Common Reporting Standard or (CRS) in Bulgaria

Starting in 2012, political interest has increasingly focussed on the opportunities provided by automatic exchange of information. Automatic exchange of information involves the systematic and periodic transmission of “bulk” taxpayer information by the source country to the residence country concerning various categories of income (e.g. dividends, interest, etc.).

On February 2014, upon an initiative of the Organization for Economic Cooperation and Development (OECD) the G20 Finance Ministers endorsed the Common Reporting Standard for automatic exchange of tax information, shortly known as Common Reporting Standard or “CRS”. The Standard calls on governments to obtain detailed account information from their financial institutions and exchange that information automatically with other jurisdictions on an annual basis.

On May 2014, OECD Declaration on Automatic Exchange of Information in Tax Matters was endorsed by all 34 member countries along with several non-member countries. More than 65 jurisdictions publicly committed to implementation, with more than 40 having committed to a specific and ambitious timetable leading to the first automatic information exchanges in 2017. Between these so called “early adopters” was Bulgaria.

On 29 October 2014, 51 jurisdictions, 39 of which were represented at ministerial level, signed a multilateral competent authority agreement to automatically exchange information based on Article 6 of the Multilateral Convention. Subsequent signatures of the agreement, including a signing ceremony in the margins of the OECD Ministerial meeting (June 2015), brings the total number of jurisdictions to 61.

Despite Bulgaria was among those countries, that committed to implement CRS starting from January 2016, latter have never signed the multilateral competent authority agreement. Thus, the time-frame for implementation of CRS in Bulgaria remains unclear. One thing is for sure – even with all political effort in hand, to adopt the reporting standard in the internal legislation, following the constitutional procedure it will take at least two to tree years for Bulgaria to implement CRS. Such political will however is more than questionable, having in mind the fragmentation of the Bulgarian parliament. The incapability of the Bulgarian Revenue Agency to adopt and implement such complex administrative procedure, makes the unlimited delay for CRS implementation in Bulgaria the most likely scenario.

Temporary replacement of aircraft engine in Bulgaria

aviation lawyer for aircraft engine claimsIf an aircraft engine fails, the airline can make a temporary engine replacement until the rightful owner (lessor) allows permanent engine replacement. Sometimes in case of financial problems the aircraft is seized by creditor or the airline goes bankrupt. In such cases the owner of the airframe might acquire title over the engine if the engine owner doesn't legally protect its asset. Such protection of assets effectively can be done by an aviation lawyer, experienced in the local jurisdiction.

How an aircraft engine owners can protect their assets?

The ultimate protection can be incorporated in the text of the engine lease agreement, signed with the aircraft operator (the airline). The agreement needs to clearly identify a jurisdiction, favourable to the engine owner, and issuing a mandatory letter of recognition of title by the airframe owner. Ultimately, on a more global level, the interest in the aircraft engine can be registered pursuant to the Cape Town Convention and it's Aircraft Protocol in the International registry of mobile assets. If the engine title dispute arises in a country where the Convention is in force, the aircraft engine owner can easily enforce a repossession (revendication).

Applicable law on installing aircraft engine on airframe in Bulgaria

Bulgaria is not signatory of the Cape Town convention but is a party through its accession to the EU. So far there is no case law on application of the Cape Town convention and Bulgarian courts are likely to apply lex situs i.e. the law of the place where the property is situated (Bulgarian laws). This, however, doesn't mean that the court will not apply the Convention. Below I will be looking at the current Bulgarian case law on the proprietary rights in case of joining two objects into one, where one is the main object and the other is subordinate i.e. the case where aircraft engine is installed on an airframe, owned by another entity.

Bulgarian Supreme Court case law on protecting title of aircraft engines

Due to the small aviation industry in Bulgaria, there are no particular disputes concerning aircraft engines. However there are some milestone court decisions, which can be applied directly to the topic of discussion.

The main legislation is Article 97 of the Ownership Act:

[blockquote]

When another’s property has been incorporated as a part of a main property in such a way that it may not be separated without causing significant damage to the main property the owner of the latter property shall acquire the ownership over the adjoined part as well.

[/blockquote]

The text of the articles faces few concerns one of which is what does  "significant damage to the main property" means? The Supreme court in its Decision 180/18.10.2013 in the civil case 2317/2013 has decided that:

[blockquote]

In the legal theory and in legal practice it is accepted that permanent incorporation means not only when the removal of the subordinate property would lead to physical damage of the main property but also if it would lead to disrupting the functions of the main property.

[/blockquote]

The second concern of the aircraft engine owner would be  "is the engine subordinate part to the airframe"? There is a slightly older Supreme court Decision 479/02.10.1986 on criminal case 476/1986, where the judges have held that:

[blockquote]

Replacing of one part of a mechanism with another one is not incorporation pursuant Article 97 of the Ownership Act, which is accepted as means to acquire ownership"

[/blockquote]

No doubt the above court decision is 100% in favour of the aircraft engine owner because temporary replacement of an engine is in fact replacement of a damaged aircraft part with another good one. The quoted court decision concerns automobile parts, so it is more relevant than the majority of the other case law, which relate mainly to real estate properties.

The third main Supreme court decision is Decision 353/22.05.2009 on civil case 585/2008, where the judges held that:

[blockquote]

It is correct and legally grounded on Article 97, that even if there are parts, provided by the defendant, these parts are incorporated in the main property and they belong to its owner i.e. to the claimant.

[/blockquote]

Hire an aviation lawyer in Bulgaria

As you can see above, you will need a qualified aviation lawyer to make the claim successful, despite the contradictory Supreme court case law. The specifics of the aviation industry requires not only local law and litigation knowledge but also the qualifications of an international aviation law specialist. Should you need an aviation lawyer, we will be please to offer qualified legal advice and services. Milen Hristov is qualified aviation lawyer, registered in Sofia Bar. He is also member of European Air Law Association and certified by IATA in international aviation law.

Temporary replacement of aircraft engine in Bulgaria

aviation lawyer for aircraft engine claimsIf an aircraft engine fails, the airline can make a temporary engine replacement until the rightful owner (lessor) allows permanent engine replacement. Sometimes in case of financial problems the aircraft is seized by creditor or the airline goes bankrupt. In such cases the owner of the airframe might acquire title over the engine if the engine owner doesn't legally protect its asset. Such protection of assets effectively can be done by an aviation lawyer, experienced in the local jurisdiction.

How an aircraft engine owners can protect their assets?

The ultimate protection can be incorporated in the text of the engine lease agreement, signed with the aircraft operator (the airline). The agreement needs to clearly identify a jurisdiction, favourable to the engine owner, and issuing a mandatory letter of recognition of title by the airframe owner. Ultimately, on a more global level, the interest in the aircraft engine can be registered pursuant to the Cape Town Convention and it's Aircraft Protocol in the International registry of mobile assets. If the engine title dispute arises in a country where the Convention is in force, the aircraft engine owner can easily enforce a repossession (revendication).

Applicable law on installing aircraft engine on airframe in Bulgaria

Bulgaria is not signatory of the Cape Town convention but is a party through its accession to the EU. So far there is no case law on application of the Cape Town convention and Bulgarian courts are likely to apply lex situs i.e. the law of the place where the property is situated (Bulgarian laws). This, however, doesn't mean that the court will not apply the Convention. Below I will be looking at the current Bulgarian case law on the proprietary rights in case of joining two objects into one, where one is the main object and the other is subordinate i.e. the case where aircraft engine is installed on an airframe, owned by another entity.

Bulgarian Supreme Court case law on protecting title of aircraft engines

Due to the small aviation industry in Bulgaria, there are no particular disputes concerning aircraft engines. However there are some milestone court decisions, which can be applied directly to the topic of discussion.

The main legislation is Article 97 of the Ownership Act:

[blockquote]

When another’s property has been incorporated as a part of a main property in such a way that it may not be separated without causing significant damage to the main property the owner of the latter property shall acquire the ownership over the adjoined part as well.

[/blockquote]

The text of the articles faces few concerns one of which is what does  "significant damage to the main property" means? The Supreme court in its Decision 180/18.10.2013 in the civil case 2317/2013 has decided that:

[blockquote]

In the legal theory and in legal practice it is accepted that permanent incorporation means not only when the removal of the subordinate property would lead to physical damage of the main property but also if it would lead to disrupting the functions of the main property.

[/blockquote]

The second concern of the aircraft engine owner would be  "is the engine subordinate part to the airframe"? There is a slightly older Supreme court Decision 479/02.10.1986 on criminal case 476/1986, where the judges have held that:

[blockquote]

Replacing of one part of a mechanism with another one is not incorporation pursuant Article 97 of the Ownership Act, which is accepted as means to acquire ownership"

[/blockquote]

No doubt the above court decision is 100% in favour of the aircraft engine owner because temporary replacement of an engine is in fact replacement of a damaged aircraft part with another good one. The quoted court decision concerns automobile parts, so it is more relevant than the majority of the other case law, which relate mainly to real estate properties.

The third main Supreme court decision is Decision 353/22.05.2009 on civil case 585/2008, where the judges held that:

[blockquote]

It is correct and legally grounded on Article 97, that even if there are parts, provided by the defendant, these parts are incorporated in the main property and they belong to its owner i.e. to the claimant.

[/blockquote]

Hire an aviation lawyer in Bulgaria

As you can see above, you will need a qualified aviation lawyer to make the claim successful, despite the contradictory Supreme court case law. The specifics of the aviation industry requires not only local law and litigation knowledge but also the qualifications of an international aviation law specialist. Should you need an aviation lawyer, we will be please to offer qualified legal advice and services. Milen Hristov is qualified aviation lawyer, registered in Sofia Bar. He is also member of European Air Law Association and certified by IATA in international aviation law.

No cabotage restriction for own account operators

going around cabotage in UKIf you have problems with DVSA or have lost your Operator's licence in UK or Ireland we can bring you back in business under Bulgarian O-licence. This route is successful only if you are not breaching the EU cabotage rules (e.g. 3 local jobs within 7 days, following international journey).

Transportation on own account

However if you are not working for hire and reward, Regulation EC/1072/2008 provides some specific rules for you. Before we move to the rules, we need to specify who qualifies for "own-account operator". The test is in Article 1, paragraph 5, point (d) of the said regulation. In general you need:

[list1]

  • to own the goods you are carrying
  • the purpose of the journey need to be to move the goods out of your premises (owned or rented)
  • the drivers need to be employed by you
  • to own/have rented (without drivers) the trucks
  • such type of journey need to be supplementary to your main business

[/list1]

Unrestricted cabotage in UK

As we said above, if you work for hire and reward, you can't do more than 3 local jobs in 7 days. After you do that, you need to physically bring the truck out of UK/Ireland. This restriction doesn't apply to own account operators. The piece of legislation which allows you to work freely as own account Bulgarian O licence holder in UK is Article 8, paragraph 6 of Regulation EC/1072/2008, namely:

[blockquote]

"6.   Permission to carry out cabotage operations, within the framework of the types of carriage referred to in Article 1(5)(d) and (e), shall be unrestricted.

[/blockquote]

As you can see, if you are moving goods on own account, you can safely use the Bulgarian O licence option, we are providing. We will help you register your UK trucks in Bulgaria and we will obtain a Bulgarian O-licence for your Bulgarian company.

We are specialised transport law firm (road/air/sea) and unlike other accounting or consultancy companies, our services are based on detailed legal research- both legislation and EU and domestic case law.

Email us  on milen@mhlegal.eu or call us on 00359 5260 5997 now to get your own Operator's licence!