Tax relief for consumer energy products in Bulgaria

The measures aim to mitigate effects of the energy crisis

At the beginning of July 2022, in the wake of the energy crisis which caused the skyrocketing of fuel prices, the Bulgarian National Assembly adopted a number of tax measures affecting consumer energy products in Bulgaria. The tax relief measures were published in the Official Gazette of Bulgaria on 5 July 2022 as part of the Law amending and supplementing the Law on the State Budget of the Republic of Bulgaria for 2022. The new law aims to help mitigate the effects of inflation and to alleviate the drastic increase in energy prices. The provisions were accepted by the previous Parliament in its final hours before its adjournment and the new elections on 2 October, however, they still apply and are all intended to apply for the originally set limited periods of time. 

VAT rate on central heating and natural gas

The first group of the consumer energy products in Bulgaria which are affected by the new tax measures are central heating and natural gas. To both supplies, a reduced VAT rate of 9% applies from 9 July 2022 until 1 July 2023.

Excise on LPG, natural gas and electricity

Similarly, from 9 July 2022 excise tax has been abolished for the following consumer energy products in Bulgaria:

  • LPG (Liquefied Petroleum Gas) and natural gas used as motor fuels,
  • heat energy,
  • energy products used for the combined production of heat energy and electricity,
  • electricity under code CN 2716 produced from the following renewable sources: solar, wind, wave, tidal or geothermal power; hydroelectric power; biomass or biomass-based products; methane emitted from abandoned coal mines and fuel cells.

The excise exemption for the above-listed consumer energy products in Bulgaria is planned to apply until 30 June 2025 provided that the European Commission does not consider the measure incompatible with state aid rules.

Compensation to consumers for high motor fuel prices

In order to be compensated for the surge in motor fuel retail prices, consumers in Bulgaria are provided with a discount from the retail prices of certain motor fuels.

The compensation is valid for the following motor fuels:

  • gasoline,
  • gasoil,
  • LPG,
  • natural gas.

The compensation for these consumer energy products in Bulgaria is provided in the form of a fixed discount of EUR 0.13 per liter/kilogram and is granted by retailers at the petrol stations from the retail price of the fuels. There is no limit on the quantity that may be purchased or in the number of purchases eligible for a discount. However, the grant of the discount by retailers is voluntary.

Only natural persons owning or using passenger motor vehicles, motorcycles and mopeds are entitled to the discount in Bulgaria after they prove their eligibility by presenting the vehicle registration certificate at the petrol station.

Retailers must account for VAT on the full price of the sold fuel and they are refunded the amount of the granted compensations on a monthly basis, within ten days after the deadline for filing the VAT return for the respective monthly period.

The fuel compensation also applies from 9 July 2022.

Other tax measures 

Apart from the tax relief for consumer energy products in Bulgaria, other provisions have been introduced also in an effort to overcome the effects of increased consumer prices and inflation. Thus, zero VAT rate applies on the supply of bread and flour for one year, and the supply of beer, wine and alcoholic spirits shall be explicitly excluded from the scope of the 9% reduced VAT rate on restaurant and catering services and consequently should be taxable at the standard 20% rate.

If you would like to know more about the tax relief for consumer energy products in Bulgaria or other tax changes in the country, please visit the homepage of Delchev & Partners Law Firm, the exclusive representative of WTS Global in Bulgaria.

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