From 28 December 2018, Bulgarian tax legislation introduced new requirements for sales management software, the producers thereof, and merchants who use such software in their business.
The new requirements apply to sales management software understood as software or a module thereof, irrespective of the underlying technology, used to process information about the sales of goods and/or provision of services in sales outlets, where the issue of a cash receipt for the payment is required. In practice, this covers all sales outlets which accept payments in cash, with bank cards or vouchers.
Who do the new requirements apply to, and why?
It is also clarified that “sales management” using sales management software constitutes the automated processing of information about the sales of goods or services, which comprises tracking the movement of goods or execution of services from their order until provided and/or paid for. Additionally, to determine whether software used by a company is sales management software subject to the new requirements, the Bulgarian National Revenue Agency (NRA) has prepared a self-assessment questionnaire.
The new requirements aim to combat tax fraud and tax evasion and ensure that a cash receipt is issued and information is transmitted to the NRA for every sale recorded in the software. Many companies currently use sales management software, but the software is either not connected to the cash registers, or allows the cash registers to be manipulated so sales are not recorded, duly documented and reported to the NRA.
Requirements for sales management software
Sales management software must be connected to the cash registers installed by the merchant and must control them. All sales management software must meet a number of requirements, including, for example:
- supporting an interface in Bulgarian;
- having built-in protection against change or the addition of external modules allowing a modification of the software’s functionality aimed at circumventing the requirements;
- built-in controls for the mandatory input of data for users and their unique authentication;
- ensuring that each sale processed through the software is closed with the issue of a cash receipt, etc.
The deadline for making sales management software compliant is 31 March 2019.
Requirements for sales management software producers/distributors
Persons established in the EU who produce and/or distribute sales management software in Bulgaria have the following obligations:
a) Filing a compliance declaration
A compliance declaration form must be submitted to the NRA with the following information:
- name and version of the sales management software;
- declaration that the software complies with the new requirements;
- declaration that the software does not comprise modules allowing the circumvention of the new rules;
- declaration that they do not produce or distribute software aimed at changing the software functions in a way that circumvents the new requirements, or which otherwise change, erase or manipulate the information in the software database.
If the sales management software is produced by a person established in an EU Member State other than Bulgaria, the compliance declaration is filed either by the producer or by an authorised distributor of the software for Bulgaria.
The declaration form is filed electronically through the e-portal of the NRA by 31 March 2019.
b) Providing information about the sales management software
Together with the compliance declaration, the producer/distributor of the sales management software must provide the following information about the software:
- information about the modules of the software and their functionalities; technological and system environment where the software operates; how the software is provided to clients (e.g. as a SaaS, web-based, local installation, etc.); type of database; encryption algorithm; authentication of users; etc.;
- manual for working with the sales management software;
- for software which is installed in the client’s environment – description of the objects in the database related to the sales management, relations between them, description of the cells in the tables as well as an exe. file and the source code generating the exe. file for accessing and extracting data from the database in a structured and readable format;
- for Software as a service (SaaS) – description of the service functionality; technical channels for communication between the cloud service and the cash registers; communication ports; description of the local components installed in the client’s environment; physical location of the database.
If any of the declared circumstances change, the producer/distributor must inform the NRA of the change within seven days.
The sales management software is then included on a public list of the software programmes which comply with the new legal requirements.
c) Obligation to cooperate with the NRA
The sales management software database must be stored in an EU Member State and, upon request, the producer/distributor must cooperate with the NRA by providing information on and/or access to the database.
Requirements for merchants using sales management software
Merchants using sales management software are required to:
- only use software which meets the legal requirements and is included on the public list of compliant software – in this regard, a declaration form on the sales management software used by the merchant must be filed by 31 May 2019;
- make sure that the sales management software manages all cash registers in their sales outlets;
- store the database of the software in Bulgaria or in another EU Member State;
- when the sales management software operation involves receiving or transmitting information from/to other software or modules – the information generated through such software or modules must be stored for the periods set for storing tax information (i.e. ten years) and access to it should be granted to the NRA with a right to read and export data;
- insert the names of each user (operator) of the sales management software according to the employment agreement with the users, their assigned role and the activation period for the assigned role.
In addition, certain new requirements are introduced for cash registers and the content of cash receipts. All producers of cash registers and the merchants using the cash registers must comply with these new requirements by 31 March 2019, which may require upgrading existing or buying new cash registers.
If you would like to know more about the new requirements for sales management software or other taxation issues in Bulgaria, please visit the homepage of Delchev & Partners Law Firm, the exclusive representative of WTS Global in Bulgaria.