva & Co. Law Firm attorneys at law. We would be glad to advise on any and all VAT issues you may have as well as on regulation of consortiums as per Bulgarian legislation in force.Please feel free to circulate the newsletter.To be added to or removed from the newsletter mailing list please send an e-mail to: firstname.lastname@example.org.