BULGARIA Trends and Developments Contributed by: Todor Banchev Todorov and Victoriya Grishina, Banchev and Grishina Law Firm
Introduction of the Euro as the Official Currency The introduction of the euro as Bulgaria’s official cur - rency, effective 1st January 2026, constitutes one of the most consequential regulatory and economic developments in the jurisdiction in recent decades. Although the fixed conversion rate of BGN1.95583 per 1EUR remains unchanged, the practical impli - cations extend far beyond the technical currency re-denomination. The transition creates a complex compliance and supervisory environment with direct consequences for tax reporting, settlement of public liabilities, pricing policies, contractual relationships and ongoing audit exposure. From a tax perspective, the transition requires careful management of a dual-currency framework during the transitional phase. Tax returns, audit acts and admin - istrative instruments relating to periods prior to 2026 will continue to be prepared in Bulgarian lev (BGN). However, any payments due after 1 January 2026 must be effected in euros, irrespective of the period to which the liability relates. This creates potential recon - ciliation challenges, particularly where reassessment acts, penalties or interest relate to prior fiscal years but become payable after euro adoption. The governing framework, the Law on the Introduction of the Euro in the Republic of Bulgaria, extends well beyond consumer information requirements. It intro - duces enhanced supervisory and sanctioning pow - ers, including the designation of the National Revenue Agency (NRA) as one of the competent authorities for enforcement. As a result, euro-transition compliance is expected to become embedded within the broader architecture of tax checks. A particularly sensitive element is the mandatory dual pricing period (8 August 2025 – 8 August 2026). Dur - ing this period, all prices offered to end consumers must be displayed in both lev and euros. Any price increase must be objectively justified by economic factors, with the burden of proof resting on the trad - er. The sanctions regime is substantial and includes turnover-based fines for large enterprises, materially increasing financial exposure. Non-compliance with the dual pricing requirements is subject to significant administrative sanctions.
For legal entities, fines range from BGN5,000 to BGN100,000, and from BGN10,000 to BGN200,000 in cases of repeated infringement, taking into account the gravity, duration and consequences of the vio - lation. For large enterprises with annual turnover exceeding BGN50 million in the preceding financial year, sanctions may reach up to 0.5% of annual turno - ver and up to 1% in the event of repeated infringement during the dual pricing period, capped at BGN1 million in all cases. Certain categories of goods and services are express - ly excluded from the dual pricing obligation, most notably petroleum products and natural gas, books and textbooks. In addition, invoices and related credit or debit notes fall outside the scope of the dual pricing requirements. In practice, the euro transition intersects with broader themes of data transparency and enforcement intensi - ty. Pricing data, accounting entries, and VAT treatment will be easier to cross-check within the evolving digital audit environment. For businesses, the transition is therefore not only a financial and operational project but also a regulatory risk exercise that requires coor - dinated review of accounting systems, configurations, contractual clauses, and internal documentation. Against this background, advisory support extends beyond technical conversion. It encompasses regu - latory risk assessment, documentation strategies to substantiate pricing adjustments, alignment between accounting and tax reporting during the dual-currency phase, and representation in administrative proceed - ings and disputes arising from enforcement measures linked to euro adoption. Fiscal Control Regime for Goods with High Fiscal Risk Bulgaria continues to expand and refine its fiscal con - trol regime for goods deemed a high fiscal risk. The regime, regulated primarily under the Tax and Social Security Procedure Code, reflects sustained policy efforts to combat VAT fraud, undeclared trade and rev - enue leakage in sectors characterised by significant cash flows and cross-border movements.
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