Archive / News from Bulgaria
After the International Consortium of Investigative Journalists received access to a total of 13.4 million files from the internal data base of Appleby, company providing legal and corporate services and operating in the territory of ten jurisdictions, the society got clearer view of the countless means through which undertakings and natural persons could avoid taxation through factitious judicial structures.
Even though the revelations are of a global extent, on 14.11.2017 the members of the EU Parliament discussed in Strasbourg the need of clear actions by the EU member States aiming to procure more fair tax policy to counter the unfair tax practices.
Some of the main topics of the debates were:
· The transparency in the activities of the tax intermediaries (banks, insurers, consultants etc.) and namely the obligation to systematically disclose their actions to the tax authorities. Some of those actions are included also within the measures for combating money laundering;
· Validation and diversification of the automatic exchange of information between the member States;
· Creation of a blacklist in connection to tax havens and related sanctions and measures against those tax havens.
The EU Economic and Monetary Affairs, Taxation and Customs Commissioner Pierre Moscovici appealed for adoption of the blacklist on the next plenary meeting of the ECOFIN Council on 5 December 2017 and for as quick as possible adoption by the EU members States of a Common Consolidated Corporate Tax Base.
Thus it would be possible to achieve progress in combating tax avoidance as well as more justice and transparency in taxation.
PM&P advised on the sale of CEZ a.s. Bulgarian hard coal-fired thermal power plant Varna
PM&P in collaboration with Weil, Gotshal & Manges has successfully assisted the sale of CEZ a.s. 100%-owned Bulgarian subsidiary TPP Varna to the Bulgarian company SIGDA OOD.
Our team, led by the partners Ivan Markov and Svetoslav Dimitrov, advised CEZ a.s. throughout the acquisition process and coordinated the preparation of the sale and purchase documentation, thus securing fast, safe and effective signing. The deal is still in progress and we, together with Weil, Gotshal & Manges, are currently assisting the client in connection with the merger clearance aspects of the acquisition.
We also continue to provide ongoing advice regarding the sale of its remaining subsidiaries in Bulgaria.
PMP with active participation at a Bulgarian-Russian Investment Forum in Sofia
A key Bulgarian-Russian Investment Forum, which was hosted by the Bulgarian Chamber of Commerce and Industry, took place on 19th and 20th October, 2017 in Sofia. The meeting was dedicated to the economic development with respect to joint investment projects of both countries, which have traditionally good bilateral relations, and the registered participation of more than 100 Bulgarian entrepreneurs was an indicator for the great interest in such future progress itself.
The forum highlighted the business opportunities and the good climate for investments in perspective projects in the areas of agriculture, real estate, industry, financial institutions and tourism in Bulgaria, whereby particular investment projects and business proposals were presented by the representatives, entrepreneurs, from the Russian Federation.
It goes without saying that Penkov, Markov and Partners, attorneys-at-law, represented by its Managing Partner Svetoslav Dimitrov, as well as by Roman Stoyanov and Boris Lazarov, did not miss the opportunity to be an active part of the event, being a law firm that is highly involved in establishing and promoting direct business contacts between representatives of the Bulgarian and the foreign business. The Executive Director of the Bulgarian Investment Agency, Mr. Stamen Yanev, discussed with us in detail also particular areas where the Russian investments in Bulgaria could be facilitated.
Intellectual Property = Competitive Business
In the modern business relations in Bulgaria, there is still a lack of understanding of the potential of intellectual products. The main answer to the question of why the market is overwhelmed by the supply of services for which there is little need is limited to a single conclusion - not enough new products are created or often enterprises copy or imitate new products / services to their competitors. Most of the Bulgarian small and medium-sized enterprises perform services and trade with our own or with foreign goods and rarely produce anything new. Very few of them export their products. The opportunities for the realization of products and services on foreign markets of leading world economies such as China, USA, Russia and others are not sufficiently used. Respectively innovative products from these countries are rarely applied in Bulgaria. The new technology purchased from abroad often has a low cost in order to enable the company´s profit under Bulgarian conditions. According to the SWOT analysis of the Ministry of Economy and Energy for the Condition of Small and Medium-Sized Enterprises in Bulgaria, included in the National Strategy for Promotion of Small and Medium-Sized Enterprises 2014-2020, the availability of low-skilled labor force is still not able to generate added value in high-tech manufacturing and services. This is due, among other factors such as access to finance, to the lack of training programs for small and medium-sized enterprises. Because of this the shift to more technological levels of labor and production is difficult.
The modern Bulgarian small and medium business providing 75% of the country's employment, does not have the incentive to create new products because it is probably not familiar with the methods of using, managing, protecting and introducing new products on the market, and moreover – it does not realize the great potential of this. For the marketing department in a medium-sized business, the importance of the registered trademark is often seen only as a necessary particularity, whereas the copyrighted work or the patent is something completely exotic and unfamiliar, and associated with unnecessary spending of money. Currently in Bulgaria trademarks are being mass-registered without clear strategy for the development and enforcement of a brand on the market being prior for companies. Even fewer are those who invest in quality, so that their production is new and unique. There are also sufficient gaps in the preservation of business secrets and know-how by appropriate legal means, which, for example, may even be sold separately and independently from the enterprise.
The key to overcoming the above-mentioned problem is receiving training and information related to the creation, management of the protection and sale of intangible assets that are of immense importance for the creation, financing and development of a competitive business. Intellectual property is essential in the management of the company in today's dynamic conditions. For example, the reputation of a brand, a patent-protected technology and the associated know-how owned may be subject to a license, whereby the undertaking grants rights of use to others against payment. This may generate significant additional earnings other than those earned from ordinary business. These rights can also be valued at the sale of the enterprise, thus increasing significantly the total value of the business sale transaction.
"Penkov, Markov and Partners" continues to win cases in connection with the protection of RES producers
The energy team of Penkov, Markov and Partners has once again justified the trust of their clients. With joy we would like to inform you that the cases for compensation for damages caused by the deduction of 20% tax (active in the period from January to August 2014 and declared unconstitutional by the Constitutional Court by Decision No. 13 of the 31st of July 2014) we have won three more positive decisions.
Both the Sofia District Court and the Sofia City Court have fully embraced our thesis that the amounts paid under an act declared unconstitutional should be compensated by the Republic of Bulgaria under the Obligations and Contracts Act and in particular that the damages have occurred from the moment the law has entered into force and should be repaired for the duration of the illegal act.
The establishment of a case-law in this case concerns a certain type of cases that although affecting the RES producers, will extend their effect to many similar cases.
It is of a particular importance that in its reasoning the Bulgarian court has accepted that in cases about claims for damages the acts declared for unconstitutional are illegal even at the moment they were voted and entered into force. Respectively, despite the fact that the decisions of the Constitutional Court act "in the future" damages are admissible and as apparent reasonable and granted as a whole.