The Law on the introduction of the euro in the Republic of Bulgaria
Despite the complex political situation and the fact that Bulgaria has not yet fulfilled the criteria for the adoption of the euro, the National Assembly of the Republic of Bulgaria took a decisive step towards the adoption of the euro as the official currency of Bulgaria by adopting the Law on the introduction of the euro in the Republic of Bulgaria (the “Law”) on 07 August 2024. The Law was promulgated in the State Gazette on 20 August 2024 and it is already part of the current legislation of Bulgaria, but most of its provisions will enter into force on the date of the introduction of the euro in Bulgaria.
The official date of the introduction of the euro in the Republic of Bulgaria is not yet clear. It will be determined by a decision of the Council of the European Union (the “Decision”). If Bulgaria fulfills the price stability criterion by 31 December 2024, the government will have to request the country’s accession to the euro area as of 1 July 2025, as the government is obliged to comply with Decision of the National Assembly dated 26 July 2024.
The Law aims to ensure the smooth introduction of the euro in Bulgaria, increase transparency and awareness, and prepare businesses and citizens for the euro adoption process.
The Law set out in detail several principles, rules, and procedures for the introduction of the euro as an official currency.
Here are some of the main rules and procedures introduced by the Law:
- From the date of the introduction of the euro, the prices of goods and services shall be converted from levs into euros by dividing the price in levs by the official exchange rate established by the Decision and rounding it by the mathematical rounding rule to the second decimal point;
- The dual display of the prices of goods and services will be indicated for a period starting one month after the entry into force of the Decision and ending 12 months after the date of introduction of the euro. Exceptions are made for taximeters, the price of tobacco products indicated on their banderole and petrol station fuel meters;
- For one month from the date of the introduction of the euro, a period of dual circulation of the lev and the euro will be introduced, during which it will be possible to pay legally with either currency;
- On the euro introduction date, all amounts under payment accounts and deposits will be automatically converted from leva to euro, and salaries, pensions, social compensations, and social benefits will be converted and paid in euro;
- A consumer protection principle is introduced, according to which the introduction of the euro may not lead to an increase in the prices of goods and services unless justified by objective economic factors. Interest rates on variable-rate loans cannot be higher than they were before the introduction of the euro;
- The capital of limited liability companies, joint stock companies, and limited partnerships with a share capital, as well the registered nominal value of the shares shall be automatically converted in the Commercial Register as on the day of the introduction of the euro their values in levs shall be replaced by values in euro using again the official exchange rate and applying the rounding rule;
- The transitional and final provisions of the Law amend many laws, including the Commercial Act, by providing that the minimum capital of a limited liability company may not be less than EUR 1 and that of a joint stock company may not be less than EUR 25 000. The amendments introduce a new minimum nominal value per share, which is set at one eurocent.
- All companies must bring their articles of association, incorporation acts, and internal documents into line with the Law within 12 months of the introduction of the euro.
- Compliance with the Law will be monitored by the Bulgarian National Bank, the Financial Supervision Commission, the National Revenue Agency, the Consumer Protection Commission, and the Minister of Electronic Government, which have the right to impose fines and financial penalties for violations of the Law.
This article has been prepared for general information only and does not constitute legal advice with respect to any particular subject or situation. For specific legal advice, you should contact Tihomir Todorov or our office. Stoeva, Tchompalov & Znepolski is not responsible for any legal action undertaken based on the information contained herein.