23 Mar The State of Emergency Act
The measures during the State of Emergency, declared on 13.03.2020
Author: Doychin Ivanov, attorney-at-law
On 20.03.2020 the Bulgarian Parliament adopted Act on the Measures and Actions During the State of Emergency, Declared by Virtue of a Decision of the National Assembly on 13.03.2020. (the State of Emergency Act) The Bulgarian President imposed veto on the Act, but it was then revoted and finally adopted by the Parliament on 23.03.2020.
You may find below highlights thereof, which are important for the business.
For the duration of the State of Emergency commencing on 13.03.2020 until its end the following measures are implemented.
I. Regarding the procedural terms
All procedural terms on court, arbitral and enforcement cases cease to run.
Some examples of such terms are:
- The term under Art. 131 of the Civil Procedures Code for presentation of an answer to the statement of claims;
- The terms for the appeals against court resolutions;
- The terms as per the instructions of the judges for presentation of opinions, replies, documents, payment statements for state fees, deposits for court experts etc.
However, the procedural terms on the penal cases related to imposing of compulsory measures and under the Extradition and the European Arrest Order Act continue to run.
II. Regarding the prescription periods
All prescription periods, provided in legislative acts, leading to extinguishing or cancelation of rights or creation of obligations for private legal persons, save for those under the Penal Code and the Administrative Violations and Sanctions Act, cease to run.
Some examples for such prescription periods are:
- The general prescription period of 5 years under Art. 110 of the Obligations and Contracts Act (OCA) regarding all receivables (such as the principal under loan contract or the remuneration on contract for provision of a services or supply of goods etc.)
- The prescription period of 3 years under Art. 111 of OCA for receivables for employment salaries; for default payments and compensations; for interests and rental payments etc.
- The prescription periods of 10 years and 5 years under Art. 79 of the Property Act regarding the acquisition of the ownership of e real estate property.
III. Regarding the terms for implementation of instructions of administrative authorities
The terms for implementation of instructions issued by administrative authorities cease to run.
Some examples of such terms are:
- Terms for correction of failures established by the Labour Inspectorate regarding the application of the labour legislation;
- Terms for provision of documents in the course of audit procedures under the Tax and Social Insurance Code.
IV. Regarding other terms
All other terms, provided by law, save for those enlisted above, which expire during the State of Emergency, related to exercise of rights or fulfillment of obligations by private legal persons, are extended by 1 month as from the end of the State of Emergency.
Some examples of such terms are those for appealing of administrative acts, penal decrees, tax assessment acts, etc.
The application of administrative acts, which expires during the State of Emergency, is extended by 1 month as from the end of the State of Emergency as well.
V. Regarding public sales and seizures of bank accounts and other receivables
All public sales and assignments of the purchased real estate properties upon enforcement procedures executed by state or private enforcement agents are canceled. Upon the end of the State of Emergency the public sales procedures shall be rescheduled. For the new procedures no taxes and fees shall be due.
No seizures of the bank accounts of natural persons and hospitals, no seizures on the employment remunerations and pensions, on medical equipment, as well as no inventories of movable objects nor of real estate properties, which are owned by natural persons, are allowed. Exceptions are permitted only for securing receivables for employment remunerations, alimonies, damages of delicts.
From the above said provisions are exempted the bank accounts of all companies and other persons, save for natural persons and hospitals. Hence on the bank accounts of a private companies is still possible the seizure of their bank accounts by an enforcement agent for any due receivables.
Furthermore, all already imposed security measures, such as seizures of bank accounts, foreclosures etc. continue to be applied.
VI. Regarding the default for execution of due payments
Until the end of the State of Emergency the legal consequences arising from the default for execution of due payments by private legal persons (such as natural and juridical persons, non-personal entities) shall not be applied. This rule includes accrual of interests, default payments, as well as the non-material consequences such as the right to declare the loan as preterm enforceable, the right to cancel a contract.
The above said rule means that in case the deadline for a specific payment is due within the term of the State of Emergency and the debtor fails to pay, hence comes into default, then he will not face the consequences of the default such as the imposition of interest for the default or default payments, nor the creditor will be entitled to declare the loan as preterm enforceable, nor the creditor will be able to cancel the contract due to the default of the debtor. However, upon lifting the State of Emergency and provided the debtor’s continuing default the creditor will then be entitled of all options enlisted above.
VII. Regarding the public announcement of the annual financial reports for 2019
In 2020 the terms under Art. 38, Para 1, point 1, 2 and 3 of the Accountancy Act are extended up to 30.09.2020. More specifically these terms relate to the public announcement of the annual financial reports by all traders (sole traders, companies), all non-profit organizations and all other enterprises.
In 2020 the term under Art. 38, Para 9, point 2 of the Accountancy Act for the public announcement of a declaration for lack of business activity in 2019 is extended up to 30.06.2020.
VIII. Regarding the notary procedures
The notary procedures are limited only to the most urgent cases. The Notary Chamber ensures Notaries Public on duty in ratio at least one Notary Public per 50 000 inhabitants for the respective district.
IX. Regarding the taxes
In 2020 the discount of 5 % will be granted to the persons, who have prepaid the tax on real estate properties or the tax on the vehicles for the whole year before 30.06.2020.
In 2020 the term under Art. 47, Para 2 of the Taxes on the Income of the Natural Persons Act is extended up to 30.06.2020. Hence, this is the term for payment of the due tax on the expenses for the natural persons acting as traders as per the Commercial Act, including the sole traders as well as the registered farmers.
In 2020 the term for submission of the annual tax return under Art. 50 of the Taxes on the Income of the Natural Persons Act for 2019 and for payment of the due tax is extended up to 30.06.2020 but again only for the natural persons acting as traders as per the Commercial Act, including the sole traders as well as the registered farmers. .
In 2020, again only the natural persons acting as traders as per the Commercial Act, including the sole traders as well as the registered farmers, will be granted a discount of 5 % on the due tax, if they submit their annual tax return for 2019 and pay the due tax prior to 31.05.2020.
However, the above said relief does not apply to the other natural persons, save for traders and farmers. For all other natural persons, save for the above said two categories, the term for submission of annual tax return for 2019 and payment of the due tax until 30.04.2020 is still applicable.
X. Regarding the procedures under the Tax and Social Insurance Procedures Code (TSIPC)
Until the lifting of the State of Emergency the term under Art. 171, Para 2 of the TSIPC shall not be applied, i. e. this is the absolute prescription period of 10 years, by expiration of which all public receivables are extinguished.
In some cases related to insolvency of the debtor under Art. 193, para 4 of TSIPC in the course of enforcement procedures cease to run.
No enforcement procedures under the TSIPC against debtors shall be initiated, save for the cases related to the defense of particularly important state and public interests.
All enforcement procedures against debtors, initiated under the rules of the TSIPC, are ceased. In all these cases the public enforcement agents are not allowed to undertake new enforcement actions, but only such aiming to secure the enforceable public receivables, as well as aiming to the distribution of already collected amounts.
The term under Art. 246, Para 10 of TSIPC for assignment of the purchased real estate property to the purchaser within a public enforcement procedure under TSIPC ceases to run as well.
The team of Ivanov and Yonkova Law Firm remains at disposal for provision of legal opinion and answers to any supplementary questions regarding the present or any other topic, you may have.
The present article does not represent legal opinion or advice on specific case or situation.
Author: Doychin Ivanov, attorney-at-law
Managing Partner Ivanov and Yonkova Law Firm