Notes on trade with excise goods (Bulgaria)

Notes on trade with excise goods

Generals

Present document content is limited to what was specified from the client as need for information about trading with diesel, alcohol and cigarettes. Details of all regulatory requirements are not listed here, as the specific intentions of the client are not clear. If necessary, this document may be extended or detailed.

Trade in fuels, alcohol and tobacco is associated with obligations to pay excise. Obligation to pay excise duty arises for persons who are: licensed warehouse keepers; registered persons under LETW (Law on Excise and Tax Warehouses), recipients in the country of excise goods released for consumption in another Member State (with certain exceptions) and other persons specified in the law.

Excise duty is levied on the following types of goods, imported or produced in the country:

Alcohol and alcoholic beverages;

Tobacco products;

Energy products(oils) and electricity;

Cars.

Tax Warehouse is a place where excise goods are produced, stored, received and shipped by licensed warehousekeeper under regime of postponed payment of excise tax, in accordance with the provisions of LETW;

Postponed Payment of Excise Tax is a set of rules applicable to the production, storage and movement of goods while payment of excise duty is delayed. The introduction of excise goods under postponed payment of excise  is related to obligations for companies who bring in excise goods to charge excise and pay the tax to the state budget. For the purpose of doing so the companies should be registered dealers; in some cases unregistered companies, defined by law, could also to receive excise goods in postponed payment of excise.

By completing the registration - voluntary or compulsory, or authorization of "unregistered" dealer, the companies have the opportunity to receive excise goods under postponed payment of excise, dispatched by a licensed warehousekeeper from another Member State.

Licensed Warehousekeeper is a dealer within the meaning of the Bulgarian Commerce Law who has received license to produce, store, ship and receive excise goods under postponed payment of excise.

Registered dealer means company that is not a licensed warehousekeeper but under certain conditions is entitled to receive excise goods from another Member State under postponed payment of excise. A registered dealer can only receive but can not store or dispatch excise goods under postponed payment of excise.

Unregistered dealer means company that is not a licensed warehousekeeper, but under certain conditions is entitled to receive a specified quantity of excise goods from another Member State under postponed payment of excise. Unregistered trader can only receive but can not store or dispatch excise goods under postponed payment of excise.

Storage of excise goods

Storage of excise goods is possible only in tax warehouse that is licensed for storage or for storage and production. If the warehouse is licensed only for storage, it can’t be used for production. For certain operations that are directly related to preparation for sale or trade of excise goods it is permitted to be carried out; these operations are legally listed.

In the warehouse can be stored only excise goods, which are:

a) produced in the same warehouse;

b) released for free circulation while put under postponed payment of excise;

c) transported under postponed payment of excise from another licensed warehouse in BG or from a tax warehouse in another Member State;

d) excise goods that were released for consumption on the territory of another Member State, introduced on BG territory.

Except for certain goods, storage is allowed only in favor of certain persons:

Licensed Warehousekeeper or

VAT registered Depositor.

Also neftoprodukt pipelines from place of production or rail stations or ports to licensed warehouse, or from the warehouse to rail stations or ports for lading, are separate tax warehouses and need licensing.

Reporting and documentation

В warehouse keepers keep records and accounts in accordance with the Accounting Act, LETW, VAT and PPLETW. Records are kept for each warehouse separately and simultaneously, by types of activities and types of excise goods.

Accountability must be available at the premises of the tax warehouse.

Stock Record Register

Licensed warehousekeepers must keep Stock Record Register, as of the day of licensing.

Movement of Excise Goods

Movement of excise goods has its importance and is regarded as legally significant fact when it’s allowed without effective payment of due excise. Generally there are three regimes of movement:

• Movement of goods under postponed payment of excise;
• Movement of excise goods released for consumption in the country;
• Movement of excise goods released for consumption in another Member State.

Movement of goods under postponed payment of excise

Under this regime payment of excise is temporarily postponed while goods are produced, introduction or import on BG territory. Only licensed warehousekeepers have the right to apply this regime.

Movement under postponed payment means:

1. Transportation of excise goods from a warehouse in the country to another warehouse in the country, or to another tax warehouse in another Member State, or to registered or unregistered dealer in another Member State, or to especially listed persons by law;

2. Transportation of excise goods from a warehouse in the country to a customs office, or to third territories in cases of export;

3. Transportation of excise goods released for free circulation and at the same time placed under postponed payment of excise to a warehouse in the country (this will be the case of transportation of imported goods from customs office to the licensed warehouse);

4. Transportation of excise goods from a warehouse in another Member State to a warehouse in the country, to registered or unregistered dealers in the country, or to special persons referred to in paragraph 1.

This regime of requires that the excise goods are accompanied by special administrative document (PAM), issued in 5 copies. There are many legally defined details about this document and its additional enclosures. These details shall be viewed if necessary in addition. Same is valid for the other two regimes of movement of excise goods – special administrative document that must travel with goods everywhere and presented before customs authorities.

Licensed Warehousekeeper

License for management of tax warehouse is issued by the Director of Customs Agency. We shall present here only shortly the document needed and the procedure.

1. In the case of manufacturing of excise goods the applicant must be a dealer under the Commerce Act or legislation of another Member State or country - party to the European Economic Area, as well as a legal entity established on the basis of a statute

In the applicant is not a manufacturer, its legal form must be capital stock company with registered and fully paid-up capital non less than 500 thousand BGN.

2. The trader must not be in bankruptcy or liquidation.

3. Persons who represent the trader must not:

-      Have been convicted;

-      Have been members of managing or controlling body or general partners in the company terminated due to bankruptcy if creditors were not satisfied.

4. The applicant must not have due customs duties and taxes.

5. The applicant must have at its disposal owned or leased premises for the manufacture and storage of excise goods.
Premises for the storage of excise goods must meet the following requirements:

- It should be separate and not directly related to premises outside the tax warehouse;

- Must have reliable physical protection and security systems;

- Have a locking door;

- Be properly identified by indicating the type of the activities in the warehouse and

- To meet specific legal requirements for their operation and the rules and regulations for fire safety.

6. The applicant must use automated reporting systems that allow real-time control of raw materials, produced or stored excise goods as well as to ensure that the person is able to meet the requirements for the regime. With changes in LETW, effective December 1, 2009 is provided as an additional condition that the dealer at its own account must provide Internet access for customs authorities to the full functionality of these systems for checks at any time.

To ensure payment of the excise the warehousekeeper is required to provide security to customs authorities and the amount should be determined so that at any moment to cover the full amount of excise that has arisen or may arise during the implementation of postponed payment regime. The security may be provided with a cash deposit or bank guarantee under the Customs Act and its implementing regulations, each warehouse must grant only one collateral.

Details on the procedure will be given if necessary for the client. License should be issued in one month as of the day of submission of all documentation. It is possible procedure to take 45 days. It is necessary to note that the documents accompanying the application for license are numerous and extensive, so that only supply them takes time, which largely depends on the client.

Registered trader

There are two types of registration under LETW – mandatory and voluntary. Mandatory registered are few groups of persons that fall outside our clients declared interest.

Right of voluntary registration under LETW have a dealer that is capital stock company with registered and fully paid-up capital of not less than 500 thousand BGN.

The procedure for registration is similar to the above described procedure for the licensed warehouse keeper. The registration certificate is awarded to the person after the presentation of collateral which at all times to cover the full amount of excise for goods received, which has arisen or could arise.

Non-registered dealers

It is not always necessary for the dealers to be registered under LETW to have the right to receive excise goods under postponed payment of excise by a warehousekeeper from another Member State. For purposes of this document we shall only say that this rule is applicable only for respective specific amount of excise goods on a concrete delivery, regardless of the size of delivery. Accordingly, for each specific delivery is issued separately authorization to receive excise goods under postponed payment of excise.