Bulgarian Constitutional Court strikes down higher tax rate on resort properties
Bulgaria’s Constitutional Court has ruled to overturn a provision from Corporate Tax Act amendments passed last year that introduced a higher tax rate on properties in resort areas.
The court also ruled to strike down the Corporate Tax Act changes to the operation of the Customs Agency, which would have allowed for senior agency employees to be sacked with no prior notice by the agency’s head, without the option of a judicial appeal.
Both provisions were referred to the court by President Roumen Radev, whose veto of several Corporate Tax Act amendments was overturned by Parliament in November 2018.
Regarding the higher tax rates on properties in resort areas, the government argued that its bill was meant to affect property owners who rented out their properties but did not register under the Tourism Act, paying no taxes on rental revenue.
But the court ruled that such a change breached the principle of equality under law, saying that property taxes should be determined by valuation alone and could not vary depending on the purpose for which the property was being used.
Additionally, since resort areas were designated by Cabinet decisions, it would give the government a way to change taxation levels (by designating an area as a resort or changing the category of an existing resort area), whereas Bulgaria’s constitution stipulates that only Parliament can make taxation changes, the court said.
Regarding the provision on Customs Agency employees, the court said that it breached provisions of the Civil Service Act and opened the door for possible political interference in the agency’s work by not specifying under which conditions could employees be sacked.
(Photo: Clive Leviev-Sawyer)
