A VAT refund refusal in Bulgaria calls for a prompt review of the document, its reasons and the deadline for challenging it. The National Revenue Agency (NRA) may be disputing input VAT deduction, setting the amount off against other liabilities, or still conducting a check or audit. These are different situations and do not all call for the same appeal.

First establish exactly what has been refused

VAT refunds claimed through a VAT return follow the special procedure in Article 92 of the Bulgarian VAT Act. Declaring refundable VAT does not necessarily mean an immediate bank payment. Deduction in subsequent periods, set-off and tax control proceedings may be relevant. The NRA explains that the general procedure tracks the following two tax periods, while the Act provides accelerated refunds in specified cases.

Check whether you have received a tax assessment act, a set-off and refund act, an express refusal, or merely a request for documents. An audit report precedes the tax assessment act. An objection to the report does not replace an appeal against the act subsequently issued.

Which evidence matters?

Where input VAT deduction is disputed, the review concerns the conditions in Articles 68–72 of the VAT Act, the documents supporting the supply, and the use of the goods or services for activities giving a right to deduct. An appeal needs more than a statement of disagreement with the revenue authority’s conclusion.

• Match invoices to contracts, orders and correspondence.
• Organise acceptance records, transport and warehouse documents, work reports or other evidence of performance.
• Trace payments and accounting entries, without assuming that a payment record proves every statutory condition by itself.
• Explain the link between the supply received and the business activity, addressing each stated ground for refusal.

The appropriate evidence depends on the supply. Services may require different records from transactions in goods. Documents collected by the NRA and the authority’s treatment of the explanations submitted should also be examined.

Administrative appeal

Under Article 152 of the Tax and Social Security Procedure Code (TSSPC), a tax assessment act may be challenged in whole or in part within 14 days of service. The appeal is addressed to the competent director of the Appeals and Tax and Social Security Practice Directorate and submitted through the relevant territorial directorate. Set-off and refund acts follow the appeal procedure for tax assessment acts under Article 129(7).

The appeal should identify the act and the disputed part, set out specific grounds, state the relief sought and include supporting evidence. Keep proof of submission. The date and method of service, including electronic service, matter when calculating the deadline.

When is judicial review available?

Following the mandatory administrative appeal, the dispute may be brought before the competent administrative court under Article 156 TSSPC. Where an express decision on the merits is issued, the part of the act not annulled may be challenged within 14 days of receiving that decision. If the deciding authority does not rule in time, special rules govern deemed confirmation and the deadline for court proceedings. This is different from an initial tacit refusal of a refund request.

The court may examine both substantive grounds and procedural defects. An accounting expert report may be requested where appropriate. Filing an appeal does not, by itself, guarantee payment of the refund.

What if the NRA does not issue a decision?

For a set-off or refund request under Article 129 TSSPC, failure to decide within the statutory period is treated as a tacit refusal under Article 131. The NRA states that an appeal against this refusal may be filed within 14 days after the decision period expires. Before treating that deadline as having started, check whether an audit has been commissioned or another statutory circumstance affects the decision period. A complaint about delay serves a different purpose and should not be treated as a substitute for an appeal against a refusal.

Practical first steps

Preserve the act and proof of service, identify the tax periods and amounts concerned, obtain access to the case file and organise the evidence by disputed supply. Reconcile the legal arguments with the accounting records. The review may also cover entitlement to interest on unlawfully withheld refunds where the statutory conditions are met.

Learn about our assistance with tax law and tax disputes in Bulgaria. Information about the team and contact details is available on the Zdravkov Attorneys at Law home page.

This article provides general information and is not individual legal advice. The available remedies and outcome depend on the act, the evidence and compliance with the applicable deadlines.