Lately, many cases arise, where documents, issued by public authorities, and by revenue authorities in particular, are being appealed. The appealed documents are usually audit assignment orders, audit reports and tax audits, issued as electronic documents.
The arising disputes aim to have these electronic documents, issued by the public authorities, declared as unsigned official documents, because they are signed with a “professional electronic signature” and not with a “qualified electronic signature”. The consequence is that the unsigned audit assignment orders and audit reports render the whole audit proceedings inadmissible, and the unsigned tax audit are themselves null and void.
1 Definitions in Regulation (EU) No 910/2014 of the European parliament and of the Council of 23 July 2014 (“the Regulation”) and in the Electronic Document and Electronic Trust Services Act (“the Act”)
1.1 Definitions according to the Regulation
Advanced electronic signature according to the Regulation is an electronic signature, that is: uniquely linked to the signatory; capable of identifying the signatory; created using electronic signature creation data that the signatory can, with a high level of confidence, use under his sole control; and linked to the data signed therewith in such a way that any subsequent change in the data is detectable.
The qualified electronic signature, on the other hand, is an advanced electronic signature, that is created by a qualified electronic signature creation device, and which is based on a qualified certificate for electronic signatures. This qualified certificate for electronic signatures is issued by a qualified trust service provider and must meet certain requirements. The provider that issues the qualified certificate must be identifiable by specific features.
There are also some established conditions for the devices, used to create qualified electronic signatures, that have to ensure, by appropriate technical and procedural means, that at least the confidentiality of the electronic signature creation data used for electronic signature creation is reasonably assured; that the electronic signature creation data used for electronic signature creation can practically occur only once; that the electronic signature is reliably protected against forgery; and that the electronic signature creation data used for electronic signature creation can be reliably protected by the legitimate signatory against use by others.
1.2 Definitions according to the Electronic Document and Electronic Trust Services Act
Regarding the definitions of electronic signature, advanced electronic signature and qualified electronic signature, the Act refers to the definitions, given by the Regulation.
The Act determines that the legal effect of the electronic signature and the advanced electronic signature is equal to that of the handwritten signature where this is agreed between the parties.
2 Case C-362/21 before the Court of Justice of the European Union, on a reference for a preliminary ruling by Administrative court – Veliko Tarnovo (Bulgaria)
In the pending case before the Administrative court – Veliko Tarnovo, with parties: a company as an appellant and the Director of Appeals and Tax and Social Security Practice Directorate – Veliko Tarnovo as a defendant, with subject the appeal of audit proceedings as irregular and of tax audit act as null and void, because they had been signed with a “professional electronic signature”, Administrative court – Veliko Tarnovo has made a reference for a preliminary ruling to the Court of Justice of the European Union regarding the interpretation of certain provisions of the Regulation (EU) No 910/2014 of the European Parliament and of the Council of 23 July 2014.
One of the questions made by the referring jurisdiction – Administrative court – Veliko Tarnovo, was whether it has to be interpreted that it is inadmissible to declare an administrative act null and void, when it is issued as an electronic document that has been signed with an electronic signature, different from a qualified electronic signature.
There was also a question in relation to whether or not when establishing if an electronic signature is qualified, it is enough to write “qualified electronic signature” in the certificate issued by the certification provider, or the court itself must establish the fulfillment of the cumulative requirements, which should be present according to the Regulation in order to accept if a signature is an advanced electronic signature.
Another issue was if the certificate service provider defines the electronic signature as “professional”, is it sufficient to assume that there is no “qualified electronic signature” in the absence of a qualified certificate from the provider, or it should be established whether the signatures comply of the requirements for a qualified electronic signature.
3 Court decision from 20 October 2022 upon Case C-362/21 of the Court of Justice of the European Union
The decision of the Court of Justice of the EU gave answers to the preliminary inquiries.
The court ruled that the Regulation should be interpreted in the sense that it allows an administrative act, issued as an electronic document to be declared null and void when it is signed with an electronic signature that does not meet the requirements provided for in the Regulation, so that it can be considered a “qualified electronic signature”, as long as the deed is not declared void solely because the signature on it is in electronic form.
The court also ruled that in the absence of a “qualified electronic signature certificate” there is sufficient reason to assume that the electronic signature does not constitute a qualified electronic signature within the meaning of the Regulation, and in this regard, it is irrelevant its possible designation as ” professional electronic signature”.
The Regulation must be interpreted in the sense that if the certificate issued by the certification service provider includes an electronic signature, this is not sufficient enough to consider that this signature meets the requirements set out in the Regulation in order to be considered a “qualified electronic signature”.
When the designation is challenged in legal proceedings, the national court is required to check whether all the requirements of the Regulation on “qualified electronic signature” are met, which obliges the national court to check in particular whether the requirements for an advanced electronic signature are met.
4 Practice of the Bulgarian courts regarding electronic documents issued by state authorities, signed with a “professional electronic signature”
4.1 In the case before the Administrative Court – Veliko Tarnovo, in which the preliminary inquiry was initiated, and taking into account the European court’s interpretation of the provisions of the Regulation, the Bulgarian court issued a court ruling declaring the revision act null and void.
The Administrative Court of Veliko Tarnovo has found the prerequisites for the presence of an advanced electronic signature, which is based on a qualified electronic signature certificate, to be unproven. The court considered that by indicating the three names of the signatory and an electronic address, it is not enough to fulfill the conditions that the electronic signature is uniquely linked to the signatory and that the signatory cannot be identified. According to the court, the requirements of the Bulgarian legislation regarding the individualization of the author of the electronic signature were also not met, insofar as in the printouts from the public register of electronic signatures, the holder of the electronic signatures was indicated as the ” Тerritorial directorate of the National revenue agency- Veliko Tarnovo”, and such legal entity does not exist. The Territorial directorate of the National revenue agency is a structural unit of the legal entity National revenue agency and cannot be the signatory of electronic signatures issued by its employees.
The court also established that the electronic documents contested in the proceedings were not signed with a qualified electronic signature.
The court came to the conclusion that the lack of signatures on the tax audit act leads to its nullity, because the administrative act lacks mandatory requisites. The absence of a signature also on the audit assignment order leads to the absence of regularly started audit proceedings. There is also lack of competence of the authorities that issued the audit report, because the revenue auditing authorities and the head of the audit have not been properly set. There is also lack of a properly defined subject of the audit and properly collected evidence. According to the court, such violations constitute procedural violations that cannot be remedied in the course of the legal proceedings.
4.2 Practice in other court cases with the same subject
The practice of cases with the same subject shows that decisions like that of the Administrative Court-Veliko Tarnovo are not sole. Increasingly, in their decisions, the courts reach conclusions that the flaws of electronic signatures are such that it is not possible to prove in the cases that they possess the characteristics of qualified electronic signatures; that it cannot be established in an indisputable way who are the authors of the acts; that the acts giving the beginning and duration of the revision and the final act of the revision do not comply with the law’s requirement of form, because they are not considered to be duly signed.
