As of July 1, 2020, with a change in the Value Added Tax Act (VAT), the introduction of a temporary differentiated VAT rate was adopted for some sectors that are most affected by the economic crisis in connection with COVID-19. The differentiated rate is part of the anti-crisis measures for temporary support of specific branches in the situation of coronavirus. The change applies to restaurant and catering services, books on physical and electronic media, baby food and baby hygiene materials. According to the adopted changes, the rate is introduced as of 01.07.2020 and will continue until 31.12.2021 amendment of Article 66, paragraph 2 of the VAT Act, published with SG, issue 55 of 19.06.2020 of the VAT Act . 

  1. Restaurant and catering services -per VATA’s definition the restaurant and catering services means supply of food and drinks, accompanied by support services. These services consist in the supply of prepared or uncooked food or drinks, or both, for human consumption, accompanied by sufficient supporting services to enable them to be consumed directly. The delivery of food, beverages, or both, is a component of a whole in which services play a greater role, i.e. the supply of prepared or unprepared food or beverages or both, whether including transport but without any other support services, shall not be considered as restaurant service or catering service. 

Food supplies that will maintain a 20% VAT regime are: 

  • Ordinary delivery of prepared or unprepared food / home delivery from a restaurant or supermarket and deliveries without other support services
  • Sales of food and beverages from vending machines, minibar and hot display cases, caravans, cinemas; Sales of food and beverages with carts in vehicles during travel and from restaurants “drive in” 
  • Beer, wine and spirit drinks, as well as cocktails, including accompanying delivery, and others
  1. Other goods and services to which a differentiated rate of 9% VAT applies: 
  • infant formula and powdered cereals for babies or small children; 
  • homogenized vegetables, fruit and mixed purees for babies or young children in containers of a net content not exceeding 250 gr; 
  • baby diapers and similar baby hygiene items as defined in VATA 
  • textbooks, study sets, music editions, children’s drawing books, audio books with a cognitive nature, but not with audio-music content. These deliveries will remain with a 9% rate and in case of accompanying delivery according to art. 128 VAT (item of insignificant value). The differentiated rate is applied by providers who are different from the suppliers – institutions in the system of pre-school, school and higher education according to art. 41, item 3 of the VAT Act, where the supplies of such goods are exempt transactions. Publications, periodicals and newspapers remain subject to a 20% VAT rate. 

If you need additional information and/or assistance please do not hesitate to contact Ms. Vesela Valcheva, Senior Accountant in Eurofast Bulgaria, at sofia@eurofast.eu.

Eurofast is a regional business advisory organisation employing local advisers in over 23 cities in South East Europe & the Middle East (SEEME). The Organisation is uniquely positioned as one stop shop for investors and companies looking for professional services in South East Europe & the Middle East.

Vesela Valcheva
Senior Accountant
Eurofast Sofia
sofia@eurofast.eu

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