The Act to Amend the Tax and Social Security Procedure Code (TSSPC) was promulgated in issue 94 of the State Gazette dated 4 December 2015. The newly adopted amendments to the TSSPC came into effect as of 1 January 2016. A summary of the key changes concerning the procedural rules as well as the automatic exchange of financial information between countries is presented below.
Changes in the procedural rules
The main amendments to the procedural rules are as follows:
- The court fees awarded in favor of the tax liable person cannot be requested for reimbursement from the National Revenue Agency (NRA) within a 30 day term. The general procedure for reimbursement provided for in the Civil Procedure Code (CPC) will be applied instead. Court fees will be refunded only when the NRA is provided with designated additional funds from the state budget.
- The amount of the court fees due by the tax liable persons in favor of the NRA is doubled when the appeal of the tax liable person against the respective act issued by the NRA was rejected.
- The simplified procedure under which no act for offsetting and reimbursement (AOR) is issued will be applied to all types of taxes (including VAT declared for refund).
- The payment of liabilities following the sequence of their occurrence is now applicable also to the liabilities assessed by municipalities.
- The absolute 10-year prescription period will be applied ex officio.
- The requirement for sending to the liable person an invitation for voluntary settlement prior to undertaking compulsory collection of the liabilities is cancelled. Forced execution of the liability may be undertaken the day after the term for voluntary payment has expired following the sending of a notice allowing for a 7-day period for payment.
- The personal liability for concealment of facts and circumstances as well as for actions of disposing with property of a legal entity which lead to the prevention of tax collection and obligatory social security installments is expanded. Such a liability will be borne not only by a member of a management body or a director but also by a procurator, a trade representative or the proxy of the respective legal entity.
- The terms for retention of accounting and commercial information will be applied also with regard to the electronic versions of these documents.
- When there is a particular request for the issuance of a certificate for existence or lack of tax and social security liabilities, no notary certified power of attorney will be requested from the person authorized by the title-holder to represent him/her before the revenue authorities when receiving the certificate.
- An act for assessment of liabilities (AAL) will also be issued in the cases when the respective tax law does not provide for declaring of the liabilities for the respective year (for example with regard to liabilities under the Local Taxes and Fees Act).
- The tax inspections for which nothing else is envisaged and which end up with the issuance of a protocol will be concluded within a term of six months; this term may be extended for another six-month period.
- The driver of the vehicle used for transportation of goods with a high fiscal risk is to declare the expected time of unloading/receipt of the goods in case the transportation documents are missing or the documents available with the driver do not contain this information.
- Upon tax registration of foreign individuals residing for a short or long term in Bulgaria, the personal information will be entered ex officio based on the data contained in the Unified Foreigners Register kept by the Ministry of Internal Affairs.
- There are also a number of amendments with respect to the enforcement procedures and the acts of the public enforcement agent.
Automatic exchange of financial information between states
A new Section in the TSSPC is created (Section III “a” “Automatic exchange of financial information in the field of taxation”) which introduces the requirements of:
- Directive 2014/107/EC amending Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation (Directive 2014/107/ЕС),
- The Agreement with the United States of America (USA) to Improve International Tax Compliance and to Implement FATCA (Foreign Account Tax Compliance Act), as well as
- The Common Reporting Standard for automatic exchange of financial information (CRS) of the Organisation for Economic Co-operation and Development (OECD).
The automatic exchange of financial information represents the systematic communication by the participating jurisdiction of financial information in the field of taxation on residents of the respective participating jurisdiction. The information is communicated without a prior request from the respective jurisdiction at pre-established regular intervals.
The persons obliged to collect and provide information are the qualifying reporting financial institutions (custodial institutions, depositary institutions, investment entities and some specified insurance companies). In practice, the main group of persons that are encompassed by the automatic exchange of information are banks, certain insurance companies, investment intermediaries, collective investment schemes and the companies managing them. This concerns Bulgarian financial institutions as well as branches of foreign financial institutions established in Bulgaria.
The qualifying reporting financial institutions are to provide the NRA with the information as determined in the TSSPC with regard to the respective financial accounts held with them. These accounts are defined in such a way as to limit the possibility for the account holders to avoid providing information through the transfer of assets to financial institutions or through investing in financial products which fall outside the scope of Directive 2014/107/ЕС, the FATCA Agreement and the CRS.
Pursuant to the amendments to the TSSPC, the NRA has already published lists of (i) the accounts which are considered excluded, and (ii) the participating jurisdictions.
The following deadlines for provision of information are introduced:
- The first year for which information is exchanged between the NRA executive director and the competent authorities of the participating jurisdictions is 2016, unless an international agreement for automatic exchange of financial information ratified by the Republic of Bulgaria, promulgated and enforced, provides for a different year.
- The first year for which information is exchanged between the NRA executive director and the competent authorities of the USA is 2014; different terms are set for the provision of the particular information required for the purposes of the FATCA reporting.
Deadlines have been established to perform the necessary review of the accounts by the reporting financial institutions.
Certain sanctions are introduced for not performing the obligations related to the automatic exchange of financial information in the field of taxation by the reporting financial institutions and the account holders.