Social Security Amendments for 2015

Social Security Amendments for 2015

KPMG's Tax News outline and highlight legislative changes and trends in the area of tax.

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The second issue in 2015 summarises the amendments to the social security legislation in Bulgaria in effect from 1 January.

The State Social Security Budget Act for 2015 was promulgated in State Gazette on 24 December 2014. The Act introduces amendments to the Social Security Code, the Criminal Code and the Administrative Violations and Sanctions Act. 

Insurance income for 2015

The maximum monthly insurance income for 2015 is increased from BGN 2,400 to BGN 2,600, whereas the minimum monthly insurance income of registered agricultural and tobacco producers is increased from BGN 240 to BGN 300. 

Insurance income in the case of summation work principle 

When the summation work principle is applied for a period longer than a month, the maximum insurance income for the period equals the sum of the maximum insurance income for the respective months during the period for which this principle is applied. 

Choice of insurance scheme

Insured and self-insured persons born after 31 December 1959 and insured in a universal pension fund (UPF) are entitled to choose once to switch and be insured only under the Pension Fund, by contributing the higher insurance installment applicable to persons born prior to 1 January 1960. Upon request from the National Social Security Institute (NSSI), the accumulated funds in the UPF until the moment are transferred to the Pension Fund within 6 months from the date when the person declared their choice

Upon occurrence of an initial insurance obligation for an individual, the insurer should remit installments at the higher rate applicable for the Pensions Fund only until they are notified that the person has chosen to contribute to a UPF. The right to choose is to be applied within one year from the date when the grounds for insurance arose. Otherwise, the person will continue to be insured only under the Pension Fund.

Documents certifying insurance length of service and insurance income 

The obligation of the insurer to issue documents certifying insurance length of service and insurance income upon the termination of employment is abolished. Such documents are to be issued upon request of the insured person within 14 days from the date of the request. 

Monetary benefits under the provisions of the Social Security Code 

The monthly benefit for raising a small child after the expiry of the term of maternity benefit remains in the amount of BGN 340 for 2015, whereas the daily compensation for unemployment remains BGN 7.20 for 2015. 

The period used as a basis for the calculation of the maternity benefit is extended from 18 to 24 calendar months preceding the maternity leave during which insurance installments for general illness and maternity were paid. 

Re-calculation of certain monetary benefits 

Upon change in the insurance data for the respective calendar year, as declared by the insurer/self-insured person, the benefit upon temporary inability to work, labor readjustment, maternity leave and giving birth as well as upon adoption of a child between two and five years of age, paid to the insured persons based on the initial data will be re-calculated ex officio and the difference will be paid out until 30 June of the following year. 

Actual length of service 

The term “actual length of service” is introduced, which covers: 

  • The time a person worked under an employment contract or state service contract
  • The period during which the person has been hired under another contractual relation and has been mandatorily insured for disability, old age and death 
  • The period during which the person has been mandatorily insured at their own expense and has remitted the due insurance installments. 

The newly introduced term is of significance in case of payment of a disability benefit and establishes the obligation that the person must have actually worked through a portion of the insurance period. 

Right to a pension based on length of service and age 

In 2015, the insurance period necessary to acquire the right to a pension is increased for women from 34 years and 8 months to 35 years and for men from 37 years and 8 months to 38 years. This right can be utilized at the age of 60 years and 8 months for women and 63 years and 8 months for men. 

Criminal liability for concealment of insurance installments for state social security or health insurance

Criminal liability is introduced for concealment of insurance installments for state social security and health insurance. The concepts “in large amounts” (installments of above BGN 3,000) and “in extremely large amounts” (installments of above BGN 12,000) are defined. 

Criminal liability is imposed in the following cases: 

  • Declaring a lower insurance income than the actual one for the insured person 
  • Failure to file a return 
  • Confirming an untrue statement or concealing true facts when filing a return 
  • Compiling or using a document containing misstatements, or compiling or using false or forged documents upon carrying out business activities, upon performing bookkeeping activities or upon presentation of information before the revenue authorities 
  • Destroying or concealing, within the statutory terms, accounting documents, accounting registers or payroll documentation. 

If the concealment of insurance installments is qualified as one “in large amounts”, the penalty is imprisonment of up to 5 years and a fine of up to BGN 2,000; in case it is qualified as one “in extremely large amounts”, the penalty is imprisonment of 2 to 8 years and confiscation of part or the entire property of the person found guilty. 

A possibility for mitigation of the criminal liability is envisaged if, until the termination of the court case before the first instance court, the installments due, together with the interest accrued, are remitted to the budget. In the case of a violation qualified as a one in large amounts, the penalty is imprisonment of up to 2 years and a fine of up to BGN 500; in the case of a violation qualified as a one in extremely large amounts, the penalty is imprisonment of up to 3 years and a fine of up to BGN 1,000. 

In the above cases, the insured employee does not bear criminal liability, including for inducement and aiding. 

 

© 2017 KPMG Bulgaria OOD, a Bulgarian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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