As of 01.01.2026, several significant amendments to the Value Added Tax Act (VAT Act) were adopted in Bulgaria. Amongst others one of these concerns the supply of goods with assembly and installation. These amendments change the tax treatment of such supplies when they are carried out on the territory of the country, as well as on the territory of the Member States.
In brief these changes are as follows:
- The main rule is that for the supply of goods with assembly and installation, the place of supply is in the state where the assembly is performed, and the supply is taxed there, according to the rules of the respective state.
- In Bulgaria, the reverse charge mechanism for such supplies has been abolished, which means that the supplier of the service is obliged to charge the tax.
- For Bulgarian companies that assemble and install in EU countries, these supplies are not considered Intra-Community Supplies (ICS). Instead, they are treated as supplies with a place of supply outside the territory of the country, and therefore, no Bulgarian VAT is charged.
- It is necessary to determine the tax treatment of these supplies in each Member State where the assembly and installation take place. This is because in some countries, taxation is applied through the reverse charge mechanism, while in others, the supplier is liable for the tax, which requires the supplier to register for VAT in that state. Invoices must be issued according to the rules of the relevant legislation.
Therefore, we advise our clients to contact local tax lawyers in the respective country where they provide such services. This will allow them to obtain clarity on the local procedure for taxing these supplies and to determine whether mandatory VAT registration is required in the country where the installation takes place.
For supplies carried out on the territory of Bulgaria, you can rely on Ilieva, Voutcheva & Co. Law Firm for assistance and clarification.
The article above is for information purposes only. It is not a (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.
