How do you handle VAT when invoicing a Dutch company from Bulgaria?

When a Bulgarian company invoices a Dutch client for services, it generally does not charge Bulgarian VAT on that invoice. Instead, the transaction falls under the EU’s reverse charge mechanism, which shifts the VAT obligation to the Dutch recipient. This rule applies to most B2B cross-border service transactions within the European Union, provided both parties are VAT-registered businesses.

The specifics depend on the nature of the services, the VAT registration status of both parties, and whether the Bulgarian supplier is a company or a freelancer. The sections below address each of these variables directly.

Does a Bulgarian company charge VAT on invoices to Dutch clients?

No. When a VAT-registered Bulgarian company provides services to a VAT-registered Dutch business, it does not charge Bulgarian VAT on the invoice. Under EU VAT rules, the place of supply for B2B services is the country where the customer is established, in this case, the Netherlands. The Dutch client accounts for VAT domestically through the reverse charge mechanism.

This is the standard rule for intra-EU B2B service transactions. The Bulgarian supplier issues a zero-rated invoice, marks it as subject to the reverse charge, and does not collect or remit any VAT on that transaction. The Dutch client then self-assesses Dutch VAT at the applicable rate (currently 21% for most services) and reports it in their own Dutch VAT return.

There are exceptions. For certain categories of services, such as services directly related to immovable property, admission to events, or passenger transport, different place-of-supply rules may apply. For the vast majority of professional, consulting, and digital services, however, the general B2B rule holds: no Bulgarian VAT on the invoice.

What is the reverse charge mechanism and how does it work?

The reverse charge mechanism is an EU VAT rule that transfers the obligation to account for VAT from the supplier to the recipient of the service. Instead of the Bulgarian supplier charging and remitting VAT, the Dutch client self-assesses VAT in the Netherlands. This eliminates the need for foreign suppliers to register for VAT in every EU country where they have clients.

In practice, the mechanism works as follows. The Bulgarian company issues an invoice without VAT, includes a reference to the reverse charge (typically the phrase “VAT reverse charged” or the equivalent EU legal reference), and provides its own Bulgarian VAT number and the Dutch client’s VAT number on the invoice. The Dutch client then reports the transaction in Box 4 of their Dutch VAT return as both output tax (VAT due) and, where they are entitled to full input tax recovery, as input tax. For most fully taxable Dutch businesses, the net VAT effect is zero: the two entries cancel out.

The reverse charge exists to simplify cross-border trade within the EU and reduce the administrative burden on suppliers. It also reduces VAT fraud risk in intra-EU transactions.

What must a Bulgarian supplier include on the invoice?

A Bulgarian supplier invoicing a Dutch company under the reverse charge mechanism must include specific information to make the invoice legally valid and compliant in both jurisdictions. Missing any of these elements can create problems for the Dutch client’s VAT recovery and may trigger compliance issues.

  • Supplier’s Bulgarian VAT number — the BG-prefixed VAT identification number issued by the Bulgarian tax authority (NRA)
  • Dutch client’s VAT number — the NL-prefixed VAT number of the Dutch recipient, which must be verified before invoicing
  • Invoice date and a unique sequential invoice number
  • Full legal names and addresses of both the supplier and the client
  • Description of the services provided, with sufficient detail to identify the nature of the supply
  • Net amount — the total payable, without VAT
  • Statement that the reverse charge applies — typically the phrase “Reverse charge — Article 196 of EU VAT Directive 2006/112/EC” or a comparable reference
  • Zero VAT amount — explicitly showing 0% VAT or a zero VAT line makes the invoice clear and audit-ready

The Bulgarian supplier should also report the transaction in its VIES (VAT Information Exchange System) recapitulative statement, filed monthly or quarterly with the Bulgarian NRA. This cross-border reporting allows EU tax authorities to cross-check that both sides of the transaction are declared consistently.

What happens if the Dutch client is not VAT-registered?

If the Dutch client is not VAT-registered, for example, a private individual, a small business below the Dutch VAT registration threshold, or a VAT-exempt entity, the reverse charge mechanism does not apply in the same way. In this situation, the Bulgarian supplier may need to charge VAT, and the place of supply rules may shift depending on the nature of the services.

For B2C (business-to-consumer) transactions or supplies to non-taxable persons, the place of supply for most services defaults to the country where the supplier is established, Bulgaria. This means Bulgarian VAT would apply. However, for certain categories of services supplied to non-taxable persons in another EU member state, such as electronically supplied services, the place of supply is the customer’s country, which may trigger registration obligations in the Netherlands or under the EU’s One Stop Shop (OSS) scheme.

In practice, most Bulgarian companies invoicing Dutch organisations are dealing with VAT-registered businesses. Before issuing any invoice, the Bulgarian supplier should verify the Dutch client’s VAT number using the European Commission’s VIES online database. If the Dutch party cannot provide a valid VAT number, the supplier must reassess the applicable VAT treatment before proceeding.

Should a Bulgarian freelancer or sole trader follow the same rules?

Yes, provided the Bulgarian freelancer is VAT-registered in Bulgaria. A VAT-registered Bulgarian sole trader or freelancer supplying services to a Dutch VAT-registered business follows the same reverse charge rules as a company: no Bulgarian VAT on the invoice, the Dutch client self-assesses, and the invoice must include both VAT numbers and the reverse charge reference.

The critical variable is VAT registration status in Bulgaria. Bulgarian businesses and freelancers are required to register for VAT once their annual turnover exceeds the Bulgarian threshold (BGN 100,000 as of 2026). However, a Bulgarian freelancer supplying intra-EU B2B services may choose to register voluntarily below that threshold, and in some cases, doing so is commercially sensible, as it allows them to invoice EU clients correctly under the reverse charge and reclaim input VAT on business costs.

A Bulgarian freelancer who is not VAT-registered faces a more complex situation. Without a Bulgarian VAT number, they cannot issue a compliant reverse charge invoice, and the Dutch client cannot apply the mechanism. In this case, the freelancer should seek advice from a Bulgarian tax adviser on whether voluntary VAT registration is appropriate, particularly if they are regularly invoicing Dutch or other EU clients. Mishandling this can create retroactive VAT liabilities in Bulgaria.

Where should VAT obligations be reported in Bulgaria and the Netherlands?

In Bulgaria, the supplier must report the intra-EU service supply in two places: the regular monthly VAT return filed with the Bulgarian National Revenue Agency (NRA), and the VIES recapitulative statement (also called the EC Sales List), which separately lists all intra-EU B2B supplies by client VAT number. The VIES filing is mandatory for any VAT-registered Bulgarian entity supplying services to VAT-registered clients in other EU member states.

In the Netherlands, the Dutch client reports the reverse charge transaction in their periodic VAT return (BTW-aangifte). The value of the supply is declared as both output tax in Box 4 (VAT due on services received from abroad) and, where the client has full input tax recovery rights, as input tax in Box 5b. The net effect for a fully taxable Dutch business is typically neutral, but the reporting obligation remains: failure to declare reverse charge VAT correctly is a compliance error regardless of the net tax impact.

Both parties should retain the invoice and supporting documentation for at least seven years, in line with Dutch record-keeping requirements. Bulgarian retention rules similarly require documentation to be kept for a minimum period, and suppliers should confirm the applicable timeframe with their local adviser. Cross-border transactions are a common area of focus in VAT audits on both sides, so clean, consistent records are essential.

How Blue Lynx supports internationally mobile professionals and businesses

Navigating VAT rules is one part of a broader compliance picture for professionals and businesses operating across EU borders. Blue Lynx’s Expat Advice service is designed to support internationally mobile professionals with the practical realities of working in the Netherlands, from tax considerations and work permit requirements to employment contracts and day-to-day settlement.

  • Guidance on Dutch tax regulations, including the 30% ruling for qualifying expats
  • Support with IND processes and work permit requirements
  • Practical advice on health insurance, housing, and government services
  • Access to Blue Lynx’s network of vetted legal, accounting, and relocation specialists
  • Employment structuring through the Employer of Record service for businesses entering the Dutch market without a local entity

If your organisation is expanding into the Netherlands or managing cross-border employment and compliance questions, contact Blue Lynx to speak with a consultant who understands both the Dutch market and the international context your business operates in.

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