Running ads on Facebook, Instagram (Meta), and Google is a mandatory step for almost every modern business. From an accounting perspective, however, these platforms hide a big trap that often leads to heavy fines for beginner entrepreneurs and online store owners.
Since the European headquarters of Meta and Google are located in Ireland, when you pay them for advertising, you are effectively „importing“ a service from abroad. Here is everything you need to know about correctly reporting these expenses, explained in simple and understandable language.
1. The Golden Rule: VAT registration BEFORE the first ad
This is the most common and expensive mistake. In Bulgaria, the law states that if you receive services from a company in another European Union country (such as Meta and Google), you must mandatorily register for VAT.
- This registration (under Art. 97a of the VAT Act) must be done before before you spend even 1 cent on advertising.
- The procedure itself in the NRA takes about 7 to 14 days, so you must plan your advertising campaigns in advance. You cannot decide on Friday that you want to launch an ad for the weekend if you do not have this VAT number.
- This is a special, „simplified“ registration. With it, you do not become a classic VAT company for your sales in Bulgaria (you do not charge VAT to your clients), but you register only for the services you purchase from abroad.
2. What is „VAT self-assessment“ and how much does it cost?
Since Meta and Google are based in Ireland, they will issue you an invoice without charged VAT (0% VAT). However, the state wants its tax. Therefore, you (through your accountant) must „self-assess“ and pay the Bulgarian VAT of 20%.
- Example:You run a Google ad for 100 euros. Google charges 100 euros from your card and issues you an invoice for that amount. At the end of the month, your accountant prepares a protocol with which you must pay another 20 euros (20% VAT) to the NRA’s account.
- In other words, your real expense for this ad is 120 euros. This 20% VAT is a pure expense for your company and you must account for it in your budget.
Exception:If your company is already registered under the general VAT Act (e.g., because you have exceeded the turnover threshold of 51,130 euros), this VAT is simply deducted for accounting purposes and you do not actually pay it out of your own pocket.
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3. What happens if you run ads without registration?
If you enter your card and run an ad before you have an active VAT registration, the NRA (National Revenue Agency) will consider this a violation of the law.
- The fine for failing to submit a registration application on time starts from over 250 euros.
- Separately, you will have to pay the VAT retroactively, along with the accrued interest. Tax authorities easily detect these payments, as they monitor companies’ bank transfers to foreign platforms.
4. Ad account settings
In order for your invoices to be valid and to avoid any issues, your ad accounts must be set up correctly as „Business“:
- Company details: You must enter the exact company name and address in Latin characters, as they appear in the Commercial Register.
- VAT Number:After you register for VAT, you receive a number (your UIC/BULSTAT with „BG“ in front). It is mandatory to enter it in the VAT number field in Meta and Google. If you do not do this, the platforms will charge you additional Irish VAT and you will effectively pay the tax twice (once in Ireland and once in Bulgaria).
- Company card:Use a debit or credit card issued in the company’s name. Paying with your personal card complicates accounting and requires additional documents for reporting.
5. What documents does the accountant need?
At the beginning of each month, your accountant will expect two things from you:
- Invoices from platforms: In Meta, they are downloaded from the Billing & Payments. In Google Ads, they are found in Billing -> Documents. Keep in mind that platforms often issue invoices several days after the end of the month.
- Bank statement: A document from the bank proving that the money has actually left your company account.
Conclusion
Reporting advertising budgets is not complicated, as long as you follow the sequence. The most important rule is: never enter your company card into Facebook or Google before you have confirmation from your accountant that your VAT registration under Article 97a is active. After that, you simply set up your data correctly in the platforms and download your invoices every month.
