In short: VAT registration is entering a business or self-employed person with the tax authority as someone who charges VAT on sales and pays it over; it becomes compulsory above a legal turnover threshold.
Simply put: Below the threshold, a small business often does not charge VAT. Once turnover passes it, registration is compulsory within a short deadline. You can also register voluntarily. After registering, either the client's price rises or the margin falls — work it out in advance.
Example: A small workshop has €48,000 turnover this year and expects a large order. The owner tracks when the threshold will be passed and works out in advance how VAT will change the prices.
The EU rule: countries may exempt small enterprises whose annual turnover in that country does not exceed a national threshold of no more than €85,000 (Directive 2006/112/EC, Article 284, as amended by Directive (EU) 2020/285, from 1 January 2025).
Example: Bulgaria — compulsory registration when taxable turnover in the country exceeds €51,130 a year (from 01.01.2026; VAT Act, Article 96(1)); apply within 7 days of passing it.
Check in your country — The threshold and the deadline, at the tax authority.
Source: Directive (EU) 2020/285: https://eur-lex.europa.eu/eli/dir/2020/285/oj · NRA (Bulgaria): https://nra.bg/wps/portal/nra/taxes/dds-v-balgariya/registratsiya-po-zdds