The Introduction of Euro into the Republic of Bulgaria Act (IERBA, the Act) was promulgated on 20.08.2024. The Act is intended to provide timely information and clarity to consumers. Its adoption prior to the issuance of the Decision of the Council of the European Union (the Decision) gives companies the opportunity to align their processes and organise their operations, as most of the stipulated rules will apply immediately after the date the euro is introduced as a national currency in Bulgaria.

1. The Regulation and forthcoming processes will affect a range of sectors, with the most significant impact being on financial and investment services, banking, consumer services and retail.
2. The Act provides for a period of dual display of prices – in BGN and in EUR, starting one month after the date of entry into force of the Decision and ending 12 months after the introduction of the euro in the Republic of Bulgaria in respect of goods and services offered to consumers. Along with this obligation, commercial companies will have to arrange a number of other processes:

• Amendment to articles of association and statutes;
• Amendment to internal rules and procedures;
• Conversion of the nominal value of shares and share capital.

3. A significant part of the preparation of companies for the introduction of the euro will focus on adapting information systems that process companies’ financial information, as well as on ensuring smooth reporting and recalculation of reported values in annual and interim financial statements.
4. Along with other obligations, as well as the special rules regarding loan amounts, interest rates and benchmarks on variable interest rates, credit institutions are also assigned the special task of frontloading and sub-frontloading euros to the commercial circulation to the Bulgarian Posts (Bulgarian national postal services) as well. A number of obligations related to the exchange of banknotes and coins have also been introduced for them.
5. The Act also provides for certain simplifications with regard to the organisation of processes and amendments to company documents, such as:

• Amendments to corporate and internal documents related solely to the conversion envisaged by the Act will not be subject to prior approval by a state body or industry regulator. However, this relief does not apply to insurance and reinsurance companies and intermediaries, pension insurance companies, management companies, investment intermediaries and market and investment operators, Special Investment Purpose Companies Association (SIPCA), for whom the obligations to approve documents and notify the Financial Supervision Commission (FSC) of amendments remain in force.
• Dual display of prices for goods on which it is technically impossible to do so (e.g. on taxi meters with display) will not be required. However, price must still be displayed– in another appropriate form;
• There is no obligation of dual display on invoices;
• Conversion of the capital of commercial companies entered in the Commercial Register will be carried out ex officio by the Registry Agency;
• Special rules are provided for the conversion and rounding of securities issued in Bulgarian leva, shares in supplementary pension insurance funds, shares in collective investment schemes, government securities.

6. The competent authorities monitoring compliance with the Act are: the Bulgarian National Bank (BNB), the Financial Supervision Commission (FSC), the National Revenue Agency (NRA), the Commission on Protection of Competition (CPC), the Minister of Electronic Governance.
7. In case of non-compliance with the provisions of the Act, there is a possibility of imposing compulsory administrative measures, which take effect immediately and irrespective of whether they have been appealed or not.

The Act also provides for the imposition of fines and financial penalties for non-compliance, the amount of which is determined on a case-by-case basis. The fines and financial penalties provided for range from BGN 50 to BGN 60,000 for certain repeated offences.

The Act is the first step towards the adaptation of Bulgaria to the introduction of the euro as a national currency. A significant number of secondary legislation acts and regulations are to be adopted for particular sectors, as well as for particular activities.

In light of the decision of the National Assembly of July 26, 2024, which in its item 2.7 obliges the Council of Ministers to request a Eurozone joining date as of 1 July 2025, in case the country meets the price stability criteria by the end of the year, the step towards the introduction of the euro seems decisive, while the time to organise and align business operations seems short.

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