Phase 1: Administrative Appeal
The administrative appeal before the Directorate for Appeal and Tax-Insurance Practice (DATIP) is a mandatory prerequisite for access to judicial review (Art. 156(2) TSIPC). Without exhausting the administrative remedies, an appeal before the administrative court is inadmissible and will be left without consideration.
Competent Authority
The appeal is filed through the authority that issued the tax assessment act, addressed to the Director of DATIP at the NRA Central Office. There are 5 DATIP directorates in Bulgaria — Sofia, Plovdiv, Varna, Burgas and Veliko Tarnovo, with jurisdiction based on the location of the territorial directorate that issued the act.
Time Limit for Appeal
The time limit for filing an appeal is 14 days from service of the tax assessment act (Art. 152(1) TSIPC). These are calendar days, not business days. Missing this deadline is fatal — the act enters into force and becomes non-appealable. In the event of insurmountable and unforeseeable obstacles, reinstatement of the time limit may be sought under Art. 26 TSIPC, but the practice is extremely restrictive.
Irregular Appeals
Where an appeal is filed with irregularities (incomplete content, missing signature, failure to attach evidence), the reviewing authority grants a 7-day period for their rectification (Art. 151(3) TSIPC). If the irregularities are not rectified within the prescribed period, the appeal is left without consideration.
Agreement on Evidence
During the administrative appeal proceedings, an agreement on evidence may be concluded within 60 days of filing the appeal (Art. 154 TSIPC). This is an important tool that allows the parties to reach consensus on the facts without the need for full proof before the court.
Powers of the Reviewing Authority
The DATIP Director has broad powers when reviewing the appeal:
- Upholds the tax assessment act in full
- Amends the act — may reduce or increase the liabilities
- Annuls the act in full and terminates the proceedings
- Annuls the act and remands for a new audit in the event of procedural violations
Critically important: the reviewing authority is not bound by the reasoning in the tax assessment act and may adopt different factual and legal grounds. The only limitation is that the authority CANNOT worsen the position of the appellant (reformatio in peius) — Art. 155(8) TSIPC.
Time Limit for Decision
The decision on the appeal is issued within a 60-day period from receipt of the appeal, or from rectification of the irregularities, or from expiry of the 60-day period for the evidence agreement (Art. 155(1) TSIPC).
Tacit Confirmation
If the DATIP Director fails to issue a decision within the 60-day period, the appeal is deemed rejected — the so-called tacit confirmation (Art. 156(4) TSIPC). This is an extremely dangerous scenario, as many taxpayers do not actively monitor the proceedings and miss the deadline for judicial appeal. In the case of tacit confirmation, the time limit for appeal before the court is 30 days from the expiry of the period for issuing a decision.
Costs
Where the tax assessment act is annulled in the administrative phase, the issue of costs (legal fees, expert reports) is resolved under the State and Municipalities Liability for Damages Act through a separate claim against the NRA. This is an additional proceeding that increases the procedural burden on the appellant.
Phase 2: Judicial Appeal — First Instance
After exhausting the administrative remedies, the tax assessment act may be appealed before the administrative court at the location of the NRA territorial directorate that issued the act (Art. 156(1) TSIPC).
Time Limit for Appeal
- 14 days — from service of the DATIP Director's decision
- 30 days — from the expiry of the decision period in the case of tacit confirmation
Scope of Judicial Review
The administrative court conducts a full review of the lawfulness of the tax assessment act — both with regard to the correct application of substantive law and compliance with procedural rules. The court is not bound by the reasoning of the DATIP decision and may make an independent assessment of the evidence.
Limitations on Witness Testimony
The TSIPC introduces specific limitations on the use of witness testimony (Art. 164 TSIPC). Witness testimony is inadmissible for establishing:
- Circumstances for the proof of which the law requires a written document
- Circumstances contradicting the contents of an official document
- Contracts with a value exceeding BGN 5,000, unless concluded between relatives
Powers of the Court
- Annuls the tax assessment act in whole or in part
- Amends the act — may determine a different amount of liabilities
- Dismisses the appeal as unfounded
Important: the court CANNOT worsen the position of the appellant. Furthermore, unlike the general administrative process, the court CANNOT remand the case for a new decision — it must rule on the merits.
Costs
If the appeal is upheld, the NRA is liable to pay the costs incurred — court fees, legal fees, and expert witness fees. If the appeal is dismissed, the appellant owes legal counsel fees to the NRA.
Phase 3: Cassation Appeal before the SAC
The judgment of the administrative court is subject to cassation appeal before the Supreme Administrative Court (SAC) within a 14-day period from notification (Art. 210 APC).
Grounds for Cassation Appeal
The cassation appeal is limited to questions of law:
- Nullity — the judgment was issued by an incompetent court or in the presence of an absolute procedural bar
- Inadmissibility — the judgment was rendered on an irregular or time-barred appeal
- Incorrectness — violation of substantive law, material violation of procedural rules, or lack of reasoning
The SAC does not assess evidence and does not establish new facts. The SAC's judgment is final and not subject to further appeal.
Suspension of Enforcement
One of the most critical aspects of the appeal process is the question of suspension of enforcement of the tax assessment act. As a rule, filing an appeal does NOT suspend enforcement (Art. 153(1) TSIPC). This means that even during an appeal, the NRA may proceed with compulsory collection of the established liabilities.
How to Suspend Enforcement
To suspend enforcement, it is necessary to provide security in the amount of the principal and interest as of the date of the request (Art. 153(3) TSIPC).
Types of Security and Their Effect
- Cash deposit — upon payment, suspension is mandatory for the revenue authority. No discretion is required — the authority is obliged to suspend enforcement.
- Bank guarantee — unconditional and irrevocable. Suspension is likewise mandatory upon submission of a guarantee covering the full amount of liabilities with interest.
- Other assets — real estate, motor vehicles, receivables from third parties. With these forms of security, suspension is at the discretion of the reviewing authority. The assets are valued at market value, usually with a 20-30% reduction.
Time Limit for Decision
The decision on the suspension of enforcement is taken within a 7-day period from receipt of the request (Art. 153(5) TSIPC). The suspension of enforcement takes effect from the date the security measures are implemented, not from the date of the decision.
In the case of judicial appeal, the suspension of enforcement is requested from the court under Art. 157(2) TSIPC, subject to the same security requirements.
Frequently asked questions
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