Breaking news

The chaos in heating bills

The chaos in heating bills
The chaos in heating bills

Emil Brandiyski


When Law diverges from reality, real chaos is created, but legal chaos, chaos that is no one’s fault.

This is the situation with the balancing accounts of the district heating systems, a consequence of the communication between the Ombudsman of the Republic Diana Kovacheva and the Ministry of Finance. The news naturally came out on Friday, because since time immemorial the important events for our country have happened on Fridays, and the fact that we are in the holiday season is just a bonus for those responsible for what is happening.

The chaos was created by Kovacheva’s question, addressed to the Ministry of Finance, about what should be the value of VAT on the invoices issued by heating utilities, after the date of reduction of this rate from 20% to 9%.

Analyzing the Law, the Ministry of Finance responds: “If the tax event on the supply (the date on which the payment became due) occurred up to and including 07.08.2022, the standard rate of 20 percent will be applicable for the supply, respectively if it occurred on 07/09/2022 and after that date, the reduced rate of 9 percent is applicable for delivery”.

And here is the problem: part of the heat energy consumers from the district heating companies receive their equalization bills with an invoice date after July 8, 2022. It reflects that the respective user pays the district heating company a certain amount, or vice versa – the district heating company owes him a certain amount. This is precisely the disputed amount that heating companies assume by default to be 20% and bill it that way. That’s the reality, so to speak. However, according to the MoF’s response, invoices received after July 8 must have reduced VAT.

The real problem is that the period covered by the balancing invoices for all users is May 1, 2021 – April 30, 2022. It turns out that the portion of users who received their balancing bills after July 8 will see lower VAT on their invoices, regardless of whether they pay extra or get a refund, just because they received their balancing bill after that date. Essentially, not everyone will pay for heat energy for the same accounting period at the same price. This gives rise to a number of controversial issues that lead to the so-called chaos in heating bills. Here are some of them:

1. Which users are affected?

There are two rationales for determining the time/date to which settlement invoices are. One is the real one and the other is the legal one.

The reality: There is actually a group of consumers who were accounted for as early as May 2022 and their balancing invoices were actually prepared as early as June by the heat accountants. Immediately after their preparation, it was possible to pay them, that is, before the date of July 9, since the information about these invoices was available in “Toplofikatsia” even before that date. Then there are 4 main types of users (Table 1). There are actually more user type options, but I won’t go into them right now.

The table shows that essentially consumers one and two who received and paid equalization bills before July 9, 2022 will pay 20% VAT on the heat consumed in their equalization invoices, regardless of whether they pay extra or get a refund for that heat. They are “screwed” for the simple reason that all the heating energy they pay is subject to VAT of 20%.

In this case, those consumers who received their equalization bills after July 8 and pay extra are also harmed, because they will be refunded for the overpaid heating energy with VAT of 9%, and they paid this heating energy in advance with VAT of 20%.

The only profitable user is No. 3, because he will pay an additional amount of heat energy with a reduced VAT rate, which will be 9%. The degree of “screwing” (“profit”) also depends on the size of the amount in the balancing account. It is one thing for your balancing bill (top-up or return) to be BGN 5, and quite another for it to be BGN 500.

Let’s consider the second “legal” rationale. I will refer entirely to the users of “Toplofikatsia Sofia”, since the balancing accounts I am considering are of such users. I proceed from the fact that all equalization invoices issued by “Toplofikatsia Sofia” that I reviewed were officially announced with a tax event date of July 31, 2022, regardless of whether they were received and paid before the cut-off date of July 9, 2022 (Table 2 ).

It is clear from Table 2 that all users will be issued invoices with VAT reduced to 9%.

In this case, the consumers to whom TC has to return amounts will be screwed, because they paid the excess heat energy with VAT of 20%, and the amounts returned to them will be at a lower VAT rate. The opposite will be the case when users need to add. They will pay extra for heat energy with 9% VAT instead of 20% VAT.

As a general conclusion of everything that has been said so far, we can note that consumers who have overpaid (paid more than necessary) for the actual amount of heat energy consumed are “screwed” in all cases.

What will happen if VAT is reduced? This means that this overpaid heat energy, which we have paid with 20% VAT, will be returned to us, but the VAT will be 9% – that is, we will receive less money.

2. Who is to blame for this chaos?

The bombshell was officially dropped by the Ombudsman of the Republic, though I doubt she was the real originator of the idea. It only considered it necessary and its duty to “protect” consumers with the opportunity given by law. Except she didn’t think there would be another section of users who would be harmed. If she was misled by some other primary source, there remains the bitter suspicion of the lack of expertise within the structure of the institution.

In this case, “Toplofikatsia Sofia” is also at fault for not complying with the law, but it could easily justify itself that if it applies the law, some consumers will be harmed, which, you see, as a “socially responsible company” it would not want to happen. To a certain extent, the blame for harming consumers, if a decision is made to correct the accounts, will be those share distribution companies that have not yet equalized their estimated values ​​with those of “Toplofikatsia Sofia” at the end of April.

It seems that the lack of thought comes from the authorities, who, in their desire to ease the bills of consumers by reducing VAT, introduce the reduction as a text without thinking about the consequences of such a decision. The Ministry of Finance also did not think that they would cause unprecedented chaos in the bills issued by the heating utilities.

3. Is there a solution to the problem?

There is a solution and I think it is the only one. The Council of Ministers or the competent law enforcement body must decide from the scope of the law, which lowers the value of VAT for heat energy from 20% to 9%, to drop the equalization accounts for the accounting period 2021-2022.

4. Who benefits from all this?

From all this chaos, only the heating companies benefit, and to the greatest extent “Toplofikatsia Sofia” as the largest heating company in the country. If she is ordered to enforce the law, she will wash her hands of the fact that some consumers will be harmed.

The biggest benefit for it, however, is a diversion of public attention from increasingly glaringly high heating bills. In the case with the now created chaos and the thousands of consumer complaints about the high bills, only the truth about the inability of the consumers to pay the high prices for heat energy is visible.

Economic life, with cuts


Follow or like “WORD” on FACEBOOK –> HERE <--

Share our posts.


The article is in bulgaria

Tags: chaos heating bills

PREV Despite the torrential rains in Bulgaria: Huge queues of cars on “Makaza” in the direction of Greece
NEXT Yotova: My dream is to see a stable Bulgaria with a serious majority in the National Assembly – Politics