More and more Bulgarian companies are offering services to clients abroad — consulting, marketing, IT, design. Here a key question arises: do you have to charge VAT, or is the transaction tax-free? The answer depends on several rules that are important to know.
In this manual, an accounting firm Rodi Consult (Varna) explains when VAT is due on services to foreign clients — updated for 2026.
In short: Taxability depends on the place of performance, which is determined by the status of the customer. To taxable person (company) abroad - without VAT, with reverse charge (Art. 21, para. 2). To non-taxable person (individual) — with 20% VAT in Bulgaria (Art. 21, para. 1).
Place of performance — the key concept
„The "place of performance" indicates in which country VAT is due. Taxable in Bulgaria are: only services with a place of performance on its territory. The rules are in Art. 21–24 of the VAT Act, and the main criterion is the status of the recipient.
The two basic rules
- To a taxable person (B2B) — the place of performance is the country of the recipient (Art. 21, para. 2). The Bulgarian company does not charge VAT; reverse charge is applied and the client self-assesses the tax.
- To a non-taxable person (B2C) — the place of performance is the country of the supplier (Art. 21, para. 1). That is, the Bulgarian company charges 20% VAT.
Example 1: marketing service for €10,000 to a German company with a valid VAT number → excluding VAT (Art. 21, para. 2). Example 2: the same service to a Greek individual without VAT registration → 20% VAT (Art. 21, para. 1).
How is the client's status proven?
To treat the client as a taxable person, you need proof (under Regulation 282/2011):
- Customer in the EU — a valid VAT number that you check in VIES;
- Non-EU customer — certificate from the tax authority for business activity or tax/similar number.
If you receive services from foreign suppliers, the opposite applies - you self-assess VAT with a protocol under Art. 117; more in the article about VAT registration.
Documentation
You issue an invoice. without tax amount and rate, with the text "reverse charge" and the reason "Art. 21, para. 2 of the VAT Act". For customers in the EU with a valid VAT number, you also submit VIES declaration (the invoice — in column 22 of the sales journal). For customers outside the EU — column 23, without VIES.
FAQ
Do I have to charge VAT on a service to a foreign company?
Usually not. In the case of a service to a taxable person (company) established in another country, the place of performance is at the recipient's and reverse charge applies (Art. 21, para. 2 of the VAT Act). You issue an invoice without VAT charged, and the client charges the tax himself.
What about a service to a foreign individual?
Yes. In the case of a non-taxable person (usually an individual without VAT registration), the place of performance is with the supplier — in Bulgaria — and 20% VAT is charged on the value of the service (Art. 21, para. 1 of the VAT Act).
How do I prove the status of the foreign client?
For a client in the EU, a valid VAT number is sufficient (verifiable in VIES). For a client outside the EU, a certificate from the competent tax authority that the person is carrying out a business activity, or their tax/similar identification number.
What is written on an invoice to a foreign company?
The invoice does not indicate the amount of tax and the tax rate. It states „reverse charge“ and the reason is Art. 21, para. 2 of the VAT Act. This way, the customer understands that he/she should charge VAT in his/her own country.
When do I submit a VIES declaration?
When the customer is a taxable person in an EU member state with a valid VAT number. Then, together with the reference-declaration, you also submit a VIES declaration, and the invoice is reflected in column 22 of the sales journal. For customers outside the EU, VIES is not submitted (column 23).
The conclusion
The rule is simple at first glance — a company abroad usually means VAT-free, an individual means VAT-included — but the details (proof of status, VIES, specific services such as real estate and transport) hide risks. An error leads to under- or over-taxation.
Do you work with clients abroad? Explore Rodi Consult accounting services or is contact us. Phone: +359 893 474 576.
This article is for informational purposes only and does not constitute tax advice. Please consult an accountant for your specific situation. Specific services (property, transportation, events) have separate rules.
