Appeal of penalties imposed for unjustified price increases under the Law on the Introduction of the Euro in the Republic of Bulgaria
With the adoption of the Law on the Introduction of the Euro in the Republic of Bulgaria (LIERB), the legislature imposed strict requirements on merchants regarding pricing. Pursuant to Article 15, paragraph 4 of the LIERB, during the dual-pricing period (from August 8, 2025, to August 8, 2026), merchants are required to set their prices in good faith and transparently, and any increase must be justified by objective economic factors. According to the legal definition in § 1, item 6 of the Supplementary Provisions of the LIERB, “objective economic factors” are regulatory changes and documentable changes in costs that have a direct and significant impact on the cost of the relevant service.
For a violation of this obligation, Article 59(5)(6) of LIERB provides for extremely severe financial penalties for legal entities and sole proprietors, ranging from 5,000 BGN to 100,000 BGN. , which are already being actively imposed by the control authorities of the National Revenue Agency (NRA) and the Commission for Consumer Protection (CCP). However, the practice of the control authorities often suffers from significant procedural flaws and incorrect application of substantive law. Current case law clearly outlines several main categories of violations on the basis of which penalty decrees (PD) may be appealed in court.
1. Violation of the grace period for imposing sanctions (Section 19 of the Law on Supplementing and Amending the LIERB)
A recurring argument for the revocation of numerous penalty orders is the failure to observe the grace period introduced by the transitional provisions of the law. According to § 19 of the Law Amending and Supplementing (LAS) the LIERB , during the period up to October 8, 2025, , the revenue administration and control authorities are authorized only to issue written warnings in cases of non-compliance with Article 15, paragraph 4 of the law, but not to impose financial penalties.
The courts have unequivocally held that this provision is special in nature, is temporary, and completely excludes the criminal liability for acts committed during this time period, regardless of their severity. In this regard, acts sanctioning price increases identified prior to October 8, 2025, are subject to revocation, as ruled in Decision No. 243 of March 30, 2026, Decision No. 217 of March 20, 2026, and Decision No. 183 of March 11, 2026, of the Burgas District Court.
2. Unlawful use of non-standard methodologies and “secret” algorithms to assess the reasons underlying price increases
It is common practice for the National Revenue Agency (NRA) and the Commission for Consumer Protection (CCP) to determine that prices are “unjustified” by entering data into Excel spreadsheets or by applying an internal “Methodology for Verifying the Justification of Price Increases,” which contains hidden algorithms for assessing price increases and mark-up tolerances. According to current court practice, this approach is unlawful.
Thus, the Burgas Regional Court, in its Decision No. 275 of April 8, 2026, and Decision No. 250 of April 1, 2026, ruled that the tables used are not a method prescribed by law for making an assessment, and the algorithms embedded in them cannot replace the obligation to fully, objectively, and comprehensively establish the circumstances surrounding the alleged violation. Even more categorical is the Dupnitsa District Court in Decision No. 85/19.03.2026, which overturns the administrative penalty order on the grounds that the internal methodology of the Commission for Consumer Protection and the National Revenue Agency is not a statutory act, has not been published, and has not been brought to the attention of merchants. The courts hold that imposing sanctions based on secret criteria drastically violates the appellants’ right to defense (Art. 57, para. 1, item 6 of the Administrative Offenses and Penalties Act) and constitutes grounds for revoking the penalty orders.
3. Incomplete examination of the objective economic factors by the supervisory authorities (Article 52, paragraph 4 of the Administrative Offenses and Penalties Act)
The legal definition in § 1, item 6 of the Supplementary Provisions of the VAT Act requires the reporting of all documentable changes in costs related to production, delivery, storage, and sales. However, tax authorities generally examine only the difference in the invoice delivery price, ignoring the merchant’s other expenses.
In many cases, merchants provide evidence of:
- Increased electricity costs;
- Increased costs for internal transportation and logistics;
- Increased social security costs;
- Increased prices from suppliers of raw materials and supplies for the business;
- Extraordinary expenses incurred to comply with the requirements of the LIERB (new software, retrofitting of cash registers, and staff training).
Which remain ignored by the supervisory authorities. The disregard of these objections constitutes a material procedural violation under Article 52(4) of the Administrative Offenses and Penalties Act, which may lead to the revocation of the penalty order and the imposed fine or property sanction (as is the case in Decision No. 75/March 31, 2026 and Decision No. 59/13.03.2026 of the Sliven District Court). In these cases, the courts correctly note that the cost of the goods and services is determined by a combination of factors, not merely by the unit delivery price, on which the regulatory authorities incorrectly focus.
4. Factual errors and the absence of a specific date of the violation
Case law has identified numerous instances of gross factual discrepancies in the description of violations. For example, in Decision No. 183 of March 11, 2026, of the Burgas District Court, it was established that the regulatory authorities had used incorrect delivery prices, which led to an artificial increase in the markup percentage from the actual 7.3% to the alleged 53.76%.
In other cases, the supervisory authorities are unable to precisely determine the date of the violation and rely on the appellants’ explanations without investigating whether the goods were actually delivered at the new price on the relevant date. The absence of a clear date of the violation (Art. 57, para. 1, item 5 of the Administrative Violations and Penalties Act) is also an absolute ground for annulment, as it prevents judicial review regarding the statute of limitations under Art. 34 of the Administrative Violations and Penalties Act.
5. Application of the “minor offense” provision (Section 28 of the Administrative Offenses and Penalties Act)
In cases of minimal unjustified increases, courts routinely apply Article 28 of the Administrative Offenses and Penalties Act (AOPA) due to the manifest disproportion of the fine. As noted by the Ruse District Court in Decision No. 144/27.03.2026, imposing a fine of 5,000 leva for an increase of merely 3 to 9 stotinki is a penalty up to 167,000 times higher than the increase itself. In the absence of harmful consequences and given that this was a first offense, the court reclassified the act as a minor offense. Similarly, the District Court of Veliko Tarnovo, in Decision No. 84/09.03.2026, overturned a fine for a mathematical rounding error of 1 eurocent, classifying it as a minor offense.
Conclusion and deadlines for appeal
It is entirely possible to defend a business’s rights against unlawfully imposed sanctions under the LIERB by filing well-reasoned objections and staying informed about current case law.
Important: The deadline for appealing the penalty order in court is 14 days from the date of service. This deadline is peremptory—failure to meet it renders the penalty final, regardless of any defects in the order.
If you require legal advice regarding sanctions imposed under the Euro Act (LIERB), you may contact Galin Atanasov Law Office, Sofia, Bulgaria, in the following ways:
Phone: +359 899 250 919
Email: office@galin-atanasov.com
Contacts: Feedback Form
