Warwick Legal Network

Bulgaria: The Supreme Administrative Court Ruled A New Interpretative Decision Regarding The Revision Under The Special Order Of Art. 122 Of The TSSPC


By Interpretative Decision № 2 of 02.02.2022, the SAC ruled on two issues, which were controversially resolved by the courts. They refer to revision by the special order of art. 122 of TSSPC under circumstances established during the audit under Art. 122, para. 1, item 2 and item 7 of the TSSPC. The Supreme Judges have accepted the following:

  1. In case of revision by the special order of art. 122 of the TSSPC there is no legal presumption that the income of unknown origin is from employment and represents insurance income.
  2. In the court proceedings under the disputed revision act, the revenue authorities bear the burden of proof for proving that insurances are due.

The exact wording of the two questions to be interpreted is as follows:

  1. Is there a legal presumption that the income of unidentified origin is from labor activity and represents insurance income, in the cases of a certain tax base for taxation under Art. 122, para. 2 of the TSSPC, representing a shortage of funds of the audited entity established during the audit, which he needed to make the proven expenses during the respective tax period, but the source of cash (income) provided by the expenses in question, resp. the hidden income, as a result of funds received from the patrimony of the natural person – audited entity from various sources in the country and / or abroad, but not declared by him?
  2. In these cases, whose burden is to prove the indicated fact in the court proceedings for contesting a revision act, by which in the indicated factual establishments, insurance obligations under Art. 124a TSPC for periods after 15.02.2011?

In the reasons of the decision the Supreme Judges initially specify that the interpretative issues refer only to the cases of conducting a revision under Art. 122 of TPSC in case of proven by the auditing bodies hidden incomes and/or excess of the expenses over the incomes only of self-insured natural persons, who are obliged to pay in advance social security contributions, as well as equalization installations for determining their final amounts under Art. 6, para. 8 and 9 CSR for the Pension Fund, for additional mandatory pension insurance under Art. 157, para. 6 CSR, as well as for health insurance contributions under Art. 40, para. 1, item 2 of the Health Insurance Act for the labor activity performed by them.

Regarding the first question, it is stated that it is related to the circumstance whether the income with an unidentified source under Art. 122, para. 1, items 2 and 7 of the TSSPC also represent insurance income, on which compulsory insurance contributions are accrued. In this regard, a distinction is made between the concepts of taxes and social security contributions. The Supreme Judges have come to the conclusion that the presumption under Art. 123, para. 1 TSSPC is not applicable to compulsory social security contributions of self-insured individuals. It refers only to taxable income as a tax base for determining tax liabilities.

Stepping on the argumentation to the answer to the first question, the General Assembly of I and II panels of the SAC accepted on the second question that in the court proceedings on contestation by an individual of an audit act, with which the factual findings, audit under art. 122, para. 1, items 2 and 7 of the TSSPC, insurance obligations under Art. 124a of the TSSPC, the revenue authorities bear the burden of proving that social security contributions are due.


For further information, please contact:

Dimitar Stefanov , Lawyer

Mikinski & Partners Law Office, Sofia

e:  gb.iksnikim@vonafetsd

t: +359 879 576 000


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