Well laid plans gone awry

NRA promises to revise disputable instructions on social security contributions.

Tens of thousands of company owners and managers will have to pay social security contributions on remuneration they do not actually receive. Besides the installment due by the self-insured, which is assessed on a BGN 420 monthly threshold, owners who manage their own firms will have to pay social security on a specified minimum income for the respective line of business. The reason for that is the recent instructions issued by the National Revenue Agency (NRA).

According to the document, contributions are due even if the owner does not have a management contract or the contract explicitly specifies that the manager does not receive remuneration.
The monthly income threshold for the different activities is about BGN 800, so the total amount on which social security will be assessed is more than BGN 1,200. However, a lot of small firms do not have such incomes. Others do not even operate but their owners will have to pay social security contributions.

Obscurity

The instructions raise a number of questions. It is not quite clear if the owners of more than one company will have to pay more than one contribution. There is no information either whether the hypothetical salary will be considered expenditure of the company. If so, at the end of the year my expenditure will be twice my income, translation firm owner Maria Nenova commented. Currently I work until June 1 to pay my taxes and in future I will have to work for the state until October 1, reckons financial consultant Dimitar Radonov. Why should I get charged twice for one and the same thing? According to Radonov, NRA's lawyers have misinterpreted the law.

Amendments

Late last year the government submitted amendments to the Social Security Code in a bid to improve collection. According to them, social security shall be paid even on unassessed remunerations. The problem most probably comes from misinterpretation of the key term 'unassessed'. It happens, especially in times of crisis, for a given firm to delay the salaries to employees. In such cases the social security contributions are also delayed. The aim of the legal changes was to put an end to that practice. Lawyers are unanimous that the instructions contradict previous rulings of the Supreme Administrative Court, as social security obligations can only ensue from a written contract.

Protest

Small and medium-sized entrepreneurs have called a protest rally on March 15 in front of NRA's building if the instructions are not revoked. The negative reaction has prompted a response from the ruling party GERB, whose representatives promised to change the disputable document. The NRA is currently revising it and the new version has to be ready by this week's end, the Pari daily has learned