BULGARIA Law and Practice Contributed by: George Chisuse, Ivelin Vassilev, Stephany Valcheva and Daniel Kolev, VC Law
1.2.4 Tax Bulgaria has not adopted a separate tax regime for blockchain or digital assets. The National Revenue Agency (NRA) applies the existing personal income tax, corporate income tax and VAT rules to crypto- related transactions. For individuals, the NRA treats income from the sale or exchange of crypto-assets as taxable income under the rules for sale or exchange of financial assets. The annual personal income tax return materials contain a specific reference to income from sale or exchange of virtual currencies. As for the business, crypto-related income and expenses are included in the ordinary corporate tax result. VAT treatment depends on the exact nature of the transaction or service. A person or company that sells crypto-assets and generates revenue from this activity will have to con- sider VAT registration if the activity is carried out as an independent economic activity and the turnover exceeds the statutory threshold of EUR51,130. How- ever, reaching the threshold does not necessarily mean that VAT is charged on the crypto sale itself. Following the CJEU’s approach in Hedqvist, the exchange of traditional currency for Bitcoin and vice versa is treated as a VAT-exempt financial transaction. The more difficult cases are platform fees, brokerage, custody, advisory, software or other crypto-related services, which may be treated differently depending on the exact nature of the supply. It is also important to note the VAT consequences of exempt financial transactions. If the sale or exchange of crypto-assets is treated as an exempt supply, the seller cannot charge VAT on that transaction. At the same time, the seller may not be entitled to deduct input VAT in full on related purchases and expenses. The right to deduct input VAT may need to be adjusted proportionally, using the applicable partial exemption coefficient, depending on the ratio between taxable and exempt activities. This can be significant for busi- nesses that have material costs for software, profes-
of the firm’s business model, regulatory status and compliance framework. Banks and payment institutions will want to under- stand the CASP’s ownership structure, source of funds, AML controls, Travel Rule arrangements and approach to client asset protection. If the bank can- not get comfortable with those risks, or if the business model falls outside its internal risk appetite, it may refuse to provide services or may later terminate the relationship. For that reason, CASPs should treat banking access as a compliance workstream, not just a commercial arrangement. Before approaching a bank or payment institution, it is advisable to review the proposed structure and onboarding materials with a compliance attorney. This helps the CASP prepare for enhanced due diligence, present its business model consist- ently, and avoid giving information that may appear incomplete, inconsistent or incompatible with the bank’s risk policies. 1.2.3 ESG/Sustainable Finance ESG-style requirements apply to digital assets mainly through MiCA’s sustainability disclosure rules. These are focused on the adverse climate and other environ- ment-related impacts of the consensus mechanism used for the relevant crypto-asset. They are not equiv- alent to a full corporate ESG reporting regime, but they do require issuers and CASPs to provide standardised sustainability-related information in the crypto-asset White Paper and, where relevant, in disclosures made available to clients. In Bulgaria, there is no separate national ESG regime specifically for crypto-assets. The applicable require- ments come primarily from MiCA and the related EU technical standards, such as Commission Delegated Regulation EU 2025/422 on sustainability indicators. As a result, a Bulgarian issuer or CASP must con- sider whether the crypto-assets it issues or services require sustainability disclosures, particularly where the underlying DLT network or consensus mechanism may have material environmental impact.
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