If you own a company in Bulgaria or have got future business plans connected to the Country, you may find this information helpful.
For limiting the so called 'grey sector' in the Bulgarian economy, the Council of Ministers proposed an Act, promulgated and entered into force in February 2011.
The Limitation of Cash Payments Act requires any payments on Bulgarian territory to be made by bank transfer, if they are:
- of an amount equalling to or exceeding BGN10,000;
- of an amount below BGN10,000 but part of aggregate contractual amount equalling to or exceeding BGN10,000.
When the above pointed payments on the territory of Bulgaria were determined in foreign currency, the exchange rate quoted by Bulgarian National Bank (BNB) for the day of payment, should be applied.
The limitation has exceptions, which briefly are:
- cash withdrawals from or cash deposits to own payment accounts;
- cash withdrawals from or cash deposits to accounts of direct relatives, spouses;
- cash transactions in foreign currency when performing main scope of such business activity;
- operations over banknotes and coins, where BNB is involved as a party;
- labor remuneration payments according to the Labor Code.
For breach of Limitation of Cash Payments Act, physical persons are liable for a penalty of 25% of the made payments. The sanction for legal entities is determined of 50% of the effected payments. In case of repeated breach within 1 year period, the sanction is double.
If a Limited Liability Company has made several meetings during the year in connection with a temporary need of additional funds and each separately recorded decision doesn't exceed the amount of BGN10,000, but overall for the year the total amount exceeds BGN10,000, is it possible the payments to be made in cash, or is it absolutely compulsory by bank transfer?
Since it's a question of independent written decisions, resulting from separate meetings of the General Assembly, would be considered that the restrictions of cash payments should not act here, i.e. that payments, under BGN10,000 each, could be made in cash. Of course, any circumvention of the law, such as when early in the year was clear Ltd needed funds in the amount of all given during the year additional contributions, by the reason there were no other sources to obtain these funds within the same year and appeared serious doubt that decisions had been made deliberately so that each additional contribution to be under the restrictive threshold, would be considered as intentional law circumvention.