Act on the Measures and Actions during the State of Emergency

The State of Emergency Act was passed at second reading by the National Assembly on 20 March 2020 and promulgated in the State Gazette issue 28 dated 24 March 2020. The name was officially changed from State of Emergency Act to Act on the Measures and Actions during the State of Emergency declared by means of a decision of the National Assembly dated 13 March 2020 (hereinafter also referred to shortly as ‘State of Emergency Act’). The Act settles the measures and actions during the state of emergency on the territory of the Republic of Bulgaria. 

I. The Act on the Measures and Actions during the State of Emergency amends the following legislation:                                                                     

1. Changes in deadlines under the Accountancy Act (AA)

• The deadlines under Art. 38, para 1, items 1, 2 and 3 of AA, by which entities publish their annual financial statements, consolidated financial statements and annual management reports pursuant to Chapter Seven of AA, adopted by the General Meeting or the respective body, shall be extended until 30 September 2020.

This deadline shall apply to all traders under the Commercial Act, non-profit legal entities, and the other enterprises.

• The deadline under 38, para 9, item 2 of AA for publishing a declaration that the enterprise did not have operations in the reporting period shall be extended until 30 June 2020. 

• In 2020, upon preparing the annual financial statements for year 2019, the statements may be signed electronically.

When all signatures on the annual financial statements and the auditor’s report are electronic, the professional seal of the registered auditor is not required. In this case, the auditor’s registration number from the register under Art. 20 of the Independent Financial Audit Act shall be placed on the annual financial statements and the auditor’s report.

2. Changes in deadlines under the Independent Financial Audit Act (IFAA)

• The deadline for publishing the Transparency Report under Art. 62, para 3 of IFAA shall be extended until 31 July 2020. 

• The deadline under Art. 108, para 1, item 9 of IFAA by which the Audit Committee shall prepare and through its Chairperson submit to the FSC an annual report on its activities shall be extended until 30 September 2020. 

3. Changes in deadlines under the Insurance Code (IC)

• The deadline under Art. 126, para 1, item 4 of IC, in which the insurer, respectively re-insurer, shall submit for the purpose of financial supervision to FSC monthly reports and references shall be extended – by the end of the second month following the month they refer to.

 4. Changes in the Social Security Code (SSC)

• The deadlines under Art. 123, para 1, item 5, and Art. 123f, para 5 of SSC, by which the Actuary in charge shall prepare and submit to the management body of the pension insurance company and to the FSC an actuarial report for the preceding year, shall be extended until 30 September 2020.

• The deadline under Art. 190, para 1 of SSC, by which a pension insurance company shall submit to FSC its audited annual financial statements accompanied by auditor’s reports thereon, reports for supervisory purposes and annual management reports on the company’s activities and on the management of funds for supplementary mandatory pension insurance shall be extended until 30 September 2020. 

• The deadline under Art. 190, para 2 of SSC, by which a pension insurance company shall publish simultaneously on its webpage:

1. the audited annual financial statements of the company and of the funds for supplementary mandatory pension insurance managed thereby, accompanied by the auditor’s reports, approved by the General Meeting

2. the annual management reports on the company’s activities and on the management of funds for supplementary mandatory pension insurance

3. information on the proposal of the company’s management body for profit distribution or covering loss from the previous year and the decision of the General Meeting of company’s shareholders for profit distribution or loss coverage,

shall be extended until 30 September 2020.

• The deadline under Art. 252, para 3 of SSC, by which the annual reports for each professional scheme, containing reporting data on the funds accumulated and the charges and deductions made, to be submitted to the insurer company under the professional scheme and to the FSC, shall be extended until 30 September 2020.

• While the Act on the Measures and Actions during the State of Emergency is effective but for not longer than 3 months, the National Social Security Institute shall transfer to employers meeting criteria set by a decree of the Council of Ministers 60% of the January 2020 income for social security purposes of the employees employed by and insured by these employers. The funds shall be at expense of the Unemployment Fund of the state social security. If the insurer fails to pay the full amount of the remuneration of workers and employees for whom the funds were received, the insurer shall pay back the amounts received.

• During the state of emergency, the statutory deadlines for insured persons and pensioners shall be suspended. Applications, complaints and other documents related to pecuniary compensations, allowances and pensions shall be submitted electronically or through a licensed postal operator (Art. 3a of SSC).

5. Changes in deadlines under the Public Offering of Securities Act (POSA) 

• The deadlines under Art. 100n, para 1 and 2 of POSA, by which an issuer is obliged to publish its annual financial statements and annual consolidated financial statements, shall be extended until 31 July 2020.

• The deadlines under Art. 100о, para 1 and 2 of POSA, by which an issuer is obliged to publish 6-month financial statements for the first 6 months of the financial year and 6-month consolidated financial statements for the first 6 months of the financial year, shall be extended until 30 September 2020. 

• The deadlines under Art. 100о¹, para 1 and 2 of POSA, by which an issuer is obliged to publish a notification on its financial position and a notification on its consolidated financial position, shall be extended until 30 September 2020.

• The deadline under Art. 115, para 1 of POSA, by which the regular General Meeting of a public company shall be held, shall be extended until 30 September 2020.

• The deadlines under Art. 77n, para 12 of POSA, by which an investment intermediary shall submit to FSC and the Fund a report on its clients’ assets as at the last day of the previous month according to a standard layout approved by the Deputy Chair of FSC, shall be extended by the end of the month following the reporting period.

6. Changes in deadlines under the Markets in Financial Instruments Act (MFIA) 

• The deadline under Art. 128, para 4, by which an investment intermediary shall submit to FSC its annual financial statements in accordance with the requirements of the International Financial Reporting Standards, shall be extended until 31 July 2020.

• The deadline under Art. 190, para 1, first hypothesis, by which a market operator shall submit to FSC its annual statements, shall be extended until 31 July 2020.

7. Changes in deadlines under the Collective Investment Schemes and Other Undertakings for Collective Investment Act 

• The deadline under Art. 60, para 1, item 1, by which an investment company and a fund’s management company shall submit to the SFC annual financial statements prepared in accordance with the requirements of the International Accounting Standards, shall be extended until 31 July 2020.

• The deadline under Art. 60, para 1, item 2, by which an investment company and a fund’s management company shall submit to the SFC 6-month financial statements for the first 6 months of the financial year, shall be extended until 30 September 2020.

• The deadline under Art. 191, para 2, item 1, by which a national open-end investment fund shall submit to the FSC and the public its audited annual financial statements, prepared in accordance with the requirements of the International Accounting Standards, shall be extended until 31 July 2020.

• The deadline under Art. 191, para 2, item 2, by which a national open-end investment fund shall submit to the FSC and the public its 6-month financial statements for the first 6 months of the financial year, shall be extended until 30 September 2020.

• The deadline under Art. 92, para 1, by which a management company shall submit to the FSC its annual financial statements, prepared in accordance with the requirements of the International Accounting Standards and of contents approved by means of an Ordinance, shall be extended until 31 July 2020. 

• The deadline under Art. 92, para. 2, by which a management company shall submit to the FSC its balance sheet and profit and loss statement for the period ending on the last date of each quarter, as well as a quarterly report on its capital adequacy and liquidity, of contents approved by means of an Ordinance, shall be extended until 30 September 2020.

• Pursuant to Art. 64, para 2, a management company of a collective investment scheme shall submit to the FSC summarised information on the issue values and share redemption prices twice per month – for the period from the 1^st to 15^th of each month and from the 16^th till the end of the month. The deadline for this obligation shall be extended, namely – to 7 business days from the end of the respective reporting period.

8. Changes in deadlines under the Corporate Income Taxation Act (CITA) 

The following deadlines under CITA shall be extended until 30 June 2020:

• The deadline for submission of an annual tax return, of an activity report under the Statistics Act, and the deadline for payment of corporate tax (under Art. 92, para 2, and Art. 93 of CITA);
• The deadlines concerning payment of tax on expenses (under Art. 217, para 2 of CITA);
• The deadlines for submission of an annual tax return and payment of alternative tax on supportive and auxiliary activities under the Gambling Act, including submission to the National Revenue Agency of an annual activity report by a taxable person (under Art. 219, para 4 and 5, and Art. 241, para 2 of CITA);
• The deadlines concerning payment of alternative tax on income of budgetary enterprises (under Art. 252, para 1, and Art. 253 of CITA);
• The deadlines for submission of an annual tax return and payment of alternative tax by ship operators (under Art.259, para 2, and Art. 260 of CITA).

In 2020, advance corporate tax instalments under CITA shall be made in compliance with the provisions of Chapter 14 thereof and subject to the following conditions:

• when the 2019 annual tax return was submitted before the State of Emergency Act entered in force, the advance corporate tax instalments shall be made at the declared amount; if necessary, a taxpayer may submit an adjustment declaration pursuant to Art. 88 of CITA;
• when the 2019 annual tax return is submitted by 15 April 2020, the advance corporate tax instalments shall be made at the declared amount;
• when no 2019 annual tax return has been submitted by 15 April 2020, the advance corporate tax instalments shall be declared not later than 15 April 2020, by means of the annual tax return form and filling in only the part thereof concerning the declaration of advance corporate tax instalments for the current year.

9. Changes in deadlines under the Individual Income Taxation Act (IITA)

• The deadline for payment of tax on expenses by sole traders and other persons of a similar status (under Art. 47, para 2 of IITA) shall be extended until 30 June 2020.

• The deadline for submission of an annual tax return (under Art. 50 of IITA) and for payment of the tax due per the tax return on the annual taxable base by persons acting as traders within the meaning of the Commercial Act, including sole traders and registered farmers, shall be extended until 30 June 2020. 

• The deadline for eligibility for 5% discount by the aforesaid persons upon submission of the annual tax return under IITA online and payment of the tax due shall be extended until 31 May 2020.

There is no change in the deadlines for submission of an annual tax returns under Art. 50 of IITA by the rest of the individuals and for payment of tax due (incl. the deadline for electronic submission and eligibility for 5% discount of the tax due remains 31 March 2020, and the ultimate deadline for tax return filing and tax payment remains 30 April 2020).

10. There is no change in the deadlines for VAT declaration and payment, nor for declaration and payment of advance personal income tax and social security contributions.

11. Change in the deadlines for tax payments eligible for discounts under the Local Taxes and Charges Act (LTCA) 

• In 2020, the persons who pay by 30 June real estate tax or motor vehicle tax for the whole year shall be entitled to a 5% discount.

12. Changes in deadlines under the Tax and Social Security Procedure Code (TSSPC)

Until the state of emergency is revoked:

• the absolute statutory period of limitation of 10 years (under Art. 171, para 2 of TSSPC) shall not be applied;
• besides the already prescribed cases of suspension of the statutory period of limitation (under Art. 172, para 1 of TSSPC), it shall also be suspended for the period of the state of emergency;
• the term of forced execution in case of insolvency (under Art. 193, para 4 of TSSPC) shall be suspended;
• no execution proceedings shall be initiated under TSSPC, unless when this is necessary to defend particularly important state or public interests or when the execution could be thwarted or seriously impeded, or when the delay in execution may result in a significant and difficult to repair damage;
• forced execution proceedings under TSSPC shall be suspended; the actions performed prior to the suspension shall remain effective; following the suspension the public bailiff may not perform subsequent execution actions, but may perform actions to secure the receivable, as well as allocate amounts received from the execution; the forced execution proceedings shall resume after the end of the state of emergency; before the state of emergency ends, the execution proceedings may be resumed according to an order of the public bailiff upon the debtor’s request for execution with respect to:

а) receivables and cash from banks;

b) receivables from third parties

c) valuables kept in safe vaults, including the contents of the vaults;

• following the completion of actions as per the above paragraph, letters “a”, “b”, and “c”, the execution proceedings shall be suspended;
• the term related to entering into possession following a public sale (under Art. 246, para 10 of TSSPC) shall be suspended.

13. Changes in the Labour Code

1) Work from home and remote work in case of a state of emergency (new Art. 120b, para 1 and para 2 of LC)

In case of a state of emergency, the employer may assign to the worker or employee, without their consent, to temporarily perform their work from home or remotely (unless when this is impossible). In this case, the place of work shall be changed, while the other conditions in the employment contract shall remain unchanged.

The change shall be done by means of an employer’s order, setting the following conditions:

• The workplace; the employment remuneration in accordance with the remuneration schemes applied; the procedure for assigning and reporting work; the procedure for supplying materials and handing over finished products; the workplace costs and payment thereof; other conditions related to the specific requirements of work from home. (Art.107c, para 2 of LC)
• The matters related to the work, technical and other equipment at the workplace, obligations and costs for maintenance, other conditions for supply, replacement and maintenance of the equipment. (Art. 107i, para 2 of LC)

The employer may grant up to one half of the worker’s or employee’s paid annual leave even without their consent. (Art.7, para 2 of the State of Emergency Act). 

2) Suspension of operations in case of a state of emergency (new Art. 120c, para 1 and 2 of LC) 

In case of a state of emergency the employer may issue an order to suspend the company’s operations, a part thereof or the work of individual workers or employees for the entire period or a part thereof until the state of emergency is revoked. When in case of a state of emergency the operations of the company or a part thereof is suspended by an order of a state body, the employer shall not permit workers and employees to their workplaces for the period set in the order.

For the period of suspension of operations by an employer in case of a state of emergency, the worker or employee shall be entitled to their gross remuneration. (new Art. 267a of LC)

3) Introducing part-time work by the employer (Art. 138a, new para 2 of LC)

An employer may introduce part-time working hours for the operations of the company or a unit thereof, during the entire period of the state of emergency or for a part thereof (i.e. for work during a part of the statutory worktime – for instance, 4 hours per day).

4) Leave entitlement in a state of emergency (new Art. 172a, para 1, para 2 and para 3 of LC) 

When because of a state of emergency, the employer or a state authority has issued an order to suspend the operations of a company, a part thereof or of individual workers and employees, the employer may grant the worker or employee their whole paid annual leave even without their consent, including to a worker or employee with less than 8 months of length of service. 

The employer shall be obliged to permit the use of paid annual leave or unpaid leave in a state of emergency upon request by certain categories of workers and employees (pregnant women, mothers, sole parents, adopters, underaged persons, persons with permanent disability of at least 50%, entitled to protection from redundancy).

The period in which the leave is used as aforesaid shall be recognized as length of service.

14. Change in the Penal Code (PC)  

• A person who in a state of emergency sells goods at a price above the set one or before it has been set or approved following the provided procedure or receives for a service remuneration higher than the legally permitted one shall be punished with deprivation of liberty for one to three years and a fine of BGN 5,000 to BGN 10,000 (Art. 225, new para 5 of PC).

II. The Act on the Measures and Actions during the State of Emergency introduces changes also to:

1) Procedural terms

For the period from 13 March 2020 until the revocation of the state of emergency, the following shall be suspended:

• Procedural terms of court, arbitration and execution proceedings, with the exception of terms under the PC;
• Statutory periods of limitation and other terms provided for in statutory acts, whose expiry terminates rights or gives rise to obligations for private law subjects, with the exception of the terms under the PC and the Administrative Violations and Penalties Act;
• The terms for fulfilment of instructions issued by an administrative body to parties or participants in proceedings (Art.3).

The following shall be extended by one month from the revocation of the state of emergency:

• Statutory terms other than the aforesaid, which expire during the state or emergency and are related to exercising of rights or fulfilling of obligations of private law subjects;
• The effect of administrative acts which is limited in time and expires during the state of emergency (Art. 4).

 2) No public sales and distrains on accounts of individuals

• The Act provides for suspension of all public sales and entering into possession declared by state or private bailiffs (Art. 5, para. 1).
• No distraints shall be placed on bank accounts of individuals, distraints on salaries and pensions, as well as no inventories of movable and immovable property owned by individuals shall be made, other than for obligations for support, tort/delict and employment remuneration receivables. (Art. 5, para 2).

 3) Restriction of notary proceedings 

• Notary proceedings shall only be limited to urgent ones, in accordance with health and hygiene requirements. The Notary Chamber shall provide for notaries on duty (Art. 5, para 3).

 4) Reliefs for debtors

• Until the state of emergency is revoked, the consequences of delay in payments by private law subjects shall not be applied, including penalty interest and compensation for delay, as well as the non-pecuniary consequences such as early chargeability, contract cancelation and confiscation of property. (Art. 6).

 5) Extending documents’ validity terms 

• The validity term of IDs expiring between 13 March 2020 and 31 October 2020 shall be extended by 6 months, and the documents shall only remain valid on the territory of the Republic of Bulgaria. Upon request, a new ID may also be issued before the expiry of the extended 6-month term (§ 10, para. 2).
• The validity term of driver’s licenses expiring between 13 March 2020 and 31 October 2020 shall be extended by 6 months, and the documents shall only remain valid on the territory of the Republic of Bulgaria. Upon request, a new license may also be issued before the expiry of the extended 6-month term (§ 10, para. 3).
• The validity term of residence permits of foreigners in Bulgaria expiring between 13 March 2020 and 31 October 2020 shall be extended by 6 months, and the documents shall only remain valid on the territory of the Republic of Bulgaria and shall certify only the right of stay. Upon request, a new residence permit may also be issued before the expiry of the extended 6-month term (§ 10, para. 1).

The Act shall be effective as from 13 March 2020, with the exception of some provisions including the ones concerning: the suspension of all public sales and entering into possession (in Art. 5); extension in 2020 of the terms under CITA until 30 June 2020 (in § 25); entitlement to 5% discount of persons that prepay tax on real estate and motor vehicles for the whole year by 30 June (in § 26); the deadlines under IITA (in § 27); the changes in TSSPC (in § 29), which are effective as from the date of promulgation of the Act in the State Gazette, and it shall be applied until the state of emergency is revoked.

This material is not exhaustive, is only of general nature and does not represent a specific advice or consultation. Should any additional questions arise, please do not hesitate to contact us at tel.: 02/943 37 00, fax: 02/943 37 07, е-mail: office@afa.bg or at: 38, Oborishte Str., Sofia 1504.