Global

Details

  • Service: Tax, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 2/12/2014

Bulgaria - Taxpayers can direct application of payments to taxes 

February 12:  Bulgaria’s constitutional court issued a decision holding as unconstitutional, a provision of the tax and social security procedure law that provided that tax and social security liabilities were to be settled in the order in which they arose.

The case identifying information is: Decision No. 2 (4 February 2014) under constitutional case No. 3/2013.


Accordingly, a provision directing for the settlement of social security liabilities in the order of their occurrence is repealed. The decision, therefore, reinstates pre-2013 provisions on what is the order of tax and social security liabilities being settled with remittances.


Tax liabilities generally are resolved and settled in the order of their occurrence; however, if for the current year, taxpayers may select which tax liability is being settled. Accordingly:


  • A payment may be allocated for settlement of liabilities from previous years.
  • If there are no liabilities from previous years but at the date of payment there are several liabilities from the current year, the taxpayer may select which liability is being settled with the payment.

KPMG observation

Implications of the decision are that taxpayers will again have the option to indicate which social security liability is being settled with a payment. With respect to tax liabilities, this choice is available only for liabilities from the current year.


Read a February 2014 report [PDF 92 KB] prepared by the KPMG member firm in Bulgaria: Constitutional Court of Bulgaria: The single tax and social security account is unconstitutional




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