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The State of Emergency due to the Covid-19 pandemic and its implications in Bulgaria

General

In response to the growing pandemic of COVID-19, a state of emergency throughout Bulgaria (the “Emergency”) has been declared from 13 March to 13 April 2020.

On 20 March, the Bulgarian Parliament adopted the Law on State of Emergency (the “Law”), promulgated in State Gazette on 24.03.2020.  The Law regulates the measures and actions during the Emergency in Bulgaria, as the Minister of Health may also introduce other temporary measures and restrictions.

Employment

The Law covers the following main subjects and measures which are relevant for employment:

  1. Remote working and working from home

Employers are allowed, depending on the nature of the work and possibility for remote working or working from home, to assign to employees without their consent remote working or working from home.  In such case only the workplace needs to be amended, the rest of the employment contracts` provisions remain unchanged.

  1. Suspension of work

Any employer or public authority may by an order suspend work at an enterprise or a part of it, or of individual employees until the end of the Emergency.  Where a public authority has suspended work, the employer is barred from allowing employees access to their workplaces.  Employers must pay 100% of the gross salary to all employees during the period of suspension of work, irrespective of the reasons for the suspension (decision of the employer or of a public authority).

  1. Obligation to grant leave

Where, due to the Emergency, or an order of a public authority, the employer has terminated the work of the enterprise, part of the enterprise or individual employees, the employer shall be entitled to grant paid annual leave to the employee without his or her consent, including to an employee who has not acquired 8 months of service.

Employers are obliged to allow the use of paid leave at the request of certain categories of employees such as pregnant employees, single parents, employees under age of 18 etc.  Employers can place unilaterally employees on up to one half of their annual paid leave, without their consent.

  1. Part-time working hours

Employers may introduce reduced working hours for the entire duration of the Emergency (for employees who work full time).

  1. State aid for employers

For a period of up to 3 months, the National Social Security Institute may transfer to an employer 60% of the amount of the individual social security income for January 2020 of certain employees based on criteria to be adopted further by the Bulgarian government.

Pursuant to Order РД -01-124 dated 13 March 2020 issued by the Minister of Health, all employers are instructed to transfer employees to remote working where possible.  Where not possible they must ensure the introduction of increased anti-epidemic measures, including filters, disinfection and regular airing of premises and instructions on personal hygiene to staff, and must not admit employees or visitors having symptoms of acute contagious diseases.

Implications for some procedural legal issues

Until the Emergency is lifted, the following shall cease to run:

  1. the procedural time-limits for judicial, arbitration and enforcement proceedings, other than time limits for criminal proceedings, under the Extradition Act and the European Arrest Warrant and proceedings related to coercive measures;
  2. the statute of limitations and other time limits provided for in statutory acts where rights are extinguished or terminated or obligations arise for individuals on their expiry, other than time limits under the Penal Code and the Law on Administrative Offenses and Penalties;
  3. the time-limits for implementing instructions given by an administrative authority to parties or participants in proceedings, other than proceedings under the European Structural and Investment Funds Management Act;
  4. the time limits under Chapter Five, Sections I and III, Chapter Eight, Section V, Chapter Ten and Chapter Twelve, Sections I, II and IV of the Anti-Corruption Law and the Forfeiture of Illegally Acquired Property, other than the term under Art. 38, para. 1, item 2 of that Law; and
  5. the time-limits under Art. 175c, para. 1 – 3 of the Judiciary Act, other than the term under Art. 175c, para. 1, item 2 of that Law.

The following shall be extended until one month after the lifting of the Emergency:

  1. legal time-limits which expire during the Emergency and relate to the exercise of rights or fulfilment of obligations of private entities (unless excepted as set out in paragraphs 1 – 5 above); and
  2. the regulation of administrative acts, which are limited in time and expire during the Emergency.

All public sale and entries into possession announced by state and private enforcement agents are suspended.  After the Emergency is lifted, public sales and entries into possession will be re-scheduled, with no new costs and charges;

No distraints shall be imposed on the bank accounts of individuals and medical establishments, distraints on salaries and pensions, security measures on medical apparatus and equipment, as well as the making of inventories of movable property and real estate owned by natural persons, except for maintenance obligations, damages for tangible property and claims for salaries.

Notarial proceedings are limited to urgent ones in compliance with the health and hygiene requirements.  The Notarial Chamber will provide duty notaries with a ratio of at least one notary per 50,000 inhabitants for the relevant area.

The effects of late payment on the obligations of individuals shall not apply until the Emergency is lifted, including interest and penalties for late payment, as well as non-monetary consequences such as early repayment, contract termination and seizure of property.

Tax and Accounting matters

The Law provides for extension of particular terms related to tax and accountancy requirements, namely:

  • The term for submission of annual financial reports of the companies is extended to 30 September 2020.  Annual financial reports may be signed only by electronic signature.  If all the signatures on the annual financial report and the audit report are electronic signatures, the professional seal of the registered auditor is not required.  In this case, the registration number of the auditor shall be indicated;
  • The term for filing the annual tax declaration for 2019 for natural persons as well as for payment of the tax due on the declaration on the annual tax is extended to 30 June 2020.  The discount under the Personal Income Tax Act may be used if the declaration is filed and the tax is paid by 31 May 2020;
  • In 2020, advance payments under the Law on Corporate Income Tax shall be made under the terms and procedure of that Law but taking into account the following particulars:

1. if, before the entry into force of the Law, the annual tax return for 2019 is filed, the advance payments shall be made in the amount as declared; if necessary, the companies may file a corrective declaration;

2. if the annual tax return for 2019 is submitted by 15 April 2020, the advance payments shall be made in the amount as declared;

3. if the annual tax return for 2019 has not been submitted by 15 April 2020, advance payments shall be declared in the model of the annual tax return by 15 April 2020, with only that part relating to the declaration of advance payments completed.

  • The limitation period for all public liabilities under the Law on Tax-Insurance Procedure is suspended until the end of the Emergency.  All existing enforcement procedures are also suspended.  Actions carried out until the stop are maintained but after the suspension, the public executor may not carry out new enforcement actions, but may perform actions to secure the claim as well as the distribution of sums received in the enforcement case.  Enforcement proceedings shall resume after the end of the Emergency.
  • No new enforcement procedures under the Law on Tax-Insurance Procedure shall be initiated.

Quarantine and healthcare and anti-epidemic measures

The Law makes several amendments in the Law on Health, namely:

  • In the event of a threat to the health of citizens from diseases, the Minister of Health may order compulsory isolation of patients, infectious agents, contact persons and persons who have entered the territory of the country from other countries.  Isolation and treatment may be carried out at home following an assessment of the existing epidemic risk by the treating physician or after consultation with an epidemiologist or infectious disease specialist;
  • Compulsory isolation and treatment shall be performed by an order of the head of the relevant medical institution at the proposal of the treating physician or the doctor who referred the patient for hospitalisation.  The order is subject to immediate execution and the making of an appeal does not prevent it taking effect.
  • The Minister of Health may introduce anti-epidemic measures in the country or in a particular region.  Measures may also include temporary restriction of movement within the country, as well as temporary suspension or limitation of the operation or mode of operation of public buildings and / or other objects or services provided to citizens during the Emergency.  In the event of introduction of anti-epidemic measures any contacts of patients with communicable diseases may not refuse to tests to establish whether they are carriers of an infectious disease.
  • In the event of violation or failure to implement the anti-epidemic measures introduced by an act of the Minister of Health or director of a regional health inspection, the fine shall be BGN 5,000.  In the event the violation is made by a legal entity, a sanction in the amount of BGN 15,000 is imposed.
  • Data kept by the electronic communications providers (the telecoms) may also be granted to the enforcement authorities for the purposes of enforcing the healthcare and anti-epidemic measures.

Since the announcement of the Emergency, the Bulgarian Ministry of Health has issued several orders, restricting the free movement of people and goods.  The main measures provided for in the said orders that may affect the commercial activity of companies are as follows:

  1. All employers are instructed to transfer employees to a regime of remote working, where possible.  Where not possible they must ensure the introduction of increased anti-epidemic measures, including filters, disinfection and regular airing of premises, instructions on personal hygiene to staff, and must not admit employees or visitors having symptoms of acute contagious diseases.
  2. Checkpoints are established at the entry and exit points of each of the 27 regional centres of Bulgaria (including Sofia).  Travel through the checkpoints is only allowed for urgent reasons, related to work in the relevant settlement, health reasons of the traveller or close relatives, or to return to the place of current or permanent residence.  The reasons for travel must be evidenced by a document: certificate issued by the employer, work identification card, medical document, ID document.
  3. The town and major ski resort of Bansko is fully quarantined until 17 March 2020.  All entry to or exit of persons located in Bansko is prohibited.  All persons located in the town are quarantined for 14 days and cannot leave their homes except to procure food or medicinal products, or to use the services of banks, insurers or gas stations, or to seek medical help.  Exceptions apply to certain medical, police, fire department, and other essential services personnel.  Extensive restrictions to commercial activities apply.
  4. Non-Bulgarian nationals, arriving from China, Iran, Bangladesh, India, the Maldives, Nepal, Sri Lanka, Spain, Italy, South Korea, North Korea, France, Germany, the Netherlands, Switzerland and the UK are to be refused entry into Bulgaria.

Bulgarian nationals, foreign nationals with permanent or temporary residence in Bulgaria, and members of their family entering the country from the above-listed countries are mandatory quarantined for 14 days.

EU nationals and nationals of Schengen Member States and members of their family arriving from the above high-risk countries, are allowed to enter Bulgaria for transit to their country of residence only.

  1. The entry of all non-EU and non-Schengen nationals into Bulgaria is prohibited until 17 April 2020, but there are exceptions to this:
  • Medical staff, medical investigators, and senior adults care specialists.
  • Transport personnel, engaged in the carriage of goods, aircraft crew members, engaged in air transport and other transport personnel, as necessary.
  • Diplomatic staff, staff of international organisations, military and humanitarian personnel, for the discharge of their duties.
  • Persons travelling for humanitarian reasons.
  • EU nationals and nationals of Schengen Member States and members of their families.
  • Third country nationals having long-term residence permits in an EU Member State for the purpose of transit through Bulgaria to their country of residence or establishment.
  • Citizens of Turkey and the Republic of North Macedonia and members of their family are allowed to enter Bulgaria for transit to their country of residence.
  1. Bulgarian nationals – truck drivers, arriving from China, Iran, Bangladesh, India, Maldives, Nepal, Sri Lanka, Spain, Italy, Korea, UK, France, Germany, the Netherlands and Switzerland are subject to special quarantine requirements as follows:

Truck drivers who are not planning a new departure in the next few days (until 14 days) must remain quarantined at home for 14 days (following the general quarantine rule).

Truck drivers who are planning a new departure in the next few days (until 14 days), must remain quarantined for the period until their next departure (but not for the full period of 14 days).  During this period truck drivers are allowed to load and unload goods, drive the truck and to the leave the country for international transport.

  1. The time for Bulgarian nationals-truck drivers to go through the country cannot exceed 24 hours.
  2. Non-Bulgarian nationals – truck drivers, who are nationals of or are arriving from China, Bangladesh, India, the Maldives, Nepal, Sri Lanka, Spain, Italy, South Korea, North Korea, France, Germany, the Netherlands, Switzerland or the United Kingdom may enter the country, in order to deliver the loaded goods and then leave Bulgaria immediately (the time spent in Bulgaria cannot exceed 24 hours).
  3. Trucks arriving from Iran or having Iranian registration plates are not permitted to enter the country in general, including for transit purposes.
  4. Temporary units for health control are established at Bulgarian borders.

Implementation of Force Majeure clauses in commercial contracts in view of the Emergency

The following shall be taken into account with regard to concluded commercial agreements governed by Bulgarian law:

The COVID-19 outbreak may be qualified as a force majeure.

The consequences of such force majeure may differ, such as: lack of raw materials and other materials required for manufacturing of goods due to restrictions imposed on import and export in certain geographical regions, delay of deliveries of goods due to closed borders, closing of trade centres, public restaurants, etc., which may lead to breach of concluded agreements like breach of terms for deliveries, for payment of lease etc.

In such cases the parties to a valid commercial agreement governed by Bulgarian law are usually not held liable for whole or partial non-performance of their obligations when this non-performance is due to force majeure.

Under the Bulgarian Commerce Act, a debtor to a commercial agreement cannot be held liable for such non-performance caused by force majeure.  Where the debtor was already in default, he may not invoke force majeure.  A force majeure is an unforeseen or unavoidable event of an extraordinary nature which has occurred after the conclusion of the agreement.

In such scenarios, the performance of the concluded agreements shall be suspended and shall be delayed for the duration of the event, qualified as force majeure.  These general rules are applicable if the party who has invoked on the force majeure event notifies the other party in written in order to release itself from an eventual claim for compensation for the damage occurred, for payment of penalties, interest, etc.  It is necessary the other party to the agreement to be notified in an appropriate term about the force majeure and the possible consequences for this party with regard the performance of the agreement.

In this regard, if due to the COVID-19 force majeure circumstance, a company which cannot fulfil certain obligations to its partners, shall immediately notify its partners in writing of the existence and respectively applicability of the force majeure and to take the necessary steps to obtain a certificate for force majeure if needed.

Should the duration of the force majeure be such that the creditor no longer has an interest in the performance, he/ she shall be entitled to terminate the contract.  The debtor shall also have the same right.

The parties to commercial agreements may also reach a mutual agreement to suspend the latter for a certain period of time, one, two or more months without paying penalties and damages.

General

This review of measures to cope with the Emergency reflects the situation in law and in practice as at the time of writing.  It is not intended to be comprehensive and should not be used as a substitute for specific professional advice which should be taken before any proposed investment is made or other action taken.

 1.Please refer to section Currently issued orders by the Ministry of Health
2.  The COVID-19 outbreak may force companies to request the Bulgarian Chamber of Commerce & Industry to issue certificates for force majeure, which to be presented to their partners (in case of disagreement) in order to be released from liability for delay of the performance of concluded commercial agreements, i.e. payment of rents, distribution of goods, etc.  In this regard the BCCI has the right to request from the respective authorities copies of all documents imposing different restrictions.