This appears to be only the second attempt by the state to gain a slightly better idea of what BOC owns and what exactly its cash income is
14 January 2024Sunday, 7:30 p.m.
Author: Flagman.bg
The Metropolitans explain that the founder of the Orthodox Church is “Jesus Christ himself” and for this reason the NAA cannot be an auditor of the BOC
Two things are certain in life – death and taxes. An indisputable fact from which it seems that even the Bulgarian Orthodox Church (BOC) cannot escape. The relations with the beyond of the oldest surviving institution in Bulgarian history are more special, as well as those with the state. The church has its own accounting and its own property register (which is not known if it actually exists), but this does not prevent it from receiving funding from the state, as well as from European funds without giving an account of them, writes Kapital.bg.
As far as taxes are concerned, however, there the idea of the Holy Synod, that it can cover everything with ecclesiastical secrecy, is put to the test. From November 2023, a financial audit of the BOC is underway, the National Revenue Agency (NAA) confirmed. The revision is to establish corporate tax liabilities for the period 2017-2022.
This appears to be only the second attempt by the state to get a better idea of what BOC owns and exactly what its monetary income is. The first one was completed exactly a decade ago in 2013. The purpose of the first revision was to establish the obligations of the BOC for tax on the income of natural persons and on income from employment contracts and legal relationships equated to them.
And the state definitely has reason to be interested in how the BOC acquires and spends money. In 2020, the state subsidy for the Church was increased to BGN 26 million per year, and the budget for 2024 foresees another increase to BGN 38.4 million. A reference shows that in the last three years alone, the BOC received about BGN 111 million. BGN from the DF “Agriculture” and the state budget.
According to official data in APIS, insured persons in all metropolitan areas and dioceses, as well as the Holy Synod number 1,885 people, which ranks it among the top 50 employers in the country. The largest in terms of number of employed persons are the Sofia Metropolitanate with 450 people and the Plovdiv Metropolitanate with 365 people. A check by “Capital” a month ago showed that only within the city of Plovdiv, the diocese owns dozens of properties that it probably rents out, far from all of them with registered contracts.
Let’s have each other’s respect
The Holy Synod has reacted to the revision by sending a seven-page letter to the NRA, in which it defines the revision not only as unconstitutional, but also as a risk to national security.
“The eight questions relating to the way of financing the BOC-BP, its expenses, the way of organizing the activity and accounting reporting and access to its documents, represent an inadmissible and unconstitutional attempt to interfere in the internal organization of the Bulgarian Orthodox Church – the Bulgarian Patriarchate. The control on the financial statements literally means control over individual religious institutions, which raises doubts as to whether this is not the actual purpose of the audit,” she wrote in the document she entered as part of the documents submitted for the NRA audit. It was signed by the Melnysh bishop and secretary of the Synod, Gerasim.
The Metropolitans explain that the founder of the Orthodox Church is “the Lord Jesus Christ Himself”, and in relations with the Bulgarian state, “periods of persecution by the state alternated with periods of peaceful coexistence”. “History also proves that democratic relations between the state and the Church, with mutual respect and guaranteeing the Church’s right to self-governance, are a guarantor of national security in Bulgaria,” says the letter, which was published on the faktor.bg news site, and by the National Narcotics Agency have confirmed that this text has been received and is authentic.
Is the rent a donation?
A quick check of the Ministry of Finance’s website shows that corporate tax is levied on “the profits of domestic legal entities, who are not merchants, including religious organizations, from transactions under Art. 1 of the Commercial Law, as well as from the leasing of movable and immovable property“.
“The experience of the almost twenty-year schism in Bulgaria proves that any interference by the state in the internal affairs of the Church leads to severe consequences for both the Church and the state itself. Historical experience also shows that whenever the state tried to exercise control over the activity of the Church or to model the internal church life according to its secular criteria, this has ended in failure”, says the letter of the Holy Synod to the National People’s Congress, which even quotes the Council of Antioch.
Since the letter mixes history, religion and law, “Capital” turned to the expert on church law Prof. Dr. Dilyan Nikolchev for advice on this church-tax dispute. Nikolchev refuted the Synod’s letter in several places, summarizing that “in one sentence, from a legal and ecclesiastical point of view, it is untenable and deeply wrong as an interpretation”.
One of the main objections of the Synod, as appears from the letter, was against the income from rents, which they thought were not incomes but endowments. “It is inadmissible to check all the property of the BOC-BP and the financial statements regarding rents, which for the church could not be qualified as economic activity. The properties and rents from them, which the secular legislation could qualify as civil fruits, are donated by faithful people to support the church, and not to form profits such as merchants within the meaning of T3, which are subject to taxation. Rents from properties donated by religious people are voluntary donations and are only for the self-support of the separated from the state BOC – BOC, these rents are not to form a profit that is subject to taxation,” the document sent to the National Revenue Agency claims.
Prof. Nikolchev refutes this opinion. “The rent suddenly – according to the synodal understanding – turns into donations from people of faith. The synod omits the text of Article 19, paragraph 2 of the Constitution, which reads: “The law creates and guarantees to all citizens and legal entities the same legal conditions for economic activity “, the lawyer claims.
According to him, although the Law on Religions (LA) outlines the freedom and equality of religions, and that religious institutions are separate from the state, it is also important to point out, that, according to ЗВ, religious beliefs are not grounds for refusing to fulfill the obligations established in the Constitution and the law, and that religious institutions are legal entities.
“This is important to emphasize, because according to the logic of the law, legal entities are equal in rights to individuals, i.e. to citizens, as far as property rights are concerned(…) In other words, it is true that the Constitution of the Republic Bulgaria and the specialized law in the field of religions (ZV) declare religious institutions to be separate from the state, but when they are legal entities this means that they are placed in the capacity of legal entities, such as any joint-stock company, or legal entities with non-profit purpose, with the difference that the BOC receives the status of a legal entity by virtue of the law on religious denominations,” adds Nikolchev.
Apartments are not icons
There is a serious reason for the BOC to worry about looking into its property pocket. “Managing the properties of the Plovdiv Metropolis is like being the mayor. There are over 50 in Plovdiv alone, not to mention the other areas. This property requires management”, as the former mayor of Plovdiv Zdravko Dimitrov summarized to “24 Chasa” last month. shortly after assuming office as manager of the properties of the Plovdiv Metropolis.
In its statement to the NRA, the Holy Synod states that according to their reading of the law, the NRA cannot be an auditor of the BOC. “If the State prevents the Church from using the church property according to its purpose, it prevents the worship itself.”
The only thing that the metropolitans recognize that the state can check are “funds from the state subsidy for the remuneration of priests”, for which there is an order expressly provided for in the special Law on Religions. However, checking the financial statements of the metropolises would mean “control over the property, which is mainly formed through donations and bequests. Such control would be in violation of the Constitution and inconsistency with the cited constitutional decisions,” the letter claims.
According to the expert in church law, there are two types of church property. The first – res sacrae are directly intended for the divine service itself and include such things as the temple, the altar, the antimins, the Gospel, crosses, icons, etc. The second type of property, which is subject to inspection by the National Revenue Agency, is res ecclesiastici and refers to real estate that serves to satisfy the needs of the Church, such as meeting the costs of carrying out the cult, for the maintenance of church members, etc.
“It is true that religious institutions occupy a special position in view of the specialized legal framework of our country: they are not regulated by such special laws as the Law on Commercial Companies, the Law on Limited Liability Companies, on cooperative associations, etc., but are subordinated of different treatment from legal entities with a non-profit purpose, by means of the provisions of the Civil Code”, Nikolchev points out, but recalls that the law specifically states that when religious denominations benefit from preferences, they are subject to an independent financial audit, as is provided for legal entities with a non-profit purpose .
The professor cites ZV, according to which the property of religious denominations can include “property rights and limited real rights in immovable property, fruits of property management, including rents, profits or dividends from participation in commercial companies or associations of commercial companies, ownership of movable property, including securities, rights under the Copyright Act and related rights, income from government subsidies, donations, bequests, etc. Registered religions have the right for their needs to produce and sell things related to with their worship activities, rituals and rites”.
It is precisely on these listed real rights that the NRA has the right to carry out inspections, as it does with any non-profit legal entity.
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2024-01-14 20:19:07
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