An important part of the registration of a natural or legal person who carries out commercial activity, which is often overlooked, is the special registration under Article 97a of the VAT Act. It is a common rule that if the turnover reaches 50 thousand BGN for the last 12 months or a period not longer than 2 months, an application for registration should be submitted within 7 days.
But very often the obligation to register under Article 97a of the VAT Act is overlooked, which is different from the standard registration when turnover is reached or voluntarily.
Persons, irrespective of their turnover, subject to compulsory registration under Article 97a of the VAT Act are the ones who:
- receive services with a place of supply in the territory of the country, which are taxable and for which the tax is chargeable by the recipient under Article 82, para 2 of the VAT Act (these are, for example, people who receive a software development service from a company); or
- are established in the territory of the country and supplies services referred to in Article 21, para 2 of the VAT Act with a place of supply in the territory of another Member State (these are, for example, those who provide software development services for a client located in another Member State)..
The time limits for registration under this procedure are also different:
Persons should submit an application for registration 7 days before the date on which the tax for the supply becomes chargeable.
This means that if a person in our country, by occupation, develops software for customers who are in another Member State, 7 days before handing over his product to the first customer, he should apply for registration under the order of art. 97a of the VAT Act.
There are differences with the standard VAT registration in determining the tax base. In cases where a person receives services for which he should register under Article 97a of the VAT Act, the first service should be taxed. In the case of standard registration, supplies up to the turnover for registration are not subject to VAT.
If you have registered as a recipient of services with place of performance within the territory of the country for which the tax is chargeable by the recipient (under Art. 97a, para 1 of the VAT Act):
- you are also deemed to be registered as a person supplying services with a place of supply within the territory of another Member State (under Article 97a, para 2 of the VAT Act);
- you are obliged to register under the general procedure (Art. 96, 97, 98 or 99 of the VAT Act);
- you have the right to register by choice (under Article 100 of the VAT Act).