Bulgaria

Tax and financial measures associated with COVID-19

20 April 2020

Tax measures

With regard to taxes and tax related procedures the following most important measures have been proposed:

  • Corporate Income Tax
    The deadline for submission of Corporate Income Tax (CIT) returns for 2019 and payment of the CIT due is extended to 30 June 2020 (normally 31 March 2020).
    The new deadline for payments and reporting of tax on expenses is 30 June 2020 (normally 31 March 2020).
  • Personal Income Tax
    The deadline of submission of personal income tax returns is extended until 30 June 2020 (normally 30 April) but this is applied only for individuals which are traders under the Commercial Act and for certain agricultural procedures.
  • Other taxes (local taxes -real estate tax and tax on vehicles)
    The deadline for payment with 5% discount of the total amount of the real estate tax and tax on vehicles for 2020 are extended until 30 June 2020.
  • Statute of limitations and enforcement proceedings
    Suspension of statute of limitations, enforcement proceedings and initiation of new enforcements proceedings will be introduced for the period of state of emergency.
  • Indirect tax measures (VAT and Custom)
    New powers of the Customs Agency to donate confiscated health-protecting goods. The Customs Agency is entrusted with the power to donate confiscated goods if the can be of use in the preservation of the public health to the hospitals, the Red Cross, kindergarten or schools.

Financial Reporting

Preparation and publication of the Annual Financial Statements for 2019 is extended to 30 September 2020, instead of 30 June. The Accountancy Act provides for the possibility to sign the annual financial statements for 2019 by means of an electronic signature.

Social security measures

In response to the Coronavirus epidemic, the Bulgarian government has introduced measures to aid businesses and individuals impacted by COVID-19:

  • Mandatory paid leave – during the state of emergency employers will be allowed to release their employees in up to half of their paid leave without the consent of the employee;
  • Employers may unilaterally order employees to work from home or remotely,
  • Reduction of the working hours of the employees. This measure may be implemented in case of decrease of the workload and may be applied towards all or part of the employees.
  • Employers may take necessary and justified steps to check the health condition of employees;
  • Enterprises with terminated work by order of government authority during the state of emergency will be provided with possibility of compensation through the National Social Security Institute, which will be able to pay 60 percent of the salaries of employees for up to three months during the period.

Employee and employer supportive measures

The Bulgarian government announced a scheme according to which it will compensate the employers affected by the COVID pandemic. Enterprises with terminated work by order of government authority during the state of emergency will be provided with possibility of compensation through the National Social Security Institute, which will be able to pay 60 percent of the salaries of employees for up to three months during the period.

Bank loans and business support

Following the Comply or explain principle, on 3 April 2020 the Governing Council of the Bulgarian National Bank (BNB) approved Moratoria prepared by the banks. The moratoria is an opportunity for borrowers to renegotiate the terms and conditions on their bank loans and repayment schedules. Borrowers who have experienced financial difficulties due to the influence of COVID-19 and are already experiencing or envisage to experience difficulties in payment of their obligations, will be able to agree with their servicing banks deferring the payment of the obligations under their bank loans.

Other measures
The state is currently committed to stimulate individuals and businesses by providing the Bulgarian Development Bank (BDB) with a resource of BGN 700 million to be used as a portfolio guarantee to commercial banks for the loans granted by them to individuals and legal entities.

Interest-free bank loans for individuals
Commercial banks may grant interest-free consumer loans of up to BGN 1,500, aiming to support individuals who are on unpaid leave due to the situation in Bulgaria. It is expected that these bank loans will be available for self-insured individuals as well.

Bank loans for legal entities
BGN 500 million is expected to be earmarked for business support through corporate loans of up to BGN 2 million to be granted by commercial banks. The financial resource will be directed mainly to the most affected sectors – retail, transport, hotel and restaurant business, tourism, pre-school education in the private sector, artistic and creative activity, sports, etc.

Additional measures

Procedural measures. Seizure of terms.

  • Any pending judicial terms under civil, commercial, forcible execution and administrative court cases shall be seized for the duration of the State of Emergency. The above requirement is not applicable towards criminal court cases;
  • Any statutory terms which lead to termination or to arising of rights of private individuals shall be seized for the duration of the State of Emergency;
  • Injunctions are not imposed over bank accounts of natural persons and medical centers, over employment remunerations and pensions except for the cases when this is necessary for repayment of debt arising out of maintenance obligation, tort or employment relationship;
  • The notary certifications and notary proceedings shall be limited only to the urgent cases for notary certification. The Bulgarian Notary Chamber shall ensure that there is one notary per 50.000 citizens to take over the urgent cases;
  • The term of validity of the identification cards and driving licenses of Bulgarian citizens as the term of validity of residence permits of foreigners allowing them to reside permanently in Bulgaria which expires in the period 13.03.2020 – 31.10.2020 shall be extended with 6 months;

As the situation continues to change, the Bulgarian government may propose further supportive measures for business.

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