Bulgaria sticks to 20% VAT rate and limited reduced rates
The Bulgarian government has confirmed that it will retain its 20% VAT rate for the foreseeable future as part of its flat tax policy.
Bulgarian flat rate tax policy
Bulgaria has one of the lowest VAT rate in the Central & Eastern European region. Hungary raised its VAT rate from 20% to 27% by 2012 during the financial crisis. Romania has been forced to put its rate up to 24% in 2011. The average EU VAT rate is over 21%.
The Bulgarian VAT rate is a universal VAT rate, meaning there are very few exemptions or use of the reduced VAT rates. Economists believe this gives a more stable and less distorting tax regime. The only use of a reduced VAT rate is for hotel accommodation at 9%.
The low Bulgarian VAT rate matches Bulgaria’s corporate tax rate of 10%. This is the lowest in the EU – Ireland is next with 12.5%.