On 31 October 2011 the Council of Ministers of Bulgaria approved the proposal by the Ministry of Finance to change three of the five material tax laws and the tax and social insurance procedure code. The approved drafts have already been filed with the Bulgarian Parliament for further discussions and adoption.

The proposed changes to the Tax and Social Insurance Procedure Code (the “Code”) stem from the local implementation of Directive 2010/24/EU of the Council of the EU (the “Directive”). The Directive aims to extend the scope of and upgrade the now-existing regime (covered by Directive 2008/55/EC, which will be repealed with effect from 1 January 2012) of mutual assistance between EU Member States for the recovery of claims relating to taxes and duties (“EU Mutual Assistance”).

The proposed changes to the Code, which are likely to be adopted without any changes being made by the Parliament, should take effect from 1 January 2012.

Instead of listing the specific taxes and duties subject to the recovery procedure, which is how the regime is structured now, the proposed text states that the EU Mutual Assistance procedure will cover any taxes, including excise duties, customs duties and fees, collected by or on behalf of the state or the municipalities as well as on behalf of the EU. The scope of the EU Mutual Assistance procedure will also include the fees for issuing any documents related to the establishment, security and collection of the public receivables listed in the draft.

The proposed draft of the Code explicitly indicates that certain receivables will not fall under the EU Mutual Assistance procedure, e.g. mandatory social insurance contributions, contract receivables, receivables stemming from criminal proceedings.   

The personal scope of the EU Mutual Assistance procedure will be explicitly defined. It will cover: (1) individuals; (2) legal entities; (3) associations; and (4) any other legal arrangement of whatever form and nature, irrespective if having legal personality or not, owning or managing assets or income subject to any of the charges listed above, residing or established in the EU.

The proposed changes to the Code also cover the following issues:

  • in certain situations, the applicant authority may enforce the EU Mutual Assistance procedure even when not all collection means have been exhausted in the applicant Member State;
  • keeping information with financial institutions, agents or any other authorized person will not be considered as valid grounds for the requested authority to deny the provision of information;
  • introducing a special regime which will entitle the debtor to defend against the actions of both the applicant and the request authority throughout the collection process;
  • implementing rules for a common period of limitation (a general period of 5 years but in any case not more than 10 years, as of the receivable due date), limiting the responsibility of the requested authority; and
  • in certain situations, the applicant authority will be entitled to use the information obtained during the recovery procedure for purposes unconnected from the recovery itself.

Law: amendment of the Tax and Social Insurance Procedure Code