KPMG Bulgaria Tax News presents a summary of recently promulgated amendments to the tax legislation effective from 1 July 2022

In the current issue of Tax News we summarize the most significant changes to the tax legislation enacted with the State Budget Act for 2022 promulgated in State Gazette Issue No 52 dated 5 July 2022. 

The changes enter into force from 1 July 2022, except for certain provisions which have a different entry-into-force date.

Changes in VAT legislation 

  • Supply of bread and flour, including their importation and intraCommunity acquisition, will be taxed with zero VAT rate until 1 July 2023. Definition of the terms "bread" and "flour" is provided for VAT purposes. 
  • Supply of central heating and natural gas, including their importation and intra-Community acquisition, will be subject to the reduced VAT rate of 9% until 1 July 2023. 
  • The deadline for application of the reverse charge scheme for local supplies, such as scrap and cereals, is extended until 31 December 2026.

Changes in personal income tax legislation

  • The amount that can be deducted from the annual tax bases in relation to the children tax relief under the Personal Income Tax Act for 2022 is increased as follows: 
    • for one child – from BGN 4,500 to BGN 6,000; 
    • for two children – from BGN 9,000 to BGN 12,000; 
    • for three and more children – from BGN 13,500 to BGN 18,000; 
    • for children with disabilities – from BGN 9,000 BGN to BGN 12,000 yearly. 
  • A possibility and approach for advance utilization of the tax relief during year 2022 is introduced. 
  • The amount of the statutory deduction for lawyers is increased from 25% to 40% and the change will enter into force from 1 January 2023.

Changes in excise duties legislation

  • Zero excise duty rate is introduced until 20 June 2025 for the following products: 
    • natural gas and liquified petroleum gas used as motor fuels 
    • heat energy 
    • energy products used for the combined production of heat energy and electricity 
    • electricity produced from: (a) solar, wind, wave, tidal or geothermal energy (b) hydraulic or in hydroelectric installations (c) biomass or from products produced from biomass (d) methane released in abandoned coal mines and (e) fuel cells. 
  • The deadline and procedure for requesting reimbursement of excise duty, paid for electricity used by railway carriers and transport operators, is stipulated. 
  • The information maintained in the Customs Agency register of authorized warehouse keepers and the tax warehouses, is specified.

Fuel compensation

  • The procedure for granting the compensation of BGN 0.25 per liter or kilogram of fuel to individuals is introduced, specifying the types of fuels and the types of motor vehicles to which the compensation applies. 
  • The compensation is granted in the form of a discount from the sales price of the respective fuel. 
  • Final distributors who provide the compensation must document, report, and declare the provided subsidy under special rules.



Vesselina Stankova
Associate Partner, Tax
Tel: +359 (2) 9697 700 

Desislava Ilieva
Senior manager, Tax
Tel: +359 (2) 9697 700