THE LAW ON MEASURES AND ACTIONS DURING THE STATE OF EMERGENCY IS ALREADY IN FORCE
WHAT IS IMPORTANT TO BUSINESS?
By virtue of special issue 28th of the State Gazette the Law on measures and actions during the state of emergency declared by the National Assembly on 13 March 2020 (“the Law”) was promulgated. The Law regulates issues regarding employment relations between employers and employees, tax and procedural issues, state measures supporting business, etc. The Law is effective as from the beginning of the state of emergency, namely 13 March 2020, with the exception of certain explicit provisions that enter into force on 24 March 2020, and applies until the state of emergency is terminated.
Below we present a summary of the more important provisions affecting business.
I. Regarding employers and employees
1. Remote work and paid/unpaid annual leave
In view of the provisions of the Minister of Healthcare for remote working, the Law gives explicit right of employers to implement homeworking or remote working for its employees without their consent. The terms and conditions for assigning, executing and control over the remote work shall be determined by an order of the employer. It should be noted that formally employers have the right, but not the obligation, to implement homework/remote work where possible in view of the specifics of their respective activity.
The Law also provides employers with the right to give one-half of the paid annual leave to an employee without their consent. The use of this right is at the discretion of the employer for expediency, it is not bound by suspension of work of the enterprise, part of the enterprise or individual employees and is exercised by virtue of an order.
A specific case concerning the paid annual leave is when, due to the state of emergency, by order of the employer or the authorities, the work of the enterprise, part of the enterprise or individual employees is suspended. In this case, the employer is entitled to give all paid annual leave to the employee without their consent, including an employee who has not obtained 8 months of service. It should be noted that, if the order for suspension of work is issued by the authorities, the employer must not allow employees to their workplaces for the period specified in the order.
In addition, according to the Law at the request of certain categories of employees, the employer is obliged to allow paid annual leave or unpaid leave. These categories of employees are:
• a pregnant employee, as well as an employee in advanced stage of invitro procedure;
• a mother or adoptive parent of a child up to 12 years of age or a disabled child, regardless of age;
• an employee who is a single father or adoptive parent of a child up to 12 years of age or a disabled child, regardless of age;
• an employee who is under the age of 18;
• an employee with permanent disability of 50 and more than 50 percent;
• an employee with protection right upon dismissal.
Time spent on these leaves (including the unpaid leave) is acknowledged for work experience.
2. Introduction of part-time work
The Law provides the right of the employer at its discretion to determine throughout the state of emergency or for part of that period part-time work for employees in the whole the enterprise or part thereof. As before, the duration of part- time work cannot be less than half the statutory one as per the period of calculation, e.g. 40-hour working week with daily calculation of working time, can be reduced to 4-hour workday. Part-time work is paid in proportion to the agreed full-time pay. In view of the fact that the Law did not provide a different regime for the introduction of part-time work than the current one described in the Labor Code, the requirements for prior coordination with the representatives of trade unions and employees' representatives in the enterprise should be followed.
3. Payment of employment remunerations and support by the state
According to the Law, in the event of suspension of the work of the enterprise, the employee is entitled to their gross employment remuneration. State support provides for the possibility during the state of emergency, but for no longer than three months, the National Insurance Institute to cover 60 per cent of insurable earnings as at the month of January 2020 of employees. In order to benefit from this support, employers must meet the criteria determined by an act of the Council of Ministers. The funds transferred in this support are from the Unemployment Fund of the State Social Security. In case the employer does not pay the full amount of the remuneration to the employees for whom the funds are received, the employer is obliged to reimburse them.
II. Regarding tax obligations
1. Extension of terms for declaration and payment of tax obligations
As per the Law, the term for filing annual corporate tax declaration, as well as for corporate and expense tax payments, is extended to 30 June 2020. The remaining corporate income tax filing and tax filing terms, which are until 31 March, are also extended until 30 June 2020.
Corporate tax advance payments shall again be paid as per the forecasted profit, namely:
• If the person has filed an annual tax declaration for 2019 before the Law enters into force, the advance payments shall be determined on the basis of the declared in it. If necessary, the person will have the opportunity to file a corrective declaration;
• If the person submits an annual tax declaration for 2019 by 15 April 2020, the advance payments shall be determined on the basis of the declared in it;
• If the annual tax declaration for 2019 has not been filed by 15 April 2020, the advance payments shall be declared using the annual tax declaration template by 15 April 2020, with only that part relating to the declaration of advance payments for current year.
The 5% rebate for early payment of real estate and vehicle taxes is extended until 30 June 2020.
The term for filing annual tax declaration and paying tax under the Personal Income Tax Act is extended only for persons who are traders within the meaning of the Commercial Act, including sole traders and registered farmers, until 30 June 2020. The term of using a 5% rebate on the tax due for them is extended until 31 May 2020. For other individuals, the terms under the Personal Income Tax Act remain unchanged – annual tax declarations are submitted by 30 April 2020, and a of 5% rebate of the tax due is applicable to the electronic filing of the declaration and payment of the tax by 31 March 2020.
2. Extension of terms for financial reporting
For non-publicly traded companies, the period for the publication of the individual and consolidated financial statements for 2019 is extended to 30 September 2020, and the terms issuers and their equivalents is extended to 31 July 2020.
The period for the publication of the individual and consolidated financial statements of issuers and related entities for the first quarter and first half of 2020 shall be extended to 30 September 2020.
Companies which did not operate in 2019 shall declare this circumstance by 30 June 2020.
III. Regarding the consequences of delayed payment
As per the Law, the negative legal consequences of delayed payment of debts of private entities, including interest and penalties for delayed payment, as well as non-monetary consequences such as declaration of early payment, contract termination and seizure of property, shall not apply during the state of emergency. In practice, this means that individuals, companies, civil societies, associations, foundations, etc. may delay payment of their monetary obligations without negative legal consequences. As described, this legislative solution may result in legal uncertainty and serious obstruction of commercial turnover during the state of emergency and increase the indebtedness of participants in commercial turnover after the end of the state of emergency. Accordingly, the Law probably shall be amended and the lack of consequences of the delay payment shall be limited only to payments to banks, credit and leasing companies.
IV. Notary proceedings
According to the Law, notary proceedings shall be limited to urgent cases in compliance with health and hygiene requirements. Since the Law does not answer the question which cases are urgent, it may be considered that the performance of notarial proceedings (for example, in the authentication of a legal transaction with a notary deed; the assertion of the ownership of real estate; in the certifying of the date, content or signatures on private documents; the certifying of transcripts and copies of documents and papers; notary invitations, protests, certification of appearance or non-appearance of persons before the notary to perform actions, etc.). shall be upon coordination with the respective notary.
V. Legal proceedings, prescription periods and other procedures
As per the Law, for the period from 13 March 2020 until the end of the state of emergency, the following procedures shall be suspended:
• procedural terms for judicial, arbitration and enforcement proceedings, except for the time terms for criminal proceedings, under the Extradition Act and the European Arrest Warrant and proceedings relating to coercive measures;
• prescription periods and other periods provided for in statutory acts, with the expiry of which rights are extinguished or terminated or obligations arise for individuals, with the exception of the time limits under the Penal Code and the Law on Administrative Offenses and Penalties;
• terms for the implementation of instructions given by an administrative authority to parties or participants in proceedings, with the exception of proceedings under the European Structural and Investment Funds Management Act;
The following terms shall be extended by one month after the end of the state of emergency:
• the term which expire during the state of emergency and which relate to the exercise of rights or fulfillment of obligations of private entities;
• the effect of administrative acts, which is limited in time and expires during a state of emergency.
All announced public sales and enterings in possession announced by public and private enforcement agents shall be suspended. After the state of emergency is lifted, the public sales and enterings in possession shall be re-scheduled, with no new fees and charges.
No attachments shall be imposed on bank accounts of individuals and medical establishments, attachments on salaries and pensions, as well as inventory of movable property and real estate owned by individuals, except for allowance obligations, compensations for delicts and employment remuneration claims.
The period of validity of identity cards, which expire from 13 March 2020 to 31 October 2020, is extended by 6 months. For the duration of the extension, the identity card is a valid identity document only in the territory of the Republic of Bulgaria. At the request of the person, a new identity card may be issued before the expiry of the extended 6-month period. The same rules apply to valid driving licenses.
A foreigner with a permitted long-term residence in the Republic of Bulgaria, to whom the term of residence expires within the period of state of emergency, may submit an application for continuation of residence within 14 days after the cancellation of the state of emergency, without the term of the declared state of emergency being considered interrupted when the foreigner applies for long-term or permanent residence. A long-term resident of a foreign country to whom the long-term residence permit expires within the declared state of emergency may enter the territory of the Republic of Bulgaria without a visa within 14 days after the cancellation of the state of emergency.
VI. Specific next steps
The applicability of the Law to particular business cases is assessed on the basis of a thorough analysis of all the facts and circumstances on a case-by-case basis.
For more information and legal assistance for your business during the state of emergency, do not hesitate to contact the Legal Department of Colliers International at: email@example.com or +359 896 777 654.