Following numerous legislative proposals for amendments and supplements between first and second voting and a partial presidential veto, the Bulgarian parliament adopted the Act on the Measures and Actions during the State of Emergency on 23 March 2020.
Effective with only minor exceptions from 13 March 2020 until the end of the state of emergency (on 13 April 2020, unless it is extended further) the Act contains the following measures affecting Bulgarian business:
Depending on the nature and specifics of the work, where possible employers can introduce work from home or remote work. This can be done without the consent of employees. Part-time work may also be introduced as a temporary measure during the state of emergency.
Changes were also made to rules governing annual leave. The employer may grant up to half paid annual leave to employees without their consent. If the operation of the business has been suspended (either by order of the employer or a competent authority), the employer can grant paid annual leave to employees, regardless of whether they are eligible for holiday entitlement (i.e. whether they have been with the company for eight months). In addition, employers must approve the holiday requests of mothers or single fathers of children below 12 years or of disabled children, pregnant and disabled employees, employees below the age of 18, as well as other groups of employees.
The operation of some businesses (e.g. restaurants, cafes, bars, gyms) has already been stopped by order of state authorities as part of the state of emergency measures. More businesses may be suspended as a result of government intervention. In these cases, employers must not admit employees into the workplace. All other employers are permitted at their discretion to suspend business operations, partially or entirely.
In both cases, employees are entitled to receive their full salaries with the National Social Security Institute paying 60% of salaries in certain sectors during the state of emergency or for up to three months. The criteria for applying this rule to businesses will be set by the Council of Ministers and announced by decree, but it is expected that this measure will apply specifically to those businesses, which suffered suspended operations during the state of emergency. A draft decree has specified the entertainment, food industry, transportation and sports sectors as primary targets for state support.
Tax and accounting
The Act extends deadlines for submitting the following tax returns and accounting reports:
- annual corporate income tax returns;
- annual activity reports of companies;
- annual personal income tax returns; and
- financial statements of companies.
The advance instalment for corporate income tax for 2020 remains due, and the Act stipulates specific rules for the determination of the amount of the instalment.
The 5% discount for early submissions and payment of personal income tax can be applied if the tax due is paid in full by 31 May 2020. Similarly, the deadline for the application of the 5% discount on real estate taxes and motor vehicle taxes is extended until 30 June 2020.
For further information on the measures introduced and the specific tax and accounting deadlines, follow this link to our Law-Now published by our tax professionals.
Public liabilities and proceedings under Tax and Social Security Procedure Code
Until the state of emergency is revoked, the statute of limitations for public liabilities, such as tax and social securities is suspended.
Actions by public enforcement officers is also suspended. Public enforcement officers, however, will be entitled to impose measures to secure the collection of public liabilities and to initiate actions for distribution.
Payment obligations may be delayed
According to Article 6 of the Act, from 13 March 2020 until the state of emergency is revoked, no default interest or liquidated damages will be due as a result of delay on payment obligations. Furthermore, creditors will not be allowed to enforce acceleration clauses, terminate relevant contracts or seize movable assets in the event of payment delays during this period. The provision was adopted as an alternative to the initial proposal for temporary suspension of payments to banks and other financial institutions under loan agreements. The provision is open to interpretation and is likely to be amended in the coming weeks.
Suspension of terms
All terms related to the exercising of rights or performance of obligations, which will elapse during the state of emergency, will be prolonged with one additional month after the cancellation of the state of emergency. Identical extensions apply to all administrative acts whose legal effect expired during the state of emergency.
The Act suspends all procedural terms on administrative, litigation, arbitration and enforcement proceedings. Only terms related to criminal proceedings and proceedings under the Extradition and European Arrest Warrant Act will continue.
Unlike the initial draft of the Bill, the Act suspends all statutes of limitations, except for those related to criminal proceedings and administrative offence proceedings.
Individuals, having outstanding liabilities subject to enforcement proceedings will benefit from the following measures:
- cancelation of all public auctions; and
- temporary suspension of initiation of enforcement actions, such as freezing bank accounts, salaries or pensions. Certain enforcement actions against hospitals are also temporarily suspended unless they relate to maintenance obligations, torts or salaries.
The Act suspends all procedural terms related to the work of the Commission for Forfeiture of Illegally Acquired Assets, including deadlines for submission of compulsory declarations and terms related to conflict of interest proceedings and proceedings for confiscation of illegally acquired assets. The May 15 deadline of the year following the respective year for the submission of the annual declaration for interest and assets remains unchanged.
The deadline for public companies to hold their annual general meetings is extended to 30 September 2020. These companies must ensure public disclosure of their annual financial reports by 31 July 2020.
Notary certifications arе limited to urgent ones. The Notary Chamber will ensure at least one notary public for each 50,000 individuals in each region.
The Public Procurement Act will not be applied to procuring hygiene materials, personal protection items, medical supplies and laboratory equipment for disposal of dangerous medical wastes. In addition, any obligation by contracting authorities to use the e-tendering platform is postponed.
The Health Minister can prohibit export of medical products by order of the Medical Products Act until the state of emergency is concluded. Violating companies can be penalised up to BGN 50,000 (EUR 25,573).
Further measures by the Health Minister
The Health Minister can impose any measures limiting the right of movement, suspending or limiting the operation of certain public developments or sites, and can temporary suspend any service provided to citizens.
All previous bans on mass gatherings remain in force.
Per previous orders, all visits to shopping malls are banned, except for pharmacies, food stores, banks and insurance offices.
Bars, gyms, cinemas, coffee shops and many other outlets must remain closed, while fast food and other restaurants are allowed only to make home deliveries.
For more information on measures in Bulgaria to support business during the state of emergency, contact your regular CMS advisor or local CMS experts: Jenia Dimitrova, Maria Lazarova, Zornitsa Stoykova and Yana Antonova.