Tax evasion is a crime under the Bulgarian Penal Code. Essentially, this crime involves avoiding the assessment or payment of tax liabilities.
The types of taxes that fall within the scope of the crime of “tax evasion” or “income evasion” are value added tax, income tax, profit tax, excise duty as a type of indirect tax, and local taxes. Under our tax legislation, each type of tax is defined in a separate law, which contains detailed regulations on its basis, taxable persons, reporting obligations, payment, and deadlines.
Who can be the perpetrator of the crime of “tax evasion”?
Anyone who is criminally liable and who is required by law to pay taxes may be the perpetrator of this crime. The circle of taxpayers is wider than the circle of persons who may be subjects of tax crimes. In addition to natural persons, legal entities and unincorporated local or foreign companies are also taxpayers. However, according to our criminal law, legal entities cannot be subjects of crimes. It should also be noted that, according to tax law terminology, the subject of the tax liability may not coincide with the taxpayer, i.e., the payer and remitter of the tax.
In this regard, a possible perpetrator of the tax crime of “tax evasion” is the natural person who manages and represents the commercial company, as well as any other natural person – proxy, commercial representative, accountant, or other person who performs the actual activities and functions of the taxpayer.
Which actions are interpreted as tax evasion?
Tax evasion may be carried out in various ways, with the law providing for several forms of enforcement. a8> several forms of executive action are provided for in the law.
Firstly, the offence will be committed when the taxpayer fails to file a tax return on time or fails to pay the tax due, which should be a large amount.
Important! Tax evasion always involves large tax liabilities, which means that the tax liability must exceed BGN 3,000. Otherwise, the act will constitute an administrative offense, but not a crime.
For example, if the tax liability is less than BGN 3,000 and the person fails to file a tax return on time, they will be punished administratively with a fine, which, according to the various laws governing the different types of taxes, may be in the amount of BGN 500, between BGN 500 and BGN 3,000, etc. However, if the failure to file a tax return on time conceals tax liabilities in excess of BGN 3,000, the act will constitute a crime punishable by imprisonment of one to six years and a fine of up to BGN 2,000.
Avoiding the assessment or payment of large tax liabilities can also be achieved by filing a false tax return that distorts or conceals the truth. In this case, the person either confirms a falsehood or conceals the truth in the tax return filed.
Other forms of executive action are:
- failure to issue an invoice or other accounting document;
- destruction, concealment or failure to store within the statutory time limits accounting documents or accounting records;
- carrying out or allowing accounting to be carried out in violation of the requirements of accounting legislation;
- drawing up or using a document with false content, a false or forged document in the course of economic activity, in accounting, or in the presentation of information to the revenue authorities or public enforcement agents;
- deduction of an undue tax credit.
IMPORTANT! For a crime to exist, tax evasion must be intentional. Thus, for example, errors in calculating the tax due, even if they are large or particularly large, will not lead to criminal liability, as there is no intent to evade tax obligations.
What is the penalty for tax evasion?
The punishment for tax evasion involving large sums of money is imprisonment for one to six years and a fine of up to two thousand leva. A more severe punishment is provided for if the tax liabilities are particularly large, i.e. over 12,000 leva. In this case, the punishment is imprisonment for three to eight years, with cumulative confiscation of part or all of the guilty party’s property. The offense is also more severely punishable when committed with the participation of a tax administration employee or a registered auditor.
The law also provides for lighter penalties in cases where the subsequent positive behavior of the perpetrator is taken into account. If, by the end of the trial in the court of first instance, the undeclared or unpaid tax liability is paid into the budget together with interest, the penalty is lighter, and in cases where the tax liability is large, the penalty is imprisonment for up to two years and a fine of up to five hundred leva, and in cases of particularly large tax liabilities, imprisonment for up to three years and a fine of up to one thousand leva.
Defense against charges of tax evasion
The defense against charges of tax evasion is assessed in light of the specific facts of each individual case, which is why it is essential to engage an experienced criminal defense attorney in a timely manner in order to build a proper defense.
With such a charge, it is not possible to be exempted from criminal liability by imposing an administrative penalty. One of the main prerequisites for exemption from criminal liability is that the crime carries a penalty of imprisonment of up to three years, which is not the case with tax evasion, as the basic penalty for this tax crime is imprisonment of one to six years. This means that in all cases the case will end with a sentence, which may be convicting or acquitting.
In the event of a conviction, if the court imposes a prison sentence of up to three years and considers that, in order to achieve the objectives of the punishment and, above all, to reform the offender, it is not necessary for the sentence to be served effectively, the execution of the sentence may be suspended. In order to impose a suspended sentence, the person must also have a clean criminal record.
If there are exceptional or multiple mitigating circumstances, the court may impose a sentence below the minimum threshold, namely below one year of imprisonment.
Author: Iveta Vuleva, junior lawyer
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