News

13 April 2023

Ombudsman Diana Kovacheva sent an opinion to Finance Minister Rositsa Velkova in connection with the draft act amending and supplementing the Tax and Social Insurance Procedure Code (TSIPC) published for public consultation.  

In it, Prof. Kovacheva draws particular attention to the proposed amendment to Article 264 of the TSIPC, according to which transactions in real estate and motor vehicles will be suspended (not notarised) if the owner has obligations to the State, including unpaid fines.

The Ombudsman is categorical that this will lead to a disproportionate restriction of the rights of citizens as parties to transactions for transfer of property or motor vehicles at the expense of facilitating the collection of fines.

“As can be seen from the stated reasons of the draft act, the amendment to the above-mentioned provision is prompted from frequent cases in which, when transferring and establishing rights in rem in real estate and transferring ownership of motor vehicles, citizens deliberately do not declare their obligations when notarising the transaction. It is suggested that the notaries perform an electronic check in the National Revenue Agency (NRA) to establish the presence or absence of enforceable public obligations of the transferor/originator of rights in rem, and in the event that they establish such obligations, to proceed with the closing of the transaction after their payment or upon explicit imputation of the obligation in the title deed/purchase agreement for the buyer to pay the amount due to the relevant budget,” writes Diana Kovacheva.

She adds that the information covers all enforceable public obligations of individuals, and not as provided for in the currently effective provision – only obligations for taxes, excise duties and compulsory insurance contributions. Therefore, according to the stated reasons of the draft act, these are all obligations established by the NRA, as well as those submitted by an external claimant for enforcement by the NRA at the time of the check.

“Apart from the fact that there are no arguments for the extension of the range of obligations for which the declaration will be replaced by a check by notaries prior to closing of a transaction, the obligations themselves are not precisely and concretely defined. With the proposed version of the provision, the public obligations subject to enforcement also include fines, without taking into account that the citizen may not have realised that he/she was fined (which is often the case), or he/she may have paid it, but the system did not report the payment (there are such complaints received by the institution), or the statute of limitations for the fine has expired, or he/she does not agree with the imposed fine and appeals it, etc.,” emphasizes the Ombudsman.

Prof. Diana Kovacheva draws attention to the fact that this is in practice a coercive administrative measure, because even if the citizen does not agree with the imposed fine, he/she would prefer to pay it in order to be able to conclude the deal rather than wait, for example, for the end of the court proceedings appealing the fine.

In her statement to the Minister of Finance, Prof. Kovacheva emphasizes that the collection of public debts to the State, part of which are imposed fines, is an obligation of the executive authorities, for which they have the corresponding legally set powers.

She points out that with the proposed amendment, notaries in practice acquire certain functions inherent to public enforcement agents, because after checking for the presence of obligations, they will exercise a form of coercion for payment by not closing a transaction or by imputing a payment obligation in the title deed or contract itself.

“As the Constitutional Court also pointed out in its decision at the request of the Ombudsman institution (constitutional case No. 11/2020), the fact that the State cannot fulfill its obligation for enforcement of imposed fines may not serve as grounds for actually sanctioning citizens,” the public defender writes.

She also adds that while the requirement for paid taxes, excise duties and compulsory insurance contributions in order to transfer ownership of real estate or motor vehicles is understandable, the extension of the scope of obligations with the amendment to the provision and the inclusion of fines is unjustified and disproportionate to the sanction of not notirising a transaction or imputing an obligation to pay the corresponding amount to the budget.