20 years together

November 2013

30 November 2013

Act for Amendment and Supplement to the Income Taxes on Natural Persons Act

The Act for Amendment and Supplement to the Income Taxes on Natural Persons Act (AASITNPA) was promulgated in State Gazette, issue 100 of October 19, 2013.

Some of the major amendments introduced in the ITNPA concern the provision of tax reliefs for foreign natural persons, which is a result of the infringement procedure that was commenced against Bulgaria.

A new Para. 5 is added to Art. 22a, which stipulates that foreign natural persons who are resident for tax purposes in an European Union member-state or other state – party to European Economic Area Agreement may use the tax reliefs for young families.

The supplemented Art. 23 provides for the presentation of additional documents when submitting the annual declaration of tax return under Art. 50. In connection to the tax reliefs under Art. 22a, the new Para. 7 provides for the presentation of official legalized certifying documents issued by the competent authorities of the respective foreign state, as well as a translation made by a certified translator in the cases under Art. 22a, Para. 5. Para. 5 of Art. 23 is supplemented with a second sentence according to which the certifying documents, issued by a creditor bank settled for tax purposes in an European Union member-state or other state - party to European Economic Area Agreement, should be accompanied by a legalized translation in Bulgarian made by a certified translator.

Other important amendments in the ITNPA are related to the taxation of the income of agricultural producers.

According to the amended Para. 5 of Art. 13, the income from economic activity of merchants, sole-traders and agricultural producers is taxable. The word “tobacco producers” is removed from the provisions of ITNPA regarding the taxable income. This is done in compliance with the amendments made in the Tobacco and Tobacco Products Act according to which a separate and individual registration of the agricultural producers as tobacco producers is no longer required. Tobacco producers thus have all rights and obligations pursuant to the ITNPA like the agricultural producers, as long as they are registered as such in the respective register.

According to the amended Art. 29a, the agricultural producers choose if their income shall be subject to taxation on the total annual tax base under Art. 28, in which case the income is formed under the terms and conditions of Art. 26. Considering the right of choice which was granted to all agricultural producers, the obligatory taxation of their income as a sole-trader is no longer required. Therefore, with these amendments, the legislator revokes the direct taxation of the income on the annual tax base under Art. 28 and grants the choice to the agricultural producers.

Art. 46 regarding the tax rates of the final tax under Chapter 6 is also amended. According to the new Para. 4, the tax rates for the income of local natural persons obtained from interests on deposits in commercial banks under Art. 38, Para. 13 are differentiated in accordance with the year in which they were obtained and they decrease progressively after 2014 until 2017 and the following.

According to the amended Para. 7 of Art. 48, the natural persons carrying out economic activity under Art. 29a cannot benefit from the tax remission under Para. 6 as a state aid for agricultural producers.

According to the new Para. 4 of Art. 55, a declaration for due taxes shall not be submitted by enterprises which use a centralized payment system.

§ 12 of the Transitional and Final Provisions of the AASITNPA excludes from the scope of taxable incomes those obtained from an activity as agricultural producers and tobacco producers and which have been paid during 2013 under the form of state aids, subsidies or other grants from the European Agricultural Fund for Rural Development, the European Regional Development Fund and the state budget, if they have been paid for 2009 or previous years.

AASITNPA enters into force on January 1, 2014.

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Interpretative Decision No. 6 of November 6, 2013 by the Supreme Court of Cassation

The General Assembly of the Civil and the Commercial Colleges of the Supreme Court of Cassation (GACCC of SCC) has adopted an interpretative decision on some disputable issues related to the application of certain provisions of the Civil Procedure Code (CPC).
 
With regard to the issues raised GACCC of SCC has adopted the following:

1. The costs for attorney fee shall be awarded when the party has paid the fee. The method of payment should be entered in the contract: if via bank transfer, evidence thereof should be submitted, and in case of cash payment, the entry of the effected payment in the legal assistance contract shall be sufficient and shall qualify as a receipt.

2. The party should submit a list of costs as stipulated in Art. 80 of the CPC, even in case a single cost was incurred in the proceedings and evidence has been submitted thereof.

3. In case of reduction of the awardable attorney fee due to excessiveness under the procedure of Art. 78, Para. 5 of the CPC, the court shall not be bound by the restriction stipulated in of §2 of Ordinance No 1/2004 on the minimum amount of attorney fees (Ordinance No 1/2004) and shall be at liberty to reduce the fee to the minimum amount stipulated by the said ordinance.

4. The costs incurred by the petitioner in the course of proceedings for revocation of an effective judgement, where the petition has been granted, shall be awarded when the dispute is judged on its merits.

5. The costs incurred by the parties to interim proceedings shall be awarded when the dispute is finally judged on its merits with a view to its outcome.

6. The amount of the fee of an appointed representative within the meaning of Art. 47, Para. 6 of the CPC and Art. 48, Para. 2 of the CPC shall be determined by the court under the terms of Ordinance No 1/2004.

7. The appointed representative of the defendant under Art. 47, Para.  6 of the CPC shall not owe state fee, as the latter shall be payable by the party.

8. The absence of a submitted list within the meaning of Art. 80 of CPC, in case that the court has not pronounced a judgement on the request for costs, gives no ground for refusal to supplement the decision in its part regarding the cots.

9. The request for amendment to the judgement in its part regarding the costs, where the party has not submitted a list under Art. 80 of CPC, is inadmissible.

10. State institutions shall owe a state fee in appellate or cassation reviews of judgements on employment lawsuits or ones based on pecuniary claims of state officials under the State Official Act.

11. A claim for costs under Art. 80 of CPC may be validly raised no later than at the court hearing closing the proceedings before the relevant instance.

12. Competent to judge on a request for exemption from state fee under Art. 83, Para. 2 of CPC in case of appeal is the court before which the request was brought.

13. Competent to judge on a request for exemption from payment of fees and costs under Art. 83, Para. 2 of CPC is the court panel, hearing the case.

14. The point from which the term under Art. 248, Para. 1 of CPC for submitting a request for supplement or amendment of the judgement in its part regarding the costs and with respect to a party that is not interested in its appealing starts running from the notifying of the judgement to the latter party, if the judgement is subject to appeal.

15. The judgement under Art. 78a of the Criminal Code, by which the criminal court exempts the defendant from criminal liability and imposes an administrative punishment, is treated as an effective sentence within the meaning of Art. 83, Para. 1, item 4 of CPC.

16. The minimum amount of the attorney fee for employment lawsuits with particular material interest shall be determined pursuant to Art. 7, Para. 1, item 1 of Ordinance No 1/2004.

17. For an appeal against admission of property partition state fee is due as in a claim not subject to estimation under Art. 18, Para. 1 in connection with Art. 3 of the Tariff for the State Fees Collected by the Courts under the CPC (the “Tariff”).

18. The state fee in case of objective cumulative consolidation of claims under Art. 422 in connection with Art. 415 of CPC shall be due in accordance with Art. 72, Para. 1 of CPC for each consolidated claim in the amounts, specified in Art. 1 of the Tariff, as the fee paid in the execution procedure is deducted from the total amount.

19. The concept “costs on the transfer of the property” within the meaning of Art. 364, Para. 1 of CPC includes in itself the notary fee.

20. The amount of the state fee in raising a claim for returning property, delivered on contractual grounds, ought to be determined by the type of protection sought and the respectively applicable substantive rule, which is relevant to the value of a claim under Art. 69 of CPC.

21. On lawsuits constituting litigious administration state fee to the amount under Art. 16 of the Tariff shall be due, unless otherwise stipulated in a legislative act.

22. The state fee in proceedings for imposing measures for protection against domestic violence (Art. 11, Para. 2 and 3 of the Protection Against Domestic Violence Act) shall be in the amount under Art. 16.

23. The state officials at the Ministry of Interior shall be exempt from payment of state fees for civil cases, related to their official relations.

24. The ruling of the appellate court on supplement or amendment of an appellate decision in its part regarding the costs may be appealed under the procedure of Art. 274, Para. 2 of CPC.

The decision has been signed with dissenting opinion by some of the judges.

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Interpretative Decision No. 3 of November 15, 2013 by the Supreme Court of Cassation

The General Assembly of the Civil and the Commercial Colleges of the Supreme Court of Cassation (GACCC of SCC) has adopted an interpretative decision on the following issues:

1. Is a decision of the General Assembly (GA) of a Limited Liability Company (LLC) necessary for the validity of a disposition transaction concluded by the body representing the company in case of disposition of a real estate over which the company has a title right or another real property right, in accordance with the competence of the GA provided for in Art. 137, Para. 1, item 7 of the Commercial Act (CA)?

2. Is the provision of Art. 38, Para. 1 of the Obligations and Contracts Act (OCA) applicable to the representation of commercial companies by their bodies when a commercial transaction is concluded by and between one and the same person acting in their capacity by virtue of the law as a body representing the two companies?

With regard to these issues, the GACCC of SCC has taken into consideration the following:

1. GA of a LLC is a decision-making body: the adopted decisions regarding the management issues specified in Art. 137, Para. 1 of the CA expresses the general volition of the shareholders. The manager’s competences include managing activities: organization and supervision of the company’s activities, as well as activities in their capacity as a volitive body. The manager subordinates to the decisions of the GA (Art. 141, Para. 1 of the CA) only with regard to the internal relations, whereas with regard to the relations of the company with third parties, the manager has no restrictions over their powers. The transactions concluded by the manager are deemed valid since they are concluded in the existence of will of the company. Whether the manager has acted without the prior decision of the GA under Art. 137, Para. 1, item 7 of the CA is a matter of importance with regard to the internal relations and is not relevant to the relations with third parties as the latter are obliged to verify neither the regulations regarding representation under the Articles of Association of the company, nor if there is an adopted decision on matters of competence of the manager. In addition, the conclusion of a preliminary contract does not constitute an act of acquisition or disposition within the meaning of Art. 137, Para. 1, item 7 of the CA, however, as far as each party has the right to request the declaring of the contract as final, the lack of a decision of the GA under Art. 137, Para. 1, item 7 of the CA shall not be considered as discrediting the preliminary contract and shall not be an obstacle to its declaration as final.

2. The representative body takes its actions in accordance with the given by law competence and exercises representative functions as part of its powers as a body of the legal entity. The representative body via which the legal entity enters into relations with third parties is part of the organizational structure of the legal entity. The representative body does not make a statement of volition as an independent legal person, and the statement of volition is considered as pertaining to the legal entity. On the contrary, the provision of Art. 38, Para. 1 of the OCA refers to the restriction of a validly arisen representative power of a legal person and concerns a transaction concluded on the basis of volition expressed by another person.

With a view to the above-mentioned the GACCC of SCC has adopted the following:

1. A decision of the GA under Art. 137, Para. 1, item 7 of the CA is not a necessary condition for the validity of a disposition transaction of a real estate over which the company has a title right or another real property right, concluded by the representative body of the company (manager/ managers).

2. The prohibition under Art. 38, Para. 1 of the OCA does not apply to the representation of commercial companies by their bodies when a commercial transaction is concluded by and between one and the same person acting in their capacity by virtue of the law as a body representing the two companies.

The decision has been signed with dissenting opinion by some of the judges.

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Interpretative Decision No. 8 of November 27, 2013, by the Supreme Court of Cassation

The General Assembly of the Civil and the Commercial Colleges of the Supreme Court of Cassation (GACCC of SCC) has adopted an interpretative decision on the following issues:

1. Under what circumstances is it admissible to claim a negative declaratory relief for title and other real rights?

2. Is there legal interest in claiming a negative declaratory relief for title and other real property rights where the plaintiff may file a claim for performance regarding the same right?

Upon deciding on the issues above, GACCC of SCC has taken into consideration the following:  

1. The equality of the parties to the lawsuit and the legal interest as the only prerequisite pursuant to Art. 124. Para. 1 of the Civil Procedure Code (CPC) for filing a claim for ascertaining the lack of a particular right mean that the court may not deprive one of the parties to the legal dispute of their right to initiate claim proceedings for ascertainment of the lack of the disputed right. The person denying the disputed right is an equal participant in the legal dispute and may be the first to file such a claim that may protect that person’s legal sphere to the fullest possible extent. The thesis that, in the absence of an explicit statutory provision it is inadmissible to claim a negative declaratory relief if the plaintiff contends that the defendant claims the title or another real property right over the same object, exclusive of his right, contradicts Art. 124, Para. 1 of CPC. If the legislator relates the legal interest in claiming a negative declaratory relief only to such claims as explicitly stipulated by law, it would have created a provision analogous to Art. 124. Para. 4, second proposal of CPC. Besides, it is not true that claiming a negative declaratory relief is always a subsidiary form of protection and that it is not admissible on the grounds that claiming a negative declaratory relief would not provide the full protection with respect to the disputed right. The type of claim and the scope of protection depend on the need preconditioned by the particular case of affecting the rights by the counterclaim.

Factual conditions may also be protected by claiming a negative declaratory relief. Such is the case in which the possession is hindered (but not taken away) before expiry of six months from its ascertainment by a person claiming without grounds to be the owner. There is also a legal interest in claiming a negative declaratory relief where the plaintiff may acquire the property on primary grounds or by restitution if the plaintiff denies the rights claimed by the defendant.     

2. Within the meaning of Art. 124, Para. 1 of CPC, the difference between the claim for performance and the declaratory claim is not contained in the difference between the subjective rights which are their subject, but in the interest causing the plaintiff’s need of protection. The court’s judgement on the admissibility of the declaratory claim depends not on the type of the disputed right, but rather on the extent to which the course of the dispute affects the legal sphere of the plaintiff. Where the right that is protected with the declaratory claim is only threatened, but not violated, the protection is limited only to affirming this right. Only the violation of the right preconditions the necessity of a claim for its recovery. There will be legal interest in a declaratory claim for title or another real property right where the legal sphere of the plaintiff is affected in such a way that requires protection through ascertainment of the right with the force of res judicata.  
 
On the grounds of the above, GACCC of SCC has adopted the following:

1. There is legal interest in claiming a negative declaratory relief for title and other real property rights, where: the plaintiff has an individual right that is challenged; the plaintiff relies on factual conditions or may gain rights if he denies the rights of the defendant. In the proceedings under this claim the plaintiff proves the facts from which the plaintiff’s legal interest arises, and the defendant – the facts from which the defendant’s right arises. The lack of legal interest leads to termination of the proceedings.

2. There is legal interest in filing a declaratory claim for title and other real property rights where the plaintiff may file a claim for performance regarding the same right.

The decision has been signed with dissenting opinion by some of the judges.

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