Bulletin, October 2017

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Amendments regarding to the protection of personal data

A new Regulation on data protection is in force since  May 24, 2016 – Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 (shortly “Regulation”). Important point in the new legal regulation is:

  1. that the Regulation is directly applicable in all Member States of the EU, whereby a specific implementation in the local legislation of the Member States is not necessary (as opposed to the directives that regulate the legal relations on the protection of personal data at the level of EU law up to now) and
  2. The regulation is to be applied mandatory in all EU member states as of May 25,2018. This means that by that date all data controllers should have aligned their internal procedures for personal data processing with the Regulation.

Summarized, the Regulation provides the following major changes:

  • increased requirements for data controllers and date processors, including an obligation for controllers to designate a data protection officer – in cases which are explicitly specified in the Regulation; increased accountability; imposition of obligation to notify the local controlling authority (Data Protection Commission, shortly “CPDP”) in a shortened term on a breach of personal data security; strengthened specific technical and organizational security measures, whereby the Regulation explicitly define pseudonymisation and encryption
  • significant increase of the maximum amount of fines and penalty payments imposed to infringers of the legal provisions regarding the personal data protection - up to 4% of the total worldwide annual turnover of the preceding financial year or up to 20 000 000 EUR, whichever is higher
  • data controllers will no longer be subject of obligatory registration with the CPDP
  • the joint liability of the controller and the processor for caused damages is explicitly regulated
  • the territorial scope of appliance of the European data protection rules is expanding – they will also apply to controllers or processors who are not established in the European Union (EU), the processing of personal data of data subjects who are in the EU by a controller or processor not established in the EU will also be subject to the Regulation when it is related to the monitoring of the behavior of such data subjects in so far as their behavior takes place within the EU, as well as the processing of personal data of data subjects who are in the EU by a controller or a processor not established in the EU, where the processing activities are related to offering goods or services to such data subjects irrespective of whether connected to a payment.
  • the requirement for consent from the person whose data is subject of processing is extended in the case of allowing data processing, and the consent must be given by a clear affirmative act establishing a freely given, specific, informed and unambiguous indication of the data subject's agreement to the processing of personal data relating to him or her, such as by a written statement, including by electronic means, or an oral statement, with the right to withdraw the consent at any time. Silence and lack of action do not constitute consent.
  • introduces new rules and provides greater control of natural persons on their personal data – enhanced access rights, correction, erasure, portability, limitation of processing, objection to the processing of personal data, etc.
  • introduces speciffic rules on personal data of children.

New amendments to the VAT Act allow VAT registration simultaneously with the initial entry in the Registry Agency/Commercial Register

With a proposed draft Law on amendment and supplement to the Tax and Social Insurance Procedure Code, which was developed in implementation of a Decision of Council of Ministers № 338 of 2017 on the adoption of measures for reducing the administrative burden on citizens and business by removing the requirement to submit certain relevant official supporting documents on paper, proposals for changes were made for the Excises and Tax Warehouses Act, The Corporate Income Tax Act, Law on Local Taxes and Fees, Value Added Tax Act and on other legal acts.

Amendments to the Value Added Tax Act provide the possibility for the persons, already upon their initial registration in the Registry Agency/Commercial Register, to exercise their right of voluntary VAT registration.

The project allows this change to be available also when the registration is conducted online. Therefore, the electronic form of applications under Commercial Register Act provides adding a field in which the voluntary VAT registration could be applied for, as well as the legal basis for it and the system would also enable the attachment of documents required for the registration.

Where the application for VAT registration is filed by a lawyer, there will be no requirement for a notarized power of attorney, simple signature power of attorney would suffice in such case.

Legislative changes to non-payment of wages are in progress

Another amendment to the Labor Code and other legal acts that are directed against non-payment of wages to employees are on way. Among the measures envisaged is that the employers who owe wages and compensations of employees would not be able to participate in public procurement procedures as contractors and subcontractors. Additional opportunities for the employees to receive their wages and compensations from the Guaranteed Receivables of Workers and Employees Fund are to be introduced. It is also envisaged that the guaranteed receivables will be granted to the employees and workers within three months from the date of entry of the court decision opening the insolvency proceedings in the Commercial register.

The amendments to the Labor Code are expected to strengthen the control functions of the "General Labor Inspectorate" Executive Agency. The Agency is empowered to carry out checks regarding the payment of wages and compensations also after termination of the employment relation, and also to give obligatory instructions in this regard. It explicitly regulates the period within which the employer is obliged to pay the compensations due to his employees and also the statutory default interest.

The changes also propose an amendment in the Civil Procedure Code. It foresees the possibility for the employees to request a faster issuance of an order for immediate execution on the basis of effective prescriptions of the "General Labor Inspectorate" Executive Agency. This will enable the employees to easily receive their unpaid wages and compensations owed to them by the employer. The purpose is that employees do not have to litigate in order to have the grounds and amount of their claims determined.

Amendments in the Social Insurance Code on maternity leave compensations

The already effective amendments to Social Insurance Code and the Ordinance on Cash Benefits and Allowances from State Social Security Fund provide the right of the mother or the adoptive mother to receive 50% of the pregnancy and childbirth compensation if they decide to return to work prematurely – and now this option could be exercised even after the 135th calendar day from the first day of their maternity. As well as up to now, in order to do this, the child should not be placed in a childcare facility on full state support. Additional preconditions are that the child should not be raised by family relatives, other related persons or foster family, and should not be raised under maternity support programs. Until now, the mother was entitled to a half of the compensation only for the second year of her maternity if she decides to return to work after the child reaches 1 year.

Also, the adoptive fathers of children up to the age of 5 already have the right to receive a pecuniary benefit for a period of 15 calendar days (paternity) and the starting date of receipt is the date of adoption. Entitled to a financial compensation after the child’s 6 months of age for the remainder to one year is, besides the father (adoptive father), already one of the parents of the mother, when the father is unknown; one of the parents of the mother (adoptive mother) or father (adoptive father), when the father (adopter) has died or one of the parents of the single adoptive mother. In case of death or serious illness of the mother (the adoptive mother), which hinders her of taking care of the child, the financial compensation for pregnancy and childbirth and child-raising allowance, or adoption of a child from 2 to 5 years of age is paid to the person who takes care of it (father, adopter, grandmother, grandfather, guardian). In view of the above mentioned changes, new forms of declarations, applications and certificates for payment of cash benefits and benefits are also foreseen.

Inheritance of debts in pending enforcement proceedings

Debt collection continues to expand its range as bailiffs extend the scope of enforcement actions. Very often the object of enforcement is the commercial undertaking or, respectively, the personal property of the Sole Trader - one of the most widespread forms of traders since the entry into force of the Commerce Act in 1991.

It is an actual issue, when a debtor - a natural person with an enforcement case against him - dies, which person the execution is directed to, and what are the possibilities for legal protection of his heirs, as newly constituted debtors?

It is generally known that in inheritance by law, usually the closest relatives of the legator inherit - children and husband. When the legator has left only duties (a practice that is often the case lately), first-line heirs also take the rather widespread step of waiving the inheritance. What is not known is that the debt is thereby not "redeemed", but successive lines of heirs are attracted to inheritance. Most often these are the brothers and sisters of the legator/debtor. From a practical point of view, this remains unclear and unknown to ordinary public. It should be noted that it is already a regular practice for bailiffs to constitute second-line heirs in their „quest“ to collect the debt. This means that when the closest heirs of a deceased person waive their inheritance, it is reasonable that the subsequent succession lines do the same. In the above context, in case of inheritance of a sole trader's business, these details are particularly relevant in view of the potential danger of covering the debts of an unsuccessful commercial activity with personal property of the heirs.