Decision No. 13 of 2 December 2025 on Constitutional Case No. 9/2024
Referring Authority and Subject Matter of the Case
The case was initiated upon a petition by the Supreme Bar Council. The subject matter of the case is the constitutionality of Article 129, paragraph 6, in the part “with the exception of mandatory social security contributions” of the Tax and Social Security Procedure Code (TSSPC). The petition argues that the provision is unconstitutional on the grounds that it contravenes Article 4, paragraph 1 (rule of law), Article 6, paragraph 2 (principle of equality), Article 7 (state liability for damages), and Article 17, paragraph 1 (the right of property […] shall be guaranteed and protected by law) and paragraph 3 (private property shall be inviolable) of the Constitution.
Summary of the Court’s Reasoning
In the vote conducted, the majority required under Article 151, paragraph 1 of the Constitution (the Constitutional Court shall adopt its decisions by a majority of more than half of all judges) and Article 15, paragraph 2 of the Constitutional Court Act (the Court’s decisions and rulings shall be adopted by a majority of more than half of all judges) was not achieved - namely, a majority of more than half of the judges sitting on the Court (at least seven votes). Accordingly, the petition was dismissed.
One group of judges held that the petition was unfounded, as the challenged provision, in the contested part, is not unconstitutional.
In their reasoning, they substantiate the absence of a conflict with Article 4, paragraph 1 of the Constitution by stating that the legislator, having regard to the characteristics of the public claim and the economic conditions, is free to regulate by law whether interest is due and from which moment it accrues in the event of reimbursement of overpaid amounts. They consider that the exception under Article 129, paragraph 6 of the Tax and Social Security Procedure Code, made solely with respect to interest on unduly paid or collected mandatory social security contributions, pursues the legitimate aim of ensuring that the funds administered by the National Revenue Agency, which in fact constitute the funds of the social and health insurance schemes, are used in accordance with their purpose - namely, to guarantee the rights of insured persons upon the occurrence of certain social risks and to secure the corresponding benefits owed in return for the earmarked collection of those contributions. The proportionality of the measure - namely, that interest is nevertheless due, but only from the moment when the claim should have been reimbursed - contributes to the promptness of the actions for reimbursement of the respective amounts and limits in temporal terms the exercise of the power of the authority which, acting under conditions of bound competence, is vested with the power to reimburse amounts unduly paid.
The judges further state that the challenged legal regulation does not lead to unequal treatment of citizens under the law, since subjects who are in an identical legal situation are treated equally by the law. The specific nature of social security legal relationships and the different legal consequences arising from their establishment, existence, and development provide grounds for the legislator to adopt a differentiated approach in regulating the legal consequences of the application of the institution of reimbursement of unduly paid or collected mandatory social security contributions, as compared to other public claims.
The part of Article 129, paragraph 6, first sentence of the Tax and Social Security Procedure Code, whose unconstitutionality is sought to be declared, does not exclude the application of the general regime of state liability provided for in Article 7 of the Constitution and regulated in the State and Municipalities Liability for Damages Act. The subsidiary nature of the remedy under the State and Municipalities Liability for Damages Act does not mean that this protection is ineffective; it merely signifies that it does not apply where another remedy is available. At the same time, however, differentiating the procedure for engaging such liability is a matter of legislative expediency, within which the principles of the rule of law, state liability for damages, and the effectiveness of remedies must be guaranteed.
According to the judges, there is no inconsistency between the challenged provision and Article 17, paragraphs 1 and 3 of the Constitution, since mandatory social security contributions, as well as the interest due upon their payment and reimbursement, are regulated by law, and it is on the basis of a statutory ground that the property of the obligated persons is affected. This is done so that they, and other insured persons, on the basis of the principle of solidarity, may enjoy rights which are realized through the payment of various types of monetary benefits or through the use of monetarily valued healthcare services. Taking into account the principle of solidarity underlying the construction of the social security system in Bulgaria, the special rules provided for the reimbursement of mandatory social security contributions, as well as the conditions and procedure for exercising social security rights, the different moment from which interest accrues upon the reimbursement of unduly paid contributions by different obligated persons (insured persons and contributors/employers) does not disproportionately affect the right to property, which is guaranteed and protected by law.
According to the other group of judges, however, the challenged provision is unconstitutional.
They take the view that the State’s obligation to refund a non-existent public liability (paid under threat of enforcement or collected through compulsory enforcement) and its obligation to compensate for damages resulting from the execution of an unlawful act of its authority derive their constitutional basis from Article 4, paragraph 1 and Article 7 of the Constitution. The judges do not call into question the undisputed fact that tax liabilities and state social security liabilities rest on different legal grounds and give rise to different legal consequences. However, they find that the different treatment, as provided by the legislator, of persons who - by the will of the State - owe social security contributions and other public liabilities, where the amounts have been paid or collected on the basis of an act of a revenue authority, cannot be justified by the difference in the nature of the two types of public liabilities.
By virtue of an explicit statutory provision, the establishment, securing, and collection of both types of public liabilities are carried out by the same entity - the revenue authority - and under the same procedure, namely the proceedings and procedures established by the Tax and Social Security Procedure Code. The social security authority (and, accordingly, the funds earmarked and collected in the respective fund) is not responsible for the unlawful coercion exercised by the revenue authority (a state body) through the issuance of an unlawful act.
The only effect achieved by the legislator through the established differential treatment of obligated persons, with regard to the starting point from which statutory interest becomes due, is to release the State from its obligation to reimburse unduly paid or collected amounts together with statutory interest, where such amounts were paid or collected on the basis of an act of a revenue authority.
Having chosen to unify the procedure for the collection of mandatory social security contributions and taxes, the legislator should likewise unify the procedure by which the State fulfills its obligation to remedy the damages caused to individuals by unlawful acts of its authorities. The fact that persons who, on the basis of an act of a revenue authority, have paid amounts not due as mandatory social security contributions may seek protection under the State and Municipalities Liability for Damages Act does not satisfy the requirement of equal treatment. This is not a matter of legislative expediency, nor can it be justified by the different nature of mandatory social security contributions and taxes, since that distinction is irrelevant in the present case. The procedure for compensation provided for in the State and Municipalities Liability for Damages Act applies to actually incurred damages exceeding the amount of statutory interest, which must be proven.
Grounds for the Ruling and Disposition
Pursuant to Article 149, paragraph 1, item 2 of the Constitution (empowering the Court to rule on requests for the establishment of the unconstitutionality of laws), the Constitutional Court dismisses the request for a declaration of unconstitutionality of Article 129, paragraph 6, in the part “with the exception of mandatory social security contributions” of the Tax and Social Security Procedure Code.
Председател: Павлина Панова