Introduction
The topic of introducing the euro in Bulgaria raises many questions among both individuals and businesses. Common concerns include whether tax rates will change, whether new obligations to the National Revenue Agency will arise, and how the transition to the euro will affect accounting and financial reporting.
In practice, it is important to clearly distinguish between actual changes and widely spread misconceptions that often create unnecessary concern.
Will taxes change with the introduction of the euro
The introduction of the euro does not automatically lead to changes in the tax system. Bulgarian tax legislation remains in force in its current form, with the only change being the currency in which amounts are calculated.
Corporate income tax, personal income tax and value added tax rates remain unchanged. The transition to the euro does not mean the introduction of new taxes or an increase in existing ones.
What will actually change
The main change concerns the currency used to express all accounting and tax-related values. This includes accounting records, annual financial statements, tax declarations and liabilities to the National Revenue Agency.
All amounts will be converted using the officially fixed exchange rate established by law. The conversion will not be carried out at discretion, but according to clear and mandatory rules.
How the euro will affect companies
For commercial entities, the introduction of the euro requires thorough preparation. This includes proper conversion of accounting balances, assets and liabilities, as well as adaptation of accounting and payroll systems.
During the transition period, dual display of amounts is expected in order to ensure transparency and consumer protection. For businesses, this requires increased attention when documenting and reporting transactions.
Incorrect conversion or improper rounding may lead to discrepancies that could later become subject to inspections by the revenue authorities.
Salaries, social security contributions and the euro
After the official introduction of the euro, salaries and insurable income will be calculated in euros. This includes basic salaries, additional remuneration, seniority bonuses, as well as all due social security contributions.
The submission of Declarations Form 1 and Form 6 will continue under the existing procedure, but the amounts will be stated in euros. Rounding rules will be regulated by law and will not depend on the employer’s discretion.
The euro and VAT
For VAT-registered entities, the transition to the euro means issuing invoices in the new currency, as well as maintaining VAT ledgers and submitting VAT returns in euros.
The VAT mechanism, tax rates and statutory deadlines remain unchanged. Only the currency expression of the amounts will differ.
Conclusion
The introduction of the euro in Bulgaria represents primarily a technical and organizational change, rather than a change in the tax burden. For both businesses and individuals, relying on accurate information and professional accounting support is essential.
Timely preparation and proper application of currency conversion rules ensure a smooth transition and help avoid future administrative issues.
For questions related to the introduction of the euro, taxation and accounting reporting, the team of Accounting Firm KONTADOR is available to provide professional consultation.