By the adoption of the Limitation on Cash Payments Act (the „LCPA”), promulgated in the State Gazette, issue 16 of 26 February 2011, it is aimed to limit the so called „grey sector” in the national economy. In the reasoning of the Bill on Limitation of Cash Payments, the Council of Ministers, which has proposed the Bill, states that similar restrictions on cash payments exist in other EU member states, such as
The LCPA requires that any payments on the territory of the country be made by bank transfer (wire transfer or deposit to a payment account), if they are:
– of an amount equal to or exceeding BGN 15,000; or
– of an amount below BGN 15,000, but form part of a contractual monetary consideration of an aggregate amount equalling or exceeding BGN 15,000.
The above requirement applies also with respect to payments in foreign currency, provided that their Bulgarian Lev equivalent, determined as per the exchange rate quoted by the Bulgarian National Bank (the „BNB”) for the day of payment, equals to or exceeds BGN 15,000.
The LCPA provides for exemptions from the requirement for effecting of payments by bank transfer with respect to the following operations:
– cash withdrawals from and cash deposits to someone’s own payment accounts;
– cash withdrawals from and cash deposits to accounts of legally incapable persons, persons with limited legal capacity, spouses, direct ascendant relatives and direct descendant relatives;
– cash transactions in foreign currency, if performed as a main scope of business activity;
– operations over banknotes and coins, where the BNB is involved as a party;
– exchange by banks of damaged Bulgarian banknotes and coins; and
– payment of labour remunerations within the meaning of the Labour Code.
An interesting point in the LCPA is the planned gradual introduction of card payments in the collection of incomes and other proceeds by state-budget funded organisations.
The terms for the implementation of the new system should be determined by the Minister of Finance.
Physical and legal persons will not have to pay bank commissions and fees on card payments in favour of statebudget funded organisations.
For breach of the mandatory requirement for effecting of payments by bank transfer, physical persons are liable for a penalty at the amount of 25% of the aggregate amount of the relevant payment and the sanction for legal entities is 50% of the effected payment.
In case of repeated breach, occurring within 1 year period as of the entry into force of the penalty order the amount of the sanctions is doubled.