The cost of divorce by mutual consent

Statistically speaking, amicable divorces are dominant in the grounds and reasons for dissolution and termination of marriage, legally speaking. For example in 2020 amicable divorces are 64. 8%[1] of all disolved mariages, and for the following years the percentage is 65.5%[2] и 67.3%[3]. In absolute terms, the number of divorces by mutual consent for 2020, 2021 and 2022 are 5841, 6563 and 6410. Leaving aside the personal reasons for amicable divorces, one practical reason is often the desire to settle the relationship quickly and cheaply, after which the now ex-spouses can move on.

There can hardly be any dispute that an amicable divorce is much quicker than alternative legal proceedings which examine the causes and fault of a failed marriage. Another main reason that is leading the parties is the costs of ending the marriage, which can be assumed to be significantly lower in an amicable divorce.

However, the calculation of costs is often not as straightforward as it first appears, and the division of property when the same was joint can sometimes lead to costs that are an unpleasant surprise for spouses seeking a fresh start.

In the most ordinary case, when a marriage is dissolved by mutual consent, without any settlement of property consequences, without settlement of support due, the state fees payable to the court are up to 40 BGN - Article 6, paragraph 3 of the Tariff of State Fees Collected by the Courts under the Civil Procedure Code (the CPC Tariff), although sometimes there are contradictions in this regard as well[4] - at the initiation of the proceedings a fee of BGN 25 is payable and at the conclusion of the proceedings a final fee of up to BGN 40 is payable.

Many more problems and controversies arise, however, when the agreement, which confirms the effects of the divorce, settles property relations, e.g. concerning the matrimonial home, matrimonial property, motor vehicles and movables owned, fees payable to the court, as well as the charging of local property tax (share).

There are several options for achieving the objectives of dissolution of marriage and termination of co-ownership of the property forming part of the matrimonial property community, each of which has its own specificities, which will be discussed as follows:

• Change of property regime, transfer of community property and dissolution of marriage by mutual consent;
• Conclusion of a marriage contract concerning the property to be divided and dissolution of the marriage by mutual consent;
• Dissolution of marriage by mutual consent and division of property by agreement approved by the court.

Change of property regime and termination of co-ownership by transaction

Pursuant to Art. 18, para. 2 of the Family Code (FC), the statutory community of property regime applies when the spouses entering into marriage have not chosen a regime of property relations, as well as if they are minors or persons under a limited disability. This is the most common matrimonial property regime, which in turn requires the settlement of the property consequences of the dissolution of the marriage.

The law allows (Art. 18, para. 3 of the FC) regime to be changed during the marriage (before the divorce). The purpose of a change would be to switch to one of the other modes - to separation or contractual regime, with which to terminate the non-participatory co-ownership of the common property. The procedure is carried out on the basis of a notarized declaration of the chosen mode of property relations, according to Art. 40, para. 2 of Ordinance No. RD-02-20-9 of 21.05.2012 on the functioning of the Unified Civil Registration System, in conjunction with Art. 4, para. 1 of Ordinance No. 11 of 16.09.2009 on the procedure for keeping, storing and accessing the register of property relations of spouses. The fees for the procedure are simple - for notarizations of signature and content a total of BGN 36 including VAT (items 4 and 5 of the Tariff for notary fees under the Law on Notaries and Notarial Activities) for both spouses (if the declaration is one page ), and for issuing a certificate for the registered regime of property relations - BGN 10, or BGN 20 for both spouses (Art. 16h, Para. 1 of the Tariff for state fees collected by the Registration Agency), or total minimum fees in the amount of BGN 56.

After termination of the community regime, the spouses are free to dispose of the owned shares of movable and immovable property. So e.g. if the spouses own real estate with a market value of BGN 100,000 and a tax assessment of BGN 25,000.[5], the same are free to make a donation between themselves of the common parts of the family home of one spouse to the other spouse, if half the tax assessment of the property is considered as material interest for the transaction[6] (BGN 12,500) as in this case the minimum taxes and fees would be: 1. BGN 216.60 with VAT notary fee for acknowledging the donation; 2. BGN 12.50 registration fee in the property register; Local tax - not due (Art. 44, Para. 6 of ZMDT), or a total of BGN 229.10.

If the spouses decide to declare a sale for half of the property (one spouse sells to the other), then according to the price determined by them for the current example of BGN 50,000 (half of the market value), the fees would be: 1. BGN 576.60 with VAT notarial fee for the acknowledgment of the purchase and sale; BGN 50.00 registration fee; BGN 1,500.00 local tax (3% from the material interest for the Municipality of Sofia, the Municipality of Plovdiv, Varna, Burgas, etc. at the present time), or a total of BGN 2,126.60.

In this case, with a market value of BGN 100 000 and a tax valuation of BGN 25 000, the summary minimum costs for the dissolution of the marriage by amicable divorce and settlement of property relations would be:

Settlement of property relations by marriage contract

According to Art. 27, para. 3, proposition second of the SC, the matrimonial community of property can be terminated during the marriage if the spouses enter into wedding contract. According to Art. 38, para. 1, m.p. 1, 2 and 3 of the Civil Code, the marriage contract may contain the rights of the parties to the property acquired during the marriage, the rights of the parties to the property they owned before the marriage, the ways of managing and disposing of property, including the family home.

In practice, such a contract may have elements of a purchase and sale, a donation, a contract for alimony and maintenance and all other known transactions, as long as they do not contradict the provisions of the Civil Code and the general legal provisions on invalidity of contracts. If the spouses agree with the marriage contract that the shared property be transferred by donation from one spouse to the other, the costs would be even lower than the classic donation contract, because according to item 9 of the Tariff for notary fees for notarization of contracts, subject to registration, half of the fee under item 8, which concerns the notarial acts (including the donation agreement), is collected. In the marriage contract, an agreement can also be reached regarding legally relevant facts - the so-called establishment agreement, in which no property is transferred, and it is established that certain property was acquired with the funds of only one spouse, even though this happened during the marriage /Decision No. 29 of 02/07/2018 of the Supreme Court of Appeals pursuant to Administrative Procedure No. 20/2018, I year o., GC, Interpretive Decision No. 3 of November 29, 2018 of the Supreme Court of Appeals pursuant to interpretation d. No. 3/2015, OSGK/. And in this case, the fees would be the same, as material interest in this case would be taken to be the amount of the tax assessment for the entire property, and not just half, since such a contract has no effect in relation to shares. Also, when property relations are settled with a marriage contract pursuant to which a donation is made or full ownership of one spouse is established over real estate, no local property acquisition tax is due and charged. Such would be due if the contract provides for the exchange of goods - e.g. property shares are transferred for cash equivalent (purchase-sale). In the event that a marriage contract with elements of a donation or an establishment contract is signed, the minimum taxes and fees would be: 1. BGN 168.30 with VAT notary fee; 2. BGN 25 registration fee in the property register; Local tax - not due (Art. 44, Para. 6 of the ZMDT), or a total of BGN 193.30. For the sake of completeness, we will assume that the marriage contract also changes the regime of property relations, for which the relevant certificates will also be issued, at fees in the minimum amount of BGN 20.

In the hypothesis of a marriage contract with elements of a donation or a settlement agreement with a market value of BGN 100,000 and a tax assessment of BGN 25,000, the aggregated minimum costs for concluding a marriage contract and ending the marriage through divorce by mutual consent would be:

Due and amount of fee for confirmation of the property settlement

Perhaps the most significant contradictions and fluctuations in the practice of the courts are in determining the taxes and fees due, when in a divorce the parties with agreement settle their property relations.

The tariff for state fees, which are collected by the courts under the Code of Civil Procedure in Art. 7, item 1 states that in a divorce case, including by mutual agreement, when the parties reach an agreement on alimony, as well as on their property relations, a fee is also collected for the agreement on property relations - 2 percent on the value of each share.

The first practical problem is about determining the value of each partition. There is a relatively permanent practice, that when one spouse receives a certain property in an exclusive share precisely on this future share, formed by the agreement itself after its approval by the court with the decision to dissolve the marriage by mutual consent, the state tax in the amount of 2% is collected on the entire property, not on half of the liquidating conjugal property community that ceases to exist /Decision No. 270 of 4.05.2011 of the Supreme Court of Appeals under Criminal Procedure Code No. 214/2011, IV year o., Decision No. 352 of 18.05.2010 of the Supreme Court of Appeals under Criminal Procedure Code No. 367/2010, II Item and Decision No. 686 of 5.10.2012 of the Supreme Court of Appeals pursuant to Administrative Law No. 579/2012, IV year o./. The Supreme Court held that, by its legal nature, this co-ownership is non-equitable, therefore the fee is not due on half of the property, but on the whole, since he ultimately receives the whole property. Without commenting on the correctness of this interpretation, which must be followed, it should be noted that there is still controversy on this issue, namely that the 2% tax is collected on half of the entire property, which option is twice as much sparing the parties – e.g. in Decision No. 11 of 10.06.2021 under the No. 86/2021 according to the inventory of RS General Toshevo, Decision No. 80 of 23.03.2021 under the No. 221/2021 according to the inventory of RS Cherven Bryag.

The next moot point is whether the 2% fee should be charged when the parties establish by agreement that certain property was never part of the matrimonial property community, but was acquired with the funds of only one spouse, with no joint contribution, and that these things (properties) are the personal individual property of that spouse. As stated, such an agreement would have of a determinative nature, and it lacks a transfer of property or a material transfer effect. From here follows the conclusion that the lack of formation of shares of the spouses, as well as the lack of an element of division of property, from which it would practically follow that a fee of 2% on each share under Art. 7, item 1 of the Tariff under the Code of Civil Procedure should not be formed and charged at all. Again, an argument in this direction is the fact that such a stipulation has a determinative and not a transferable effect. The court proceeded in this sense in Decision No. 260896 of 12.03.2021 under City Decree No. 2003/2021 of RS - Varna and in Decision No. 261543 of 07.12.2020 under City Decree No. 12127/2020 of RS - Varna. There is also an opposite practice, which should be perceived as incorrect, in which, despite the ascertainment nature and the lack of transfer of property, the court charges the fee of 2% on the formed share - Decision No. 850 of 29/09/2020 under city ordinance No. 2114/2020 on the inventory of RS - Dobrich and Decision No. 90 of 20.05.2021 according to city decree No. 459/2021 according to the inventory of RS - Sevlievo, Decision No. 106 of 30.06.2021 of RS - Blagoevgrad according to city decree No. 1392/2021 .

Determination of the value of the share by tax or market valuation

Practically the most controversial question, however, is perhaps how should the value of shares and property be established - whether in the case of real estate it is their tax assessment or market value, determined by appointing a special forensic examination, and in the case of motor vehicles - insurance value or again market value. The Code of Civil Procedure determines the amount of the price of the claim for property claims and other real rights on property - the tax assessment, and if there is none - the market price of the real right (Article 69, paragraph 1, item 2 of the Civil Code), and according to paragraph . 2 for claims that are not specified in para. 1, the court determines the initial cost of the claim. Proceedings in divorces by mutual consent and confirmation of agreements are not claims, but unilateral protective[7] /Resolution No. 257 of 09.05.2014 under City Law No. 1634/2014, G.K., I year Fr. of the Supreme Court/.

In practice, two views seem to have been formed, which can be distinguished as that of the Sofia District Court and that of the other district courts in the country.

One view is that the state tax from 2% for the property received in the share and the corresponding local tax should be formed on the tax assessment or on insurance value on a motor vehicle - so Decision No. 245 of 24.01.2015 of RS - Plovdiv according to city decree No. 17442/2014, Decision No. 793 of 29.09.2015 of RS - Veliko Tarnovo according to city decree No. 1963/2015.[8], Decision No. 106 of 30.06.2021 of RS - Blagoevgrad under City Decree No. 1392/2021, Decision No. 628 of 11.04.2013 of RS - Burgas under City Decree No. 992/2013. , Decision No. 999 of 12.07.2010 of RS - Burgas under City Decree No. 2512/2010, Decision No. 4818 of 26.11.2012 of RS - Varna under City Decree No. 12529/2012. , Decision No. 1543 of 5.11.2015 of the District Court - Pleven pursuant to City Decree No. 3374/2015.[9], Decision No. 105 of 03.2.2023 of the RS - Blagoevgrad under City Decree No. 167/2023.[10], Decision No. 1287 of 27.09.2010 of the RS - Elin Pelin in case No. 325/2010, Decision No. 668 of 10.12.2015 of the RS - Elin Pelin in case No. 589/2015 Mr.[11], Decision No. 964 of 03/07/2013 of the RS - Varna pursuant to City Decree No. 10635/2010.[12], Decision No. 375 of 25.11.2021 of the RS - Yambol under City Decree No. 3237/2021[13], Decision No. 4 of 21.01.2019 under city decree No. 1253/2018 of RS – Samokov and many others.

As stated, the practice of the Sofia District Court is different, which appoints a forensic expert (wrongly named as a forensic expert), which should determine the market value of real estate, which are the subject of the agreement under Art. 51 of the Civil Code, taking into account this value, and not the tax assessment, when determining the fees due from 2% under Art. 7, item 1 of the Tariff under the Code of Civil Procedure, as well as the local tax payable - Decision of 29.10.2010 of the SRS under City Law No. 8608/2010, Decision of 23.11.2010 of the SRS under City Law No. 10542/2010, Decision of 27.06.2011 of 2594/2011, Decision of 28.06.2011 of 28.06.2011 of 28.06.2011 of 28.07.2011 of 28.07.2011 of 28.06.2011 of 28.06.2011. /2011, Decision of 27.07.2011 of the SRS under City Law No. 6715/2011, Decision of 11.06.2012 of the SRS under City Law No. 2462/2012, Decision of 4.07 .2013 of the SRS under city d. No. 441/2013, Decision dated 5.12.2013 of the SRS under city d. No. 16048/2013, Decision dated 29.05.2014 of the SRS under city court order No. 15701/2014, Decision of 21.11.2014 of the SRS under city order No. 44027/2014, Decision No. 171986 of 08/08/2020 of the SRS under city order No. 74030/ 2019 and many others.

The correctness of this approach is at least debatable, insofar as in similar cases, which almost without exception do not represent factual and legal complexity, as unilateral protective rather than contentious claims proceedings, there is not a high volume of action to justify charging higher fees. It can even be said that contentious legal proceedings involving real rights, in which there are often a large number of court hearings, collection of evidence, requested technical expertise and so on, and which are many times more burdensome to the judicial system, come out cheaper than government fees for the losing party, or more expensive for the court system. But without going into details why the judicial panels in the Sofia District Court proceed in this way, it should only be noted that in cases of divorce by mutual consent, the spouses are not obliged to comply with either their permanent or current addresses (if they are in Sofia), nor with the location of the real estate (if they are also in Sofia), and can choose another judicial district in which to divorce by mutual consent and submit an agreement regarding their property under Art. 51 of the SC[14]. However, in case of disagreement, the parties are obliged to choose the court of their address.

Local tax due

The liability of local tax on the acquisition of real estate is also controversial. Real estate acquisition tax is due in the case of division of property, when the share owned before the division increases - the tax is charged on the excess (Art. 47, Para. 3 ZMDT). That is, when the parties divide the property and place it in the share of one of the spouses, the tax is not assessed on the entire tax assessment, market or insurance value, but only on the excess, which in almost all cases is half of the item, and the practice of the courts in these cases is rather constant.

However, this is not the case with an agreement in which there is donation items, because according to Art. 44, para. 6 of the ZMDT, property acquired by donation between direct relatives and between spouses is not taxed. When an agreement is approved under Art. 51 of the SC, in practice both parties are still spouses, therefore the norm is applicable. As examples of non-taxation when approving an agreement in the nature of a donation in case of divorce can be mentioned Decision No. dated 09.01.2014 under City Decree No. 2132/2013 of the RS - Gorna Oryahovitsa and Decision No. dated 10.10.2014 under no. d. No. 70477/2014 of the RS - Montana. The situation is similar when one spouse states that “does not desire an equation of his share and gives up his ideal portion gratuitously" or that "gives up his share voluntarily and gratuitously in favor of” to the other husband. In this hypothesis, there is also a donation element, which is why local tax is not charged - Decision No. 1660 of 27.12.2016 under City Decree No. 6728/2016 of RS - Ruse and Decision No. 41 of 22.03.2022 according to City Decree No. 898/2021 of RS - Slivnitsa. Conversely – Decision No. 66 of 28.03.2013 under City Decree No. 235/2013 of the RS – Troyan.

Of more interest is the question of whether a local tax would be due in the already discussed hypothesis, when the agreement has the nature of a settlement agreement, when the parties ascertain that certain property was never part of the marital property community, but was acquired with the funds of only one spouse, without joint contribution, and that these items (properties) are the personal individual property of that spouse. As stated, such an agreement would be of a declaratory nature, and it lacks a transfer of property or a rem transfer effect, therefore no local tax should be charged at all, as long as there is no transfer of property ("acquisition").

Entry of the agreement under Art. 51 of the FC in the Property Register

There is also a relative lack of clarity on another issue, namely whether when with the agreement in settling the property consequences in case of divorce by mutual consent, when immovable property is affected by dispositional actions, the same is subject to entry in the property register. En masse, judgments approving settlements and granting divorces lack any indication that the judgment should be entered. The regulations for entries in art. 4, b. "h" clearly indicates that se enter the court decisions that have entered into force, which replace the acts under letter "a", as well as the decisions establishing the existence of acts subject to registration under the preceding letters, which are all acts by which ownership is transferred (b. "a"), contracts for the division of immovable properties, as well as court-separation protocols regarding such properties (b. "d") and agreements on disputes regarding acts that are subject to registration (b. "g"). Therefore, when with agreement under Art. 51 of the FC disposal or division of real estate is carried out, the decision approving the same should be entered.

There is a practice of the Shumen District Court, which explicitly states such an entry, and the same is practically carried out - Decision No. 907 of 07.12.2017 pursuant to City Decree No. 3099/2017 of the RS - Shumen, Decision No. 68 of February 9, 2022 pursuant to City Decree No. 1593/2021 of the RS - Shumen, Decision No. 68 in case No. 1593/2021 of the RS - Shumen. This approach should be supported as correct, and more importantly, that such entries are actually available - e.g. dv. entrance No. 437/2018 in SV - Shumen. The lack of registration does not vitiate the legal act or the agreement itself, but the notification action is missing for all third parties, and the property continues to be considered the property of the spouses for them. Another consequence would be the lack of reversibility of unregistered acts (the divorce decision).

A practical consequence of the entry of the decision is also the payment of a fee, which is in the amount of 0.1% of the material interest, according to Art. 2, para. 1 of the Tariff for state fees collected by the Registry Agency. In the given example, this would be on the tax assessment of BGN 25,000, or the registration fee would be BGN 25. But in a divorce, on which a forensic assessment has been prepared, this would be a market assessment, namely BGN 100,000. or fee would be BGN 100.

As a summary of the above regarding approval of the agreement for the settlement of property relations under Art. 51 of the FC in the hypothesis of a divorce by mutual consent, with a market value of BGN 100,000 and a tax assessment of BGN 25,000 per immovable property, the aggregated minimum expenses would be:

The above shows to what extent it is important for the parties to correctly formulate their declarations of intent, objectified in the agreement under Art. 51 of the FC, which may have the same practical consequences, but be perceived differently in view of its legal nature, and the parties be charged differently, as well as the mechanisms by which the division of the property acquired during the marriage. Out of the present study remain the questions about the different ways of charging fees under the agreement in the maintenance part, or in the hypothesis of equalizing the shares of the spouses with monetary equality, in which hypotheses there is also a difference in law enforcement. Rather, the purpose is to mark the differences in the views of the courts that have a direct effect on the property spheres of citizens who wish to end their marriage and close a chapter in their lives, but whose divorce may prove expensive and bitter. albeit by mutual consent.

Ivan Nikolaev, attorney-at-law

[1] Population and demographic processes 2020, National Statistical Institute, Sofia, 2021, p.28.

[2] Population and demographic processes 2021, National Statistical Institute, Sofia, 2022, p. 23.

[3] Population and demographic processes 2022, National Statistical Institute, Sofia, 2023, p. 14.

[4] Some courts collect a state fee of BGN 25 upon initiation of the case and a state fee of up to BGN 40 with the court decision (Article 6, Item 3 of the Tariff). – e.g. Decision No. 553 of 12.03.2019 under the No. 1352/2019 according to the inventory of RS - Burgas, with which the total amount of the fee becomes BGN 65.

[5] These sample values will be used for greater clarity in the presentation.

[6] According to Art. 96, para. 1 of the NNPA when transferring and certifying the right of ownership of things, the material interest certified is the market price of the thing, which in turn is determined according to § 2 of the SP of the NNPA according to the order of Art. 33 of the LTFA. In turn, according to Art. 33, para. 1, item 1, the immovable property is assessed according to the tax assessment.

[7] Markov, M. Family code. Comment attached. Sofia: IC "Labor and Law", 2015, p. 186.

[8] The agreement specified sums to settle the shares of the parties, but again no market value appraisal was performed, but a tax assessment was specified.

[9] In the case, an expert was assigned to determine the value of 49 dairy cows, 19 calves and 1 bull, but not for the value of the real estate assessed by tax assessment.

[10] Same as the previous note.

[11] It is interesting that RS Elin Pelin approves an agreement for a property in the city of Sofia, again not appointing an expert, but referring to a tax assessment.

[12] Regarding the insurance value of the motor vehicle. Rather, an exception is Decision No. 55 of 31.03.2021 of the RS - Shumen under City Decree No. 661/2021, in which case the market value of the motor vehicle is indicated.

[13] In the case, insurance value was indicated for 2 vehicles, and market value for another, probably due to the lack of an insurance assessment. Again, the real estate is listed with its tax assessment.

[14] Balevska, E. Civil Procedure Code. Comment attached. Sofia: IC "Labor and Law", 2017, p. 827.

[15] The value is determined as a minimum, in view of the current practice for determining the amount of fees of experts for the preparation of real estate appraisals.

[16] For the example, the amount of 3% of the material interest for the Capital Municipality, the Municipality of Plovdiv, Varna, Burgas, etc. was used. currently.