CJEU – Recent Developments in Direct Taxation 2018

1. S. 18Introduction

Procedural requirements of penalty interest payments for unpaid withholding tax as a result of delayed request for Double Tax Treaty (“DTT”) relief have become a common tax litigation issue in the Bulgarian judicial practice, since the establishment of a specific procedure for tax treaty application introduced in 1999 in the Bulgarian Procedure Law. Currently, the trend towards an increase in penalty interest case law persists despite the adoption of a new Tax and Social Procedure Code (“TSSPC”), thereby strengthening the proliferation of well-settled jurisprudence in the area.

This notwithstanding, given the fact that the obligation to make a penalty interest payment configured in the Bulgarian tax procedure law as a consequence of a late request for DTT application only required by the Bulgarian Tax Authority (“BTA”) in cross-border transactions has consistently interfered with the observance of the EU non-discrimination principle and the proportionality of the administrative sanction, it has recently been examined by the CJEU, in the TTL case, and declared contrary to EU law.

This request for a preliminary ruling from the CJEU submitted by the Bulgarian Supreme Admi...