The Supreme Administrative Court (“SAC”) ruled in a new Interpretative Decision (“ID”) № 5 of 29.03.2021, concerning the liability of third parties (managers, procurators, members of the management body, commercial representative and commercial agent) for obligations of legal entities under Art. 19, para. 1-2 of the Tax and Social Security Procedure Code (“TSSPC”). According to the ID, persons acting in bad faith should be liable not only for the taxes and social security payments of the companies but also for the interest on these amounts.
The decision of the SAC was rendered after establishing a contradictory practice of Bulgarian courts. According to part of the judges, the responsibility of the third party under Art. 19, para. 1 and 2 of the TSSPC should not include the established interest obligation of the principal debtor. In this group of court decisions, it is assumed that the liability under Art. 19, para. 1 and 2 of the TSSPC is a special case of liability for obligations and should be interpreted strictly.
According to the other view, the liability of the third party under Art. 19, para. 1 and 2 of the TSSPC should include the established interest obligation of the principal debtor. In this group of court decisions, it is assumed that the third person under Art. 19, para. 1 and 2 of the TSSPC is an obliged person under Art. 14, item 3 of the TSSPC - a person who is responsible for the obligations of legal entities. The scope of the liability of the obliged person under Art. 14, item 3 of the TSSPC is defined in Art. 16, para. 3 TSSPC and includes interest.
The SAC accepts the second opinion as the correct one. In Art. 19, para. 1 and 2 of the TSSPC is enshrined a special case of personal property liability of third parties for public obligations of legal entities under Art. 14, items 1 and 2 of the TSSPC. The liability arises by virtue of the law and shall be applied in respect of an exhaustively determined circle of subjects for obligations of a legal entity under Art. 14, items 1 and 2 of the TSSPC (principal debtor) in the cumulative presence of the prerequisites, provided by the law. The factual composition giving rise to the liability includes conduct in bad faith of the third party, inability to collect the tax due and social security contributions of the legal entity, and the existence of a causal link between them.
The norm of Art. 19, para. 1 of the TSSPC provides that the third party is liable for the "outstanding obligation". Art. 19, para. 2 of the TSSPC states that the third party is liable for “the outstanding obligations of the obligated legal entity under Art. 14, items 1 and 2 of the TSSPC”. The liability of the third party under Art. 19, para. 1 and 2 of the TSSPC also includes the interest for delay of the main debtor by virtue of an explicit legal norm - Art. 16, para. 3 TSSPC. This norm stipulates that the liability of the third party under Art. 14, item 3 of the TSSPC covers the taxes and the obligatory social security contributions, the interests and the expenses for their collection.