What tax audits of home repairers reveal

Reducing the share of the shadow economy in Bulgaria, which according to various statistics is 20 – 30% of GDP, is one of the tools that the Ministry of Finance is relying on this year to fill the growing gap in the state coffers, but also to achieve the targeted 33% increase in VAT revenues in the budget.

To this end, at the beginning of 2025, the National Revenue Agency (NRA) announced that this year it will again keep a close eye on home repairers – individuals offering services such as the construction or repair of plumbing installations, electrical installations, masonry and plastering (plastering, painting, whitewashing, etc.) and exterior repairs such as insulation, renovation, and roofing.

Economic.bg asked the revenue agency for information on what the checks have shown so far.

First, “soft measures”

The efforts of the National Revenue Agency are aimed at bringing the activities of so-called “home craftsmen” into the open, so that they declare their full income and pay the taxes and social security contributions they owe," the National Revenue Agency said in a comment to Economic.bg.

They added that the first step in this direction is an information campaign to explain the rights and obligations of craftsmen. This will be followed by assistance with the actual declaration of obligations.

These are our soft measures before moving on to control procedures. We take control measures when we see that, despite our efforts, individuals are not responding positively," warns the NRA.

When asked how many craftsmen have been checked, however, the revenue agency said that an exact number cannot be given, given that the category “home craftsman” covers a wide range of services. However, the NRA provided data on the checks carried out by year. An important detail is that one check may include several craftsmen or one craftsman may be checked several times, so the table is not indicative of how many home craftsmen have been checked.

Informants – the NRA's main assistant

Given that there is no single register or portal where craftsmen are listed, the main question is how the tax authorities find them and how they know when to initiate an inspection.

The most common reason for initiating control proceedings is information received from external sources – reports from individuals and legal entities, information from other control bodies and institutions," the Agency explains.

The subject of control is compliance with tax and social security legislation, including the issuance of cash receipts, income declarations, payment of social security contributions, etc. Further checks may also be triggered by facts established after audits have already been carried out.

During the inspections themselves, tax officials usually request information and evidence from third parties, carry out cross-checks, and request assistance from other control bodies in carrying out control activities.

The Revenue Agency collects information through many legally established methods and channels, including through partnerships with organizations and institutions," the NRA added.

The damage to the budget is unclear

However, from our conversation with the NRA, it became clear that the exact amount of damage to the treasury is yet to be determined.

We are currently conducting a risk analysis, which is ongoing. Preliminary data indicate that it is common practice not to issue accounting documents when carrying out repair work. In over 60% of cases, no such documents have been issued," the Agency said.

They added that the risk analysis will be completed by the end of the year.

What are the fines

When asked what the fines are for not issuing a cash receipt, the NRA first said that in the case of undeclared income, craftsmen are subject to a fine or property sanction of up to BGN 500 for a first offense and up to BGN 1,000 for a repeat offense.

If the person submits false information that leads to lower tax or non-payment of tax, the penalty is a fine of up to BGN 1,000. For a repeat offense, the fine is up to BGN 2,000. These individuals are subject to control proceedings to establish their obligations, after which they may be required to pay their taxes retroactively, together with interest.

Translated with DeepL.