TAX ON IMPORTING A CAR FROM A THIRD COUNTRY
We received an inquiry from a company registered in Bulgaria about what happens if this company imports a car from a non-EU country. Here is our response. When your company (a Bulgarian legal entity) imports a car into Bulgaria from a third country (a country that is not a member of the EU and the European Economic Area), it should be considered that at the border during import, the full VAT at a rate of 20% is paid along with all customs duties according to the customs declaration. If the car has a large engine capacity, excise duty is also paid.
In order to use the tax credit on the paid VAT, the car should be 6+1 excluding the driver's seat. In this case, you will also have the right to the tax credit for the used fuels and lubricants.
What happens if the car is not 6+1 excluding the driver's seat? - Except in cases where your company is a taxi company or a rent-a-car, you will not be able to benefit from the 20% tax credit from the value on the import customs declaration. Additionally, for expenses made on fuel and lubricants, a direct tax of 10% is paid on all invoices for fuels and lubricants. This 10% tax is an inherent expense for your company. Its value reduces the value of the company's profit. Thus, the tax base for calculating corporate tax also decreases, and it is reduced as well.
