Supplies with a place of transaction outside Bulgaria
For the purposes of verifying transportation and the place of performance of the transaction, the company shall have supporting transportation documents and contracts.
Question: We trade with Greece in goods which are imported from China. Our Greek partners propose that we import the goods in Greece in their name, at their port, and that they pay the relevant customs duty and VAT rate in their name. Is that possible? What would the consequences be for us? What documents do we have to issue and how do we include them in the accounting records?In what way would such sale be recorded on our part? Is this a case of Intra-European Union supply according to the VAT Act?
Answer: A definition of Intra-European Union supply is provided in Article 7, paragraph 1, of the Value Added Tax Act (VATA): “Intra-European Union supply of goods” shall be any supply of goods, transported by or for the account of the supplier who is a person registered under this Act, or of the recipient from the territory of the country to the territory of another Member State, where the recipient is a taxable person or a non-taxable legal person registered for VAT purposes in another Member State.”
In this case, the supply is not from the territory of Bulgaria to the territory of Greece.Therefore, this is not a case of Intra-European Union supply. This supply is not Intra-European Union supply for the Greek company either because the goods are not dispatched or transported to the territory of the country to the territory of another European Union member state.
In case of supply of goods, the place of transaction is determined pursuant to the provisions of Article 17 of the VATA. Paragraph 2 of this article stipulates that the place of supply of goods which are dispatched or transported either by the supplier or by the recipient or by a third person shall be the place where the goods are at the time when dispatch or transport to the recipient begins.
In this case is very important who will pay the transport and where the goods will be transferred to the buyer. THE TRANSPORT MUST BE PAYED BY THE GREEK COMPANY.
Therefore, in the case described above, the place of transaction of the supply is outside Bulgaria. On the grounds of Article 86, paragraph 3, of the VATA, no tax shall be charged. It must be specified in the invoice that the place of transaction is outside the territory of the country.
For the purposes of verifying transportation and the place of performance of the transaction, the company shall have supporting transportation documents and contracts.
The accounting of the invoices does not differ from the acquisition and sales on the territory of the country. There are differences regarding the declaration of the documents in the VATA journals. The invoices issued for supplies with a place of transaction outside the territory of the country must be reflected in column 23 – turnover tax of supplies, pursuant to the provisions of Article 62, paragraph 2, of VATA, including turnover tax of supplies in conditions of distance sales with a place of transaction on the territory of another member state, from the sales journal for the taxation period during which they were issued.
The invoice which is issued by the supplier form China must not be specified in the acquisition journal because it is taxation document within the meaning of Article 112 of VATA.