Information;Order — ECLI:EU:C:2019:818
Date: 2019-10-03
Language of the case: Bulgarian
Court formation: Eighth Chamber
Subject matter: Free movement of goods;Approximation of laws;Customs Cooperation
Procedure: Reference for a preliminary ruling
Origin: Bulgaria

Summary of the facts and legal opinions of the parties 
By penalty notice No 1858/2017 issued by the deputy head of the Mitnitsa Burgas 
on 29 January 2018, EUR 17 425.00 (seventeen thousand four hundred and 
twenty-five euro) were confiscated from the Turkish national SZ for the benefit of 
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the state pursuant to Article 20(1) of the Valuten zakon (Law on Currency, ‘VZ’), 
and he was ordered to pay a fine of BGN 1 000 (one thousand BGN) pursuant to 
Article 18(1) in conjunction with Article 11a(1) VZ. A penalty was imposed on 
the Turkish national, as he had breached the provisions of Article 11a(1) VZ in 
conjunction with Article 2(1) and Article 9(1) and (2) of the Naredba N° N-1 za 
prenasyaneto prez granitsata na stranata na paritchni sredstva, blagopodni metali, 
skapotsenni kamani i izdeliya c i ot tyax i vodene na mitnitcheski registri po tch. 
10a ot Valuten zakon (Regulation No N-1 on the movement of cash, precious 
metals, precious stones and goods containing or made from the same over the state 
border and on keeping customs ledgers pursuant to Article 10a of the Law on 
Currency) of 1 February 201[2] (‘Naredba No N-1’) and thereby committed a 
contravention pursuant to Article 18(1) VZ, in that, on 5 June 2017 at the ‘Kapitan 
Andreevo’ customs point (Mitnicheski punkt ‘Kapitan Andreevo’) of the Mitnitsa 
Burgas, he failed to declare to the customs authorities cash of a value of 
EUR 17 425.00 (seventeen thousand four hundred and twenty-five euro) being 
moved from the Republic of Turkey into the Republic of Bulgaria and subject to 
the obligation to declare. 
The penalty notice was contested by SZ before the Rayonen sad Svilengrad. By 
judgment No 72 of 2 May 2018 in administrative offences case No 122/2018, the 
Rayonen sad upheld the penalty notice and found that the penalised act had been 
objectively and subjectively proved, which meant that the Turkish national had 
rightly been ordered to pay a fine of BGN 1 000 under Article 18(1) VZ for 
committing said act and the undeclared cash had been confiscated for the benefit 
of the state pursuant to Article 20(1) VZ. SZ filed an appeal against that decision 
at the Administrativen sad Haskovo and requested its annulment and the issuance 
of a new ruling in the matter, by which the penalty notice is annulled in full. 
The appellant claims that he did not commit the administrative contravention of 
which he is accused and that the judgment at first instance had been issued on the 
basis of an erroneous consideration of evidence. The respondent and the 
representative of the prosecutor are of the view that the contested judgment was 
lawful and correct and to be left in force. 
V. Applicable national legislation 
Law on Currency 
Article 11а(1): The movement of cash of a value of EUR 10 000 or more or the 
corresponding value in BGN or another currency into or out of a third country is 
to be declared to the customs authorities. 
Article 18(1): Any person committing or allowing a contravention of 
Article 11(2) or (3), Article 11a(1), (2) or (3), Article 14(2) or (3), Article 14a(1) 
or Article 16(6) and the legislation issued for the implementation thereof shall be 
ordered to pay a fine of BGN 1 000 to BGN 3 000, if the act does not constitute a 
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criminal offence. If the contravening party is a legal person or a retailer, an assets 
penalty of BGN 2 000 to BGN 6 000 is imposed.  
[Or. 3] Article 20(1): If cash, precious metals, precious stones and goods 
containing or made from the same are moved over the state border, the subject of 
the contravention is confiscated for the benefit of the state. This applies even if the 
contravening party cannot be determined. 
[…] 
Naredba No N-1 
Article 2(1): The movement of cash of a value of EUR 10 000 or more or the 
corresponding value in BGN or another currency over the state border into or out 
of a third country is to be declared to the customs authorities according to the 
procedure provided for in Article 9. 
Article 9(1): In the cases mentioned in Article 2(1) and Articles 5 and 7, the 
persons are obliged to complete customs declarations in respect of cash according 
to the form approved by the Finance Minister and file these with the customs 
authorities. The customs declaration form approved by the Finance Minister is 
published on the website of the customs agency (Agentsia ‘Mitnitsi’). 
Article 9(2): The declaration under Article 9(1) is completed and filed in 
triplicate, with one copy for the declarant and two copies for the customs 
authorities. 
VI. EU law: 
Regulation (ЕC) No 1889/2005 of the European Parliament and of the Council of 
26 October 2005 on controls of cash entering or leaving the Community 
Article 3(1) 
Any natural person entering or leaving the Community and carrying cash of a 
value of EUR 10 000 or more shall declare that sum to the competent authorities 
of the Member State through which he is entering or leaving the Community in 
accordance with this Regulation. The obligation to declare shall not have been 
fulfilled if the information provided is incorrect or incomplete. 
Article 4(2) 
In the event of failure to comply with the obligation to declare laid down in 
Article 3, cash may be detained by administrative decision in accordance with the 
conditions laid down under national legislation. 
Article 9(1) 
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Each Member State shall introduce penalties to apply in the event of failure to 
comply with the obligation to declare laid down in Article 3. Such penalties shall 
be effective, proportionate and dissuasive. 
Charter of Fundamental Rights of the European Union 
Article 49(3) 
Тhe severity of penalties must not be disproportionate to the criminal offence. 
VII. Reasons for the referral of the request for a preliminary ruling 
[Or. 4] The obligation to declare cash of a value of EUR 10 000 or more entering 
or leaving the Community was transposed into national law by Article 11a(1) 
VZ. For contraventions of this obligation, the national law provides for an 
administrative responsibility under Article 18(1) VZ or criminal responsibility 
under Article 251 of the Nakazatelen kodeks (Penal Code, ‘NK’) depending on 
the value of the undeclared currency. In both cases, the act consists in the failure 
to comply with the obligation to declare under Article 11a(1) VZ, with the 
confiscation of the subject of the contravention/act for the benefit of the state also 
being provided for, in addition to the fine/assets penalty pursuant to Article 18(1) 
VZ or the custodial sentence or financial penalty pursuant to Article 251(1) 
NK. In the case of an administrative contravention, the confiscation is regulated in 
Article 20(1) VZ, whereas it is provided for in Article 251(2) NK in respect of 
criminal offences. 
In the ruling in the case, the adjudicating Chamber of the Administrativen sad 
Haskovo found that, by order of 12 July 2018 in Case C-707/17, the Court of 
Justice of the European Union ruled on a request for a preliminary ruling of the 
Rayonen sad Svilengrad which concerned the interpretation of Article 65 TFEU, 
Article 9 of Regulation (EC) No 1889/2005 of the European Parliament and of the 
Council of 26 October 2005 on controls of cash entering or leaving the 
Community (‘Regulation (EC) No 1889/2005’) and Article 17 of the Charter of 
Fundamental Rights of the European Union. 
According to that order, Article 9(1) of Regulation (ЕC) No 1889/2005 is to be 
interpreted to the effect that it precludes national legislation such as that in 
question in the main proceedings which on the one hand provides for the 
confiscation of the undeclared sum for the benefit of the state and on the other 
hand provides for a custodial sentence of up to six years or a financial penalty of 
twice the value of the subject of the act as penalty for failure to comply with the 
obligation to declare under Article 3 of the Regulation. 
The order of the Court of Justice of 12 July 2018 in Case С-707/17 examined the 
national provision of Article 251 NK, according to which the failure to comply 
with the obligation to declare cash, precious metals, precious stones and goods 
containing or made from the same which are moved there over the state border, 
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where this forms an external border of the European Union, is punishable if the 
value of the subject of the act is particularly high. 
According to national law (interpretation judgment No 1 of the Obshto sabranie na 
nakazatelna kolegia na Varhovnia kasatsionen sad [General Meeting of the 
Criminal Division of the Supreme Court of Cassation] of 30 October 1998 in 
interpretation proceedings No 1/98), the value of the subject of the act is 
particularly high if the monetary value thereof is 140 times higher than the current 
national minimum wage. 
Аdministrative penalties under Article 18(1) VZ are applicable in the case of 
contraventions of the obligation to declare pursuant to Article 11a(1) VZ which do 
not constitute criminal offences. That is the case here, with the contravention 
being committed by a natural person. 
The fine to be imposed under Article 18(1) VZ in the case of contraventions of 
Article 11a(1) VZ is BGN 1 000 to BGN 3 000. The confiscation of the subject of 
the contravention for the benefit of the state is also provided for in Article 20(1) 
VZ. 
The administrative responsibility introduced by the national legislator (in the case 
of criminal offences: criminal responsibility) for contraventions of the obligation 
under Article 11a(1) VZ complies with the first sentence of Article 9(1) of 
Regulation (EC) No 1889/2005, according to which each Member State shall 
introduce penalties to apply in the event of failure to comply with the obligation to 
declare [Or. 5] laid down in Article 3. According to the second sentence of 
Article 9(1) of the Regulation, such penalties shall be effective, proportionate and 
dissuasive. 
Since the adjudicating Chamber examined the reasoning of the order issued in 
Case C-707/17 by the Court of Justice on 12 July 2018, the question raised 
therefor is whether, if the penalty provided for in Article 18(1) VZ is to be 
imposed in the case of failure to comply with the obligation to declare under 
Article 11a(1) VZ, the cumulative ordering of the measure under Article 20(1) VZ 
(confiscation of the subject of the contravention for the benefit of the state) 
exceeds the boundaries of what is required in order to achieve the objective 
pursued by Regulation (EC) No 1889/2005 — preventing, deterring or avoiding 
the introduction of the proceeds of illegal activities into the financial system and 
their investment after laundering. Тhe Chamber’s misgivings are based on the fact 
that the penalty provided for in Article 20(1) VZ is not linked to the performance 
of preceding administrative proceedings within the meaning of Article 4(2) of 
Regulation (EC) No 1889/2005 for determining the origin and intended purpose of 
the undeclared cash, but is ordered by the authority responsible for administrative 
penalties in each case of an established failure to comply with the obligation 
pursuant to Article 11a(1) VZ. Against that background, it appears possible to 
conclude that the confiscation of the undeclared cash for the benefit of the state in 
addition to the imposition of a fine for the failure to comply with the obligation to 
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declare might be incompatible with the principle of Article 49(3) of the Charter of 
Fundamental Rights of the European Union, according to which the severity of 
penalties must not be disproportionate to the criminal offence and which the 
Member States have to observe when determining penalties under Article 9(1) of 
Regulation (EC) No 1885/2005, in particular when it is considered that the 
administrative contravention of Article 18(1) VZ constitutes less of a threat to the 
public than the criminal offence under Article 251 NK, the national regulation of 
which was the subject of the interpretation in the order of the Court of Justice of 
12 July 2018 in Case C-707/17. 
In view of the above comments, the Court is of the opinion that, with regard to the 
correct resolution of the dispute pending before it, it is necessary within the 
meaning of Article 267(3) in conjunction with Article 1(a) and (b) TFEU to refer 
the question set out below to the Court of Justice. It therefore […] 
ОRDERED: 
Pursuant to subparagraphs (a) and (b) of the first paragraph of Article 267 TFEU, 
the following question is REFERRED to the Court of Justice of the European 
Union for a preliminary ruling: 
Are Article 9(1) of Regulation (EC) No 1889/2005 of the European Parliament 
and of the Council of 26 October 2005 on controls of cash entering or leaving the 
Community and Article 49(3) of the Charter of Fundamental Rights of the 
European Union to be interpreted as precluding a provision of national law such 
as Article 20(1) of the Valuten Zakon (Law on Currency) which, in the case of a 
failure to comply with the obligation to declare under Article 3 of the Regulation, 
in addition to the imposition of a fine pursuant to Article 18(1) of the Law on 
Currency of BGN 1 000 to BGN 3 000, cumulatively provides for the full 
confiscation of the undeclared cash regardless of its provenance and intended use? 
[…] [Or. 6] 
[…]