New year, new Accounting Act in Bulgaria

A new Accounting Act adopted on 1 January 2016 brings Bulgarian accounting legislation into line with EU Directive 2013/34, and reduces the administrative burden for companies.

A new Accounting Act (AA) was adopted on 1 January 2016 to bring Bulgarian accounting legislation into line with EU Directive 2013/34. The parliament commission decided this approach was most effective to address all requirements of the directive, and to reduce the administrative burden for companies.

The main purposes of EU Directive 2013/34 are:

  • To reduce the administrative burden and related costs for businesses (particularly SMEs)with respect to accounting, audit requirements and compliance
  • To implement unified categories of enterprises and groups of companies applicable in all jurisdictions within the EU
  • To introduce new non-financial information (especially for large companies) with a focus on corporate and social responsibility, human rights, measures against money laundering and corruption etc.

The most important and practical items in the new Bulgarian Accounting Act that companies should be aware of are as follows.

Relaxed translation of documents in a foreign language

Documents received in a foreign language are now only required to be translated into Bulgarian where it may be required by another legal act.

Storage of accounting documents

Clear definitions now apply to the storage of various types of documents in Bulgaria, including all financial reports and all accounting documents subject to tax inspections (invoices, bank statements, etc.) which must be stored for 10 years. All payroll-related documents should be stored for 50 years, and all other documents should be stored for three years.

Enterprise categories

The following types of enterprises are introduced in the new AA; micro enterprises, small enterprises, medium-sized enterprises, large enterprises. The category applied to a company is determined based on whether as at 31 December of the current year, the company does not exceed two of the following three criteria:

  • Micro enterprises: assets less than BGN 700.000, revenue less than BGN 1.400.000, average number of employees is fewer than 10
  • Small enterprises: assets less than BGN 8.000.000, revenue less than BGN 16.000.000, average number of employees is fewer than 50
  • Medium-sized enterprises: assets less than BGN 38.000.000, revenue less than BGN 76.000.000, average number of employees is under 250
  • Large enterprises: applies to all others.

Categories of groups of companies (relevant for holding structures)

  • Small groups
  • Medium-sized groups
  • Large groups

The categorization for groups of companies is the same as for enterprises.

Annual financial reports

The following enterprises are allowed to apply simplified requirements with respect to annual financial reporting (eg. avoid detailed disclosures) as long as they represent true and fair information:

  • Micro enterprises
  • Small enterprises

Applicable accounting standards

Companies are allowed to apply either Bulgarian National Accounting Standards or IFRS.

Annual audit

The requirements for mandatory audit are now relaxed, in an attempt to simplify the administration and related costs.

Additional reports

All companies (except for the companies not subject to mandatory audit) should prepare an annual report of activities. This annual report should consist of a review of the past period and results, analysis of the main financial and non-financial items, important post-balance sheet events, probable future development, any R&D activities, branches in the country, etc.

Talk to us

Our experts in Bulgaria can assist companies registered in the country to make sure they are compliant with all requirements under the new Accounting Act.

Need more information? Get in touch with our experts.

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