Google AdSense remains one of the most popular ways to monetize websites, blogs, and mobile applications. For many content creators in Bulgaria, it is a primary or additional source of income. However, receiving a transfer from “Google Ireland Limited” is not simply a “gift” – it is business income that carries specific legal obligations.
The biggest mistake you can make is assuming that this income is “invisible” to the National Revenue Agency (NRA). In the era of automatic information exchange between EU countries and strict banking controls, declaring your income is not just recommended – it is mandatory.
The Crucial Point: VAT Registration under Art. 97a
This is the most important technical detail that many people overlook. Since AdSense payments come from Google Ireland Limited (a legal entity in Ireland), you are providing a service to a person in another EU member state.
According to the Bulgarian VAT Act, you are obliged to register under Art. 97a before you receive your first payment.
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This is a “special” registration – it does not require you to charge 20% VAT on your domestic income, nor does it allow you to claim VAT refunds on purchases.
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However, it obligates you to file a VAT declaration and a VIES declaration every month in which you receive a payment.
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Important: The registration deadline is 7 days before the date the service becomes taxable (i.e., before you accumulate a balance for payment).
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Option 1: Declaring as a Natural Person (Freelance)
If you do not want to register a company, you can receive your income as a natural person (freelancer).
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Tax Base: You deduct 25% statutory recognized expenses from the total income.
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Tax: You owe a 10% tax on the remaining 75% of the amount.
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Social Security: You must pay social security as a self-insured person (SIP) on a chosen income (not less than the national minimum). You must file a declaration (OKD-5) to start the activity.
Option 2: Declaring through a Company (LLC/EOOD)
When AdSense income begins to grow, registering a company becomes more financially viable.
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Corporate Tax: The company’s profit is taxed at 10%.
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Expenses: You can recognize all real expenses related to the activity – hosting, domains, computer equipment, office rent, software licenses, etc.
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Dividends: If you wish to withdraw the profit as personal cash, you owe an additional 5% dividend tax.
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VAT: The company must still be registered under Art. 97a (or under the general regime if the turnover exceeds 100,000 BGN).
Documentation and Invoicing
Even though Google does not require a physical invoice from you, for Bulgarian accounting purposes, you must issue one for every transfer received.
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The invoice is issued to Google Ireland Limited.
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Since it falls under Art. 97a, the reason for not charging VAT must be stated: “reverse charge” according to Directive 2006/112/EC.
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The amount is converted into BGN using the Bulgarian National Bank (BNB) exchange rate on the day of payment.
Common Mistakes and Sanctions
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Lack of VAT Registration: Fines for not registering on time start from 500 BGN and can reach thousands for systemic violations.
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Failure to file a VIES Declaration: Since the transaction is within the EU, it must be reported in the VIES system; otherwise, sanctions follow during an audit.
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Mixing Personal and Business Finances: Using a personal bank account for large corporate AdSense inflows is a red flag for regulators.
Why Do You Need an Accountant for AdSense?
While AdSense may seem like passive income at first glance, the administrative burden in Bulgaria is significant. A professional accountant will:
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Perform the correct VAT registration to ensure you don’t start with fines.
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File monthly declarations to the NRA on your behalf.
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Monitor changes in social security and tax thresholds.
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Advise you on when to switch from being a natural person to a company to legally pay less tax.
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Conclusion
Google AdSense revenue is a great way to capitalize on your online presence, but it requires a responsible approach to the law. Proper planning and timely consultation with a specialist will ensure that your business is legal, allowing you to focus on creating quality content.
Disclaimer: This article is for informational purposes and does not constitute legal or tax advice. For personalized guidance, consult a qualified accountant or tax consultant.
