At New Balkans Law Office (www.newbalkanslawoffice.com), we regularly provide comprehensivesupport to UK and foreign-owned businesses operating in Bulgaria. Our servicesinclude subsidiary incorporation, day-to-day operations management, and taxoptimisation. We also recently helped a client of ours to have its public debtsdeclared extinguished and written off successfully.
Here, we’ll explore the process ofhaving public debts declared extinguished and written off. By understanding thestatutory limitations and necessary actions, you can effectively optimise yourbusiness’s expenditures while keeping it financially viable.
If your company has been operating inthe Bulgarian market for some time, a significant portion of your profits haslikely gone toward the payment of state and local taxes. Despite Bulgariahaving the lowest tax rate in Europe, it’s always beneficial to minimisebusiness expenditures to ensure optimal performance and liquidity.
Understanding theExtinguishment of Outstanding Public Debts
One effective way to achieveoptimisation is by monitoring your outstanding public debts. . Similar to otherjurisdictions, these debts, despite being due and payable, may be consideredextinguished after a certain period. This period is known as the statutorylimitation, and it signifies that if your company has outstanding debts and noaction has been taken by the state or municipality to collect them, you maylawfully consider the debt extinguished and not pay it.
To qualify for public debt write-off, aminimum of 5 years must have passed since the debt’s maturity or the lastaction taken by the authorities for its collection. Furthermore, even if actionhas been taken, the debt shall be considered unconditionally extinguished after10 years from its maturity.
Actions Taken for DebtCollection
The actions taken by authorities fordebt collection can include various steps, such as establishing the existenceof the debts through official acts, sending invitations for voluntary payments,initiating enforcement proceedings, etc.
Initiating theWrite-Off Process
Although the right to a write-off arisesautomatically based on the law, you must submit a request for write-off to theappropriate entity: the National Revenue Agency for state taxes. If the debtsare owed with respect to municipal taxes and fees such as real estate taxes andwaste management fees, then one must submit a write-off request to therespective municipalities. You can conveniently submit these requests onlinewith an e-signature. In case of any unlawful refusal to grant the request, itcan be appealed before the administrative courts.
Conclusion
By understanding the process of writing off old public debts in Bulgaria, youcan effectively optimise your business’s expenditures and ensure financialviability. New Balkans Law Office (NBLO) is here to provide expert assistanceto UK and foreign-owned businesses, helping them navigate the complexities ofBulgarian law and achieve their financial goals. Contact us via the BBBA todayto learn more about how we can support your business.
You can read more publications from the New Balkans Law Office at the links below.
NBLO takes part in IBA’s Global Insolvency and Restructuring Conference
NBLO takes part in IBA’s International Financial Law Conference
New Regulations for Investors in Bulgaria
Alternative Investment Funds as a Tool for Diversifying Investments
Bulgaria’s start-up visa: a route into EU markets
Benefits of Shareholders’ Agreements
How to prove my Source of Funds/Source of Wealth from crypto asset profits
Investor protection before the European Court of Human Rights
Crypto Wealth Planning and Asset Protection in 2023
A Comparative Study of the Leading IP Box Regimes in Europe