Bulgaria

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Return to homepage  |  Last updated: 14 May, 2020

The act on the Measures and Actions was finally approved by the National Assembly on 23 March 2020 after the President exercised his right to veto and returned it for further discussion and was promulgated in State Gazette on 24 March 2020.

Bank moratorium

• Following the Comply or explain principle, on 3 April 2020 the Governing Council of the Bulgarian National Bank (BNB) announced its decision to comply with the EBA Guidelines and required all Bulgarian commercial banks to prepare and submit a unified draft rules for a private Moratoria on bank loan payments in relation to the COVID-19 situation (the “Moratoria”), which would enable banks to offer flexibility and incentives for bank loan payments
• Deferral of payments under bank loans for a period of up to six months, but no later than 31 December 2020. Subject to deferring may be all amounts due, or the principal only
• The scope of the Moratoria covers the widest possible range of borrowers, both individuals and legal entities. The Moratoria will apply to all bank loans concluded before 31 March 2020, regardless of their type, size, purpose, and established collaterals
• Eligible are all borrowers who, until 1 March 2020, have fulfilled the obligations under their bank loans in a timely manner timely (the banks have accepted that a maximum delay of up to 90 days from the due date shall be considered as “timely performance”)
• The Moratoria provides for three mechanisms for deferral of the payments, as follows:
  • Mechanism 1 – deferral of principal and interest for up to six months
  • Mechanism 2 – deferral of principal only for up to six months
  • Mechanism 3 – applicable for revolving products.
• Any borrower who wants to take advantage of the measures provided for in the Moratoria must contact their servicing bank by 22 June 2020, in order to receive instructions on the procedure to be followed, the necessary documents to be provided, as well as the applicable terms

Additional financing options

• The state is currently committed to stimulate individuals and businesses through different options: interest-free loans, grants, etc.
• Some of these forms of financing are:
  • Provision by the Bulgarian Development Bank (BDB) of a portfolio guarantee to commercial banks for the loans granted by them to individuals and legal entities
  • Interest-free bank loans for individuals up to BGN 1,500 per month for a period of three months, i.e. BGN 4,500 in total
  • Working capital bank loans and credit lines with a maximum amount of BGN 48,800 primarily aimed at micro and small companies
  • Grants under EU programs, etc.

Start-ups:

• 250 million capital increase of the Bulgarian Bank for Development which will guarantee up to €1.25 billion in bank loans to companies.

Rights of the employers:

• Remote work (home office) and teleworking may be introduced without the consent of the employees
• To suspend the work of the company, certain departments or certain employees
• Part-time work without the consent of the employees
• To provide half of the paid annual leave without the consent of the employees
• Certain categories of employers may receive from the State 60% of the salary of the employees, as well as 60% of the social security contributions due by the employer /a separate Decree of the Council of Ministers in this regard was adopted on 30 March 2020

Start-ups:

• 60% coverage of employees salary for the first month

Suspension or non-application of certain statutory terms

Until the state of emergency is lifted, certain statutory terms will cease to apply or enforcement proceedings will not be initiated, as follows:

• The limitation period for repayment of public liabilities will cease to run for the duration of the state of emergency. Until the state of emergency is lifted, the 10-year period for repayment of public claims does not apply.
• Enforcement proceedings under the Tax and Social Security Procedures Code will not be initiated except in special cases to which this prohibition does not apply (no prohibition is provided for the imposition of preliminary security measures in the course of tax control proceedings and for securing evidence in fiscal control).
• The enforcement on debtors' assets for public claims is suspended, but security measures may be imposed and the amounts received in the enforcement procedure may be distributed. Upon the request of the debtor, the enforcement measures may be initiated against its valuables in vaults, on its receivables and funds in banks.
• The limitation periods for the establishment of administrative offenses and for the payment of fines and sanctions are not extended and do not cease to run for the period of the state of emergency.

Preparation, signing and publication of the Annual Financial Statements for 2019 in accordance with the Accounting Act:

• The deadline for publication of the annual financial statements for 2019 is extended to 30 September 2020 and the deadline for filing of declaration for lack of activity is extended to 30 June 2020.
• The Act provides for the possibility to sign the annual financial statements for 2019 by means of an electronic signature under Article 13 of the Electronic Document and Electronic Certification Services Act on behalf of the legal representative of the enterprise, the preparer of the financial statements and the registered auditors who have performed an independent financial audit of the financial statements

Main sources of information:

• Dedicated KPMG Bulgaria web page “Working in times of COVID-19”

Tax: Kalin Hadjidimov – khadjidimov@kpmg.com
Legal: Juliana Mateeva – jmateeva@kpmg.com