Invoicing EU clients: when you skip VAT and what the invoice must say

What a VAT-free invoice to an EU client actually means

If you run a Bulgarian company and bill business clients in other EU countries, say, a German or Dutch company you work with as a developer, consultant, or agency, you've probably noticed something: no VAT line on the invoice. That's not a favor to the client. It's the rule.

When you supply a service (not goods) to a business client established in another EU country, and that client is VAT-registered there, the place of supply is legally considered to be the client's country, not Bulgaria (Art. 21(2) of the Bulgarian VAT Act, ЗДДС). Since the supply is not legally "in Bulgaria," you don't charge Bulgarian VAT on it.

Instead, the client self-assesses and pays the tax in their own country, under a mechanism known as reverse charge. They pay you the agreed amount with no VAT added, and the tax obligation shifts entirely to them.

This only applies when: (1) the client is a business, not a private consumer, and (2) the client is actually VAT-registered in their EU country. And because you're not charging tax, the invoice can't stay silent about why: Bulgarian law requires the exact grounds to appear on it. The standard wording is "reverse charge: Art. 86(3) in conjunction with Art. 21(2) of the Bulgarian VAT Act", usually written in Bulgarian ("обратно начисляване: чл. 86, ал. 3 във връзка с чл. 21, ал. 2 от ЗДДС") with an English line added for the client's own bookkeeping.

The registration you need before your first invoice, not after

Here's where old instincts from your home country can mislead you. If you've run a company anywhere else in the EU, you probably already know reverse charge: it's an EU-wide mechanism, not a Bulgarian invention. What is Bulgaria-specific, and easy to miss, is a separate registration you need before you send your first invoice to an EU business client, regardless of your revenue.

You might assume that because your turnover is nowhere near the general VAT registration threshold of €51,130 a year, you have no VAT paperwork to deal with yet. Not true if you're billing EU businesses. There is a separate, narrower registration for exactly these cross-border B2B services, under Art. 97a of the Bulgarian VAT Act. It doesn't turn you into a full VAT payer: you still don't charge VAT on your Bulgarian sales until you cross the general threshold, but it must be in place before that first EU invoice goes out.

The deadline is unusually tight: you must apply 7 days before the tax point, which is whichever happens first between issuing the invoice and receiving payment. In practice, that means registering before you send the invoice or get paid, not filing paperwork afterward to catch up.

The fine print here (what exactly counts as the tax point, how advance payments are treated) genuinely trips up accountants, not just founders. If your first EU invoice is coming up, get this checked with an accountant beforehand, not after the money has already landed.

Check the client's VAT number in VIES before you invoice

Reverse charge only works if your client is actually VAT-registered in their EU country. If the number they gave you is wrong, expired, or doesn't exist, you have no legal basis to skip Bulgarian VAT, and you could end up owing it yourself, without having collected it from the client.

Before issuing the invoice, check the number in VIES (VAT Information Exchange System), a free EU Commission database that confirms whether a VAT number is currently valid. Check it at the official VIES site and save the confirmation (a screenshot is fine) in your invoicing records. It's your evidence if anyone later asks why the invoice carries no VAT.

The monthly VIES declaration you'll owe on top

Once registered, every month you invoice at least one EU business client, you owe a VIES declaration: a filing that lists each EU client's VAT number and the total value billed to them (Art. 125 of the VAT Act). It goes in alongside your regular monthly VAT return, not instead of it.

The deadline matches the VAT return: the 14th of the month following the reporting period. Missing it is a filing violation on its own, even if the underlying invoice was completely correct.

What the invoice must contain: a checklist

An invoice to an EU business client under reverse charge needs:

• the full name and address of your company and of the client;
• your VAT number and the client's VAT number (the one you checked in VIES);
• an invoice number and date;
• a description of the service and the amount in EUR;
• the explicit grounds for not charging VAT: "reverse charge: Art. 86(3) in conjunction with Art. 21(2) of the Bulgarian VAT Act" (in Bulgarian for NRA purposes, with an English line for your client).

Two boundaries worth knowing so you don't over-apply the rule. First, if your client is a private individual, not a registered business, say, you sell a digital product to a consumer in France, none of the above applies. That falls under a different regime built around the OSS (One Stop Shop) scheme, with its own invoicing and filing rules. We won't cover it here, but don't reach for "reverse charge" on a B2C sale out of habit.

Second, if the client is outside the EU entirely, a US or UK company, for instance, the supply is still outside the scope of Bulgarian VAT, but the grounds you cite on the invoice are not the same "reverse charge" wording used for EU clients. The exact phrasing depends on the case. Check it with your accountant before copying the EU wording onto a non-EU invoice.

This is where FreeMe.bg comes in

Honestly, this is exactly the kind of thing that turns a small, well-run company into the subject of an NRA letter: one missing line on an invoice, one Art. 97a registration filed a week too late, one skipped VIES declaration. Not because anyone did anything dishonest, just because nobody told them in time which grounds to write down or by when to register.

This is exactly the case FreeMe.bg is built for. When you issue an invoice, the system fills in the correct legal grounds automatically based on the type of transaction, domestic sale, EU B2B reverse charge, or otherwise, and it produces bilingual invoices for clients who don't read Bulgarian. And unlike software that only calculates what you owe, FreeMe.bg is backed by a team of accountants who actually file the returns, VAT and VIES, with the NRA, including if you still need that Art. 97a registration.

Useful next reads:

What invoicing looks like with FreeMe.bg
How VAT and VIES filing will work
When you need an expert and what's included

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