Tax Treaty Case Law around the Globe 2017

S. 197Bulgaria: Procedural Requirements for Tax Treaty Relief: a “Penalty” for Tax Treaty Application

Slavka Dimitrova Slavcheva

1. S. 198Introduction

Tax cases on penalty interest payments have become quite common in Bulgarian judicial practice since the establishment of a special procedure for tax treaty application in Bulgarian Tax Procedure Law (1999). Nowadays, the trend towards an increase in penalty interest case law persists despite the adoption of a new Tax and Social Security Procedure Code (TSSPC), thereby strengthening the proliferation of well-settled jurisprudence in the area.

Internal law on penalty interest payments, configured in the Bulgarian Tax Procedure Law as an administrative consequence of the time-barred request for Double Taxation Convention application submitted by foreign entities to the Bulgarian Tax Authority, has consistently interfered with the international requirements of tax treaty compliance, observance of the EU non-discrimination principle and the proportionality of the administrative sanctions. Moreover, this legal practice, which consists of extending the reach of penalty interest for delayed payment of taxes to the area of untimely requests for tax treaty r...