Which income is recognized by the institutions for an EOOD?

The income of a single-member limited liability company (EOOD) is recognized in accordance with the principles of the Accountancy Act and the National Accounting Standards (NAS) or the International Financial Reporting Standards (IFRS), depending on which standard is applied. For accounting and tax purposes, the institutions (such as the National Revenue Agency - NRA) recognize various types of income that must be reported in the accounting of the EOOD.

Main types of income that are recognized for an EOOD

Income from core activity: This is the income generated from the EOOD's main business activity, which is described in the company's articles, and usually includes:
Income from the sale of goods - if the company is engaged in retail or wholesale trade.
Income from the sale of services - if the company's main activity is providing services (for example IT services, consulting services, accounting services and others).
Income from production - if the company manufactures and sells products.
Interest income: If the EOOD has deposits or grants loans to other companies or persons, the interest income is recognized as financial income. It is subject to corporate tax.
Rental income: If the company rents out real estate or movable assets, the rental income is also recognized as income and is subject to taxation.
Dividend income: If the EOOD holds shares or interests in other companies and receives dividends, this income is recognized as income from financial investments. It is recorded as financial income and is subject to taxation.
Income from the disposal of assets:

Sale of fixed assets - if the EOOD sells tangible or intangible fixed assets (e.g. buildings, machinery, vehicles), the income from the sale is recognized as income from the disposal of assets.

Sale of financial assets - if the company sells shares or other financial instruments, the income from this activity is also recognized.
Income from financing or subsidies: If the EOOD receives subsidies or grants (e.g. under European programs), they are recognized as other operating income. Depending on the specific conditions of the financing, they may be taxable.
Other operating income: This income includes all other types of income that are not directly related to the company's main activity but are nonetheless part of its operating activity:
Income from the sale of waste.
Income from incidental activities, such as the sale of old goods or materials.
Income from compensation (e.g. in the case of insurance events).
Conditions for recognizing income

The income of an EOOD is recognized and recorded at the moment the following conditions are met:

There is a probability of an inflow of economic benefit - there must be reasonable assurance that the company will receive the relevant income.
The income can be measured reliably - the value of the income must be determined or able to be reliably calculated.
The company has fulfilled its obligation - for example, in the sale of goods, the income is recognized when the goods are delivered, and in the provision of a service - when the service is performed.

Tax recognition of income

For tax purposes (when calculating corporate tax), income must be recognized in the tax period in which it is accrued, regardless of whether it is received in cash or in another way. The income is included in the annual tax return, which the EOOD files with the NRA by 30 June of the following year.

All income that the EOOD generates from its business activity, financial operations, sales of assets, rentals or other sources is recognized and reported in the accounting, and for each transaction it is important to comply with the accounting standards and tax requirements. The correct recognition of income is essential for accurate financial reporting and compliance with tax obligations.

For a detailed consultation, contact the team of Марилена-Консулт ЕООД.