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January 4, 2023

Law on Application of Provisions of the Law on the 2022 State Budget Law of the Republic of Bulgaria, the 2022 State Social Security Budget Law and the 2022 National Health Insurance Fund Budget Law

In State Gazette issue 104 of 30 December 2022 was promulgated the Law on Application of Provisions of the 2022 State Budget Law of the Republic of Bulgaria (SBLRB), the 2022 State Social Security Budget Law (SSSBL) and the 2022 National Health Insurance Fund Budget Law (NHIFBL), (hereinafter referred to as “the Law”). The purpose of the Law is to regulate the temporary application in year 2023 of some of the provisions of SBLRB, SSSBL and NHIFBL until the adoption of the laws on the State Budget, State Social Security Budget and National Health Insurance Fund Budget for year 2023.

The Law enters into force on 1 January 2023 and is effective until the adoption of the 2023 state budget law, but for no more than 3 months. The term stops running for the period from the date of dissolution of the present National Assembly until the date of constitution of the next National Assembly.

The most important provisions of the Law are related to:

1. Prolonging the effect of the provisions of SBLRB regarding food vouchers

By means of Art. 1 of the Law, the effect of the provisions of § 1, para 2-5 and para 7 of SBLRB is prolonged, regulating:

• The opportunity food vouchers to be used also for payment of other goods and services (bills for utility services, services provided by cultural institutions and tickets for film screening, tourist services, etc.).
• The value of food vouchers that are not subject to one-off tax on expenses in case the conditions of Art. 209 CITA are fulfilled.

By means of § 3 of the Transitional and Conclusive Provisions (TCP) of the Law, the way of determining the taxable base for tax on social benefit expenses in respect of food vouchers is regulated for the months until the adoption of the 2023 state budget law, by analogy of the provisions in force in 2022.

By means of § 10 of the TCP of the Law the Corporate Income Taxation Act (CITA) is amended and the value of food vouchers which are not subject to one-off tax on expenses is changed from BGN 80 to BGN 200. This amendment enters into force from the date of enactment of the 2023 state budget law. In view of the limited and temporary effect of the Law, it is possible certain period to remain unregulated by either the Law or the new provisions of CITA.

2. Tax relieves for children under art. 22c and Art. 22d of the Individuals’ Income Taxes Act (IITA)

The provision of Art. 1 of the Law prolongs the term for application of the amounts of tax relieves under Art.22c (relief for children) and Art. 22d (relief for children with disabilities) of IITA, determined by § 2, para 1-2 of SBLRB – decrease of the taxable base by BGN 500 per month for a child, BGN 1,000 per month for 2 children, BGN 1,500 per month for three and more children, and for children with disabilities – BGN 1,000 per month.

By means of § 7 of the TCP of the Law an opportunity is provided the relieves to be used for decreasing the taxable base for employment income determined under art. 42 IITA. 

In case of advance taxation of income from business activity and rental income, the relieves are used by decreasing the advance tax due on quarterly basis, respectively by the amount of BGN 150 for one child, BGN 300 for two children and BGN 450 for three and more children, and BGN 300 for a child with disability.

The condition the tax relieves to be used by only one of the parents is preserved.

3. Effect of the provisions of SSSBL

The effect of the provisions of SSSBL is prolonged for the period mentioned above regarding:

• The amounts of the minimum income for social security purposes per professions and positions (Art. 9, para 2 SSSBL);
• Minimum income for social security purposes of self-insured individuals and agricultural producers (BGN 710);
• Maximum income for social security purposes (BGN 3,400);
• Minimum and maximum daily unemployment compensations;
• The cash compensation for raising a child;
• The amounts of the contributions to Labour Accident and Professional Disease Fund;
• The exemption from the payment of contributions to Employees’ Guaranteed Receivables Fund.

4. Effect of the provisions of NHIFBL

By means of Art. 3 of the Law the effect of some of the provisions of NHIFBL is prolonged for the same term, where the most important is that the rate of the health insurance contributions is preserved – 8%.

This material is not exhaustive, but rather has general information nature and does not constitute specific advice or consultation. Should you have questions, do not hesitate to contact us at Tel. + 359 2 9433700, Fax + 359 2 9433707, e-mail: office@afa.bg or at the following address: 1504 Sofia, 38, Oborishte Street.

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