The Parliament and Council of Ministers have adopted a set of measures for overcoming the impact of COVID-19 on business. These measures affect various aspects of life and are supplemented by the orders of the Minister of Health who can impose any measures, effectively restricting the right of movement, suspending or limiting the operation of certain public developments or sites, or the temporary suspension of any service provided to citizens.
The Emergency Measures Act
On 23 March the Parliament adopted the Measures and Actions during the State of Emergency Announced with a Decision of the Parliament on 13 March 2020 Act (“Emergency Measures Act”). The Emergency Measures Act provides that:
- depending on the nature and specifics of the work, where possible employers can introduce working from home or remote working, even without the consent of the employee. Part-time work may also be introduced temporarily during the state of emergency. When on site work continues, directors must ensure strict adherence to the hygiene rules and measures for compliance with the special order issued by the Minister of Labour and Social Policy
- operation of the business may be suspended partially, entirely or for certain employees during the state of emergency (announced until 13 May 2020, although it may be prolonged further). Some businesses have been temporarily closed under the order of the Minister of Health (cafés, bars, etc.). Such measures may be applied by directors of companies which have not been affected by the orders of the authorities responsible
- directors have the opportunity to grant employees half of their paid annual leave without their consent. When operation of the business is suspended, directors may grant paid annual leave regardless of whether employees are eligible for holiday entitlement (i.e. whether they have been with the company for 8 months or not). In addition, employers must approve the holiday requests of certain groups of employees (e.g. mothers or single fathers of children below 12 years or of disabled children; pregnant and disabled employees).
The Emergency Measures Act also provides for suspension of certain terms provided for in legislation that may affect business. In addition, the emergency legislation extends deadlines for submitting tax returns and accounting reports as follows:
- the standard deadlines for 2019 annual reporting on corporate income tax, expenses tax, gambling tax and merchant vessel operation tax are extended from 31 March 2020 to 30 June 2020. The payment terms of taxes due have been extended accordlingly
- the deadline for filing companies’ annual financial statements is also extended until 30 September 2020.
More information about the emergency legislation and its impact on business may be found in our law-now articles: Bulgaria: state of emergency legislation published today, Bulgarian Government adopts wage subsidies to support business during crisis, Bulgaria introduces emergency tax measures during COVID-19 crisis, and Bulgaria issues new guidance on public procurement during the state of emergency.
The Council of Ministers adopted Decree No. 55/2020 which introduces compensation for eligible employers that have been affected by emergency measures. The industries entitled to compensation are limited and explicitly listed in the decree (mainly in the food, hotel and leisure, culture and entertainment sectors). Compensation is in the amount of 60% of the socially-insured income of the respective employee for January 2020, plus the social insurance payments due on behalf of employers. This support will be provided for no more than 3 months during the state of emergency, and employers that benefit from it shall not dismiss the respective employees for the period of time equal to the period during which they have been granted compensation.
Moratorium on bank loan payments approved by the Bulgarian National Bank
The Bulgarian National Bank approved a moratorium on bank loan payments on 10 April 2020 as part of the measures for overcoming the impact of COVID-19. The moratorium is applicable to all persons and legal entities (except credit institutions) which must apply to their bank in order to benefit from the moratorium and meet the following minimal requirements:
- persons and legal entities should have, or expect to experience, difficulties in servicing their liabilities stemming from the COVID-19 outbreak
- clients should have serviced their debts regularly prior to 1 March 2020 or have been in arrears no longer than 90 days as of the application date.
The moratorium provides bank customers who apply with the option to amend the repayment schedule of principal and/or interest under their exposure without the option to alter any other features of the financing agreement (including interest rate). The option to delay the payment of interest and/or principal shall not be longer than 6 months and shall not extend beyond 31 December 2020.
Additionally, the Emergency Measures Act provides that borrowers would be exempt from the adverse consequences of payment delays under loans provided by banks and financial institutions such as default interest and penalties, or a creditor’s rights to accelerate or terminate a loan.
Further, there is information that the Bulgarian Development Bank will provide loans free of interest to companies affected by COVID-19. It is expected that the requirements for application for such a loan will be made known soon.
For more details on the moratorium, please refer to our law-now article: The Bulgarian National Bank approves sector-wide voluntary moratorium.