As of 2019, amendments to the Bulgarian tax procedure legislation have entered into force. These introduced substantial changes for appealing tax assessments before the Bulgarian courts.
Under the new bill for amendment and supplementation of the Bulgarian Tax and Social Security Procedural Code ("TSSPC"), which entered into force on 1 January 2019, the rules for appealing tax assessment acts before the Bulgarian courts have changed significantly in terms of expanding the local jurisdictional power of the first instance courts, limiting the access to the last instance court and increasing the applicable state fee rates. The changes will affect all taxable persons (both individuals and companies) whose business activities are subject to tax in Bulgaria.
Prior to adopting the new bill, tax litigation disputes used to be resolved exclusively by the five largest Bulgarian administrative courts acting as first instance courts. Under the new rules, the local jurisdiction of the first instance courts is being decentralized among all twenty-eight Bulgarian administrative courts which are now competent to rule on tax disputes. Thus, under the new rules, a tax assessment act may be appealed only before the administrative court of the district where the permanent address or the seat of the taxpayer is located at the time the tax audit proceedings, which resulted in the tax assessment, were initiated by the tax authorities. This is expected to speed up the resolution of tax disputes, since it will relieve the larger administrative courts from being overloaded with tax litigation disputes.
While under the new rules the Bulgarian Supreme Administrative Court ("SAC") remains the competent court to rule upon tax litigation cases as a second (and last) court instance, the new bill introduces a materiality threshold which limits the possibilities of taxpayers of appealing first instance decisions of the administrative courts: Decisions concerning tax assessments which do not exceed an amount of BGN 750 (approx. EUR 384) in case of individuals or an amount of BGN 4,000 (approx. EUR 2,045) in case of companies, will be final and may not be appealed further before the SAC.
In addition, the new bill replaces the fixed state fee due by taxable persons for filing appeals before the SAC (i.e., BGN 25 or approx. EUR 13) with a proportionate state fee calculated as 0,8% of the amount in dispute, but subject to a maximum of (i) BGN 1,700 (approx. EUR 870) if the amount in dispute is below or equal to BGN 10,000,000 (approx. EUR 5,112,919), or (ii) BGN 4,500 (approx. EUR 2,300) in all other cases. The fixed state fee of BGN 50 (approx. EUR 25) which is due for initiating appeals of tax assessment acts before the first instance court, however, remains unchanged. The new proportionate state fee will significantly increase the cost of tax litigation for all taxpayers.
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