Information;Order — ECLI:EU:C:2024:808
Date: 2024-09-26
Language of the case: Bulgarian
Court formation: Seventh Chamber
Subject matter: Right of establishment;Approximation of laws;Freedom to provide services
Procedure: Reference for a preliminary ruling
Origin: Bulgaria

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Translation C-550/23 – 1 
Case C-550/23 
Request for a preliminary ruling 
Date lodged:  
30 August 2023 
Referring court:  
Sofiyski rayonen sad (Bulgaria) 
Date of the decision to refer:  
20 August 2023 
Applicant:  
NV 
Penalising authority:  
Agentsia za darzhavna finansova inspektsia 
  
ORDER 
[…] 
[…] Criminal case of an administrative nature No 12337 as entered in the court 
register for 2022 […]: 
The proceedings before the Sofiyski rayonen sad (Sofia District Court, Bulgaria) 
were initiated by an action brought by NV against decision imposing a penalty 
No 11-01-184/25.08.2022, which was issued by […], the director of the Agentsia 
za darzhavna finansova inspektsia (Public Financial Inspection Agency; ‘ADFI’) 
and which, on the basis of Article 265(1) of the Zakon za obshtestvenite porachki 
(Law on public procurement; ‘the ZOP’), read in conjunction with Article 257 
thereof, imposed on NV an administrative penalty in the form of a fine of 
2 140.69 Bulgarian leva (BGN) (two thousand, one hundred and forty leva and 
sixty-nine stotinki) for infringement of Article 17(1) of the ZOP, read in 
conjunction with Article 20(2)(2) thereof. 
EN 
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[Procedural acts in connection with the request for a preliminary ruling] […] 
I. Parties to and subject matter of the main proceedings: 
1 NV, address: City of Sofia, […] 
2 ADFI, address: City of Sofia, […] 
3 The subject matter of the case is an examination of the question whether the 
applicant NV, in his capacity as executive director of the company ‘Montazhi’ 
EAD, has committed an administrative offence, specifically in relation to the 
expenditure of BGN 89 195.66, net of VAT, incurred within the framework of a 
supply contract dated 15 June 2020, concluded between ‘Montazhi’ EAD and 
‘Reyr Studio BG’ EOOD without any of the procedures under Article 18(1) of the 
ZOP being used. 
4 These proceedings are at first instance, and the court’s decision is open to 
subsequent judicial review by the Administrativen sad Sofia-Grad (Administrative 
Court, Sofia City, Bulgaria), meaning that it is not final. 
II. Facts: 
5 External monitoring of compliance with the ZOP, including monitoring of the 
performance of public contracts and framework agreements, is carried out by the 
Smetna palata (Court of Auditors, Bulgaria) and the bodies of the ADFI. 
6 The company ‘Montazhi’ EAD is a single person joint-stock company represented 
by the applicant NV, in his capacity as executive director. The sole owner of the 
capital in ‘Montazhi’ EAD is ‘Darzhavna konsolidatsionna kompania’ EAD. The 
sole owner of the capital in ‘Darzhavna konsolidatsionna kompania’ EAD is the 
State, the rights of which are exercised by the Minister for Economy, in 
accordance with his or her sectoral responsibility. ‘Montazhi’ EAD comes within 
the scope of public financial inspection for the purposes of Article 4(4) of the 
Zakon za darzhavnata finansova inspektsia (Law on public financial inspection; 
‘the ZDFI’), namely as a company in the capital of which a person pursuant to 
Article 4(3) of the ZDFI holds a blocking minority. 
7 ‘Montazhi’ EAD is managed by the sole owner of the capital and the board of 
directors. The board of directors entrusts one or more executive members, chosen 
from among its members, with managing and representing the company, and 
determines their remuneration. 
8 During a financial inspection of ‘Montazhi’ EAD concerning the lawfulness of the 
conclusion and performance of contracts with counterparties, including the owner 
of the capital, between 1 January 2017 and 30 April 2021, the supervisory bodies 
of the ADFI assumed that the company is a ‘body governed by public law’ within 
AGENTSIA ZA DARZHAVNA FINANSOVA INSPEKTSIA  
 
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the meaning of Paragraph 2(43) of the Additional Provisions to the ZOP and that 
NV, who represents it, is a public contracting entity within the meaning of 
Article 5(2)(14) of the ZOP on the following grounds: 
8.1 it has a management or supervisory body more than half of whose members 
are appointed by a public contracting entity within the meaning of Article 5(2)(14) 
of the ZOP; 
8.2 96.92% of the revenue from the company’s core activity arise from contracts 
awarded without being put out to tender, concluded with the owner of the capital, 
‘Darzhavna konsolidatsionna kompania’ EAD, and with a subsidiary of 
‘Darzhavna konsolidatsionna kompania’ EAD, and, in order to be selected as a 
contracting party for those transactions, ‘Montazhi’ EAD did not operate under 
normal market conditions, since there was no opportunity for other economic 
operators to participate and free competition was not ensured; 
8.3 the company is not in a position to bear the financial risk of its activity alone 
and functions as a going concern owing to the declared intention of the owner of 
the capital to support the company financially when necessary. 
9 In view of the administrative bodies’ finding that ‘Montazhi’ EAD is a ‘body 
governed by public law’, they issued a notice establishing an administrative 
offence and subsequently issued the decision imposing a penalty challenged in the 
present proceedings, by which the applicant NV, executive director of ‘Montazhi’ 
EAD and a public contracting entity awarding public contracts within the meaning 
of Article 5(2)(14) of the ZOP, was penalised for incurring expenditure on 
18 August 2020 (date of expenditure based on invoice 
No 0000000016/23.07.2020) of BGN 89 195.66, net of VAT, within the 
framework of a supply contract concluded between ‘Montazhi’ EAD and ‘Reyr 
Studio BG’ EOOD dated 15 June 2020, by which a public contract was awarded 
for the ‘supply of ballast, gravel and quarry rock for the following purpose: repair 
and rehabilitation of the dam Zlati voyvoda 3, PI 30990.50.92 (000305), village of 
Zlati voyvoda, municipality of Sliven, and of its facilities’, without recourse to 
any of the procedures under Article 18(1) of the ZOP in line with the value of the 
contract, which exceeds the minimum threshold of BGN 70 000 laid down in 
Article 20(2)(2) of the ZOP. 
III. Relevant legal provisions 
10 National law 
ZOP (promulgated in State Gazette No 13 of 16 February 2016) 
Article 5. ‘(1) The contracting entities shall be responsible for the proper 
estimation, planning, execution, conclusion and reporting on the outcomes of 
public contracts. The contracting entities shall be public and sectoral. 
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(2) The following shall be public contracting entities: 
… 
14. the representatives of bodies governed by public law;’ 
Article 17. ‘(1) Contracting entities shall be obliged to use the public 
procurement procedure laid down by law where the grounds for so doing are in 
place.’ 
Article 18 (promulgated in State Gazette No 13 of 2016, in force since 15 April 
2016). ‘(1) The procedures covered by the present law are: 
1. open procedure; 
2. restricted procedure; 
3. competitive procedure with negotiation; 
4. negotiated procedure with prior call for competition; 
5. negotiated procedure with publication of a contract notice; 
6. competitive dialogue; 
7. innovation partnership; 
8. negotiated procedure without prior notice; 
9. negotiated procedure without prior call for competition; 
10. negotiated procedure without publication of a contract notice; 
11. design contest; 
12. public competitive tendering; 
13. direct negotiated procedure.’ 
Article 20. ‘(1) The procedures under Article 18(1)(1) to Article 18(1)(11) 
shall apply when: 
1. public contracting entities and their consortia award public contracts with a 
value estimated to be equal to or greater than: 
(a) (amended by State Gazette No 86 of 2018, in force since 1 March 2019) 
BGN 10 000 000 – for works; 
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(b) (amended by State Gazette No 86 of 2018, in force since 1 March 2019, and 
No 102 of 2019, in force since 1 January 2020) BGN 271 000 – for supplies and 
services; 
(c) (amended by State Gazette No 86 of 2018, in force since 1 March 2019) 
BGN 1 000 000 – for services listed in Annex 2; 
2. public contracting entities in the field of defence award public contracts with 
a value estimated to be equal to or greater than: 
(a) (amended by State Gazette No 86 of 2018, in force since 1 March 2019) 
BGN 10 000 000 – for works; 
(b) (amended by State Gazette No 86 of 2018, in force since 1 March 2019, and 
No 102 of 2019, in force since 1 January 2020) BGN 271 000 – for supplies and 
services that include goods listed in Annex 3; 
(c) (amended by State Gazette No 86 of 2018, in force since 1 March 2019, and 
No 102 of 2019, in force since 1 January 2020) BGN 418 000 – for supplies that 
include goods not listed in Annex 3; 
(d) (amended by State Gazette No 86 of 2018, in force since 1 March 2019) 
BGN 1 000 000 – for services listed in Annex 2; 
3. sectoral contracting entities award public contracts with a value estimated to 
be equal to or greater than: 
(a) (amended by State Gazette No 86 of 2018, in force since 1 March 2019) 
BGN 10 000 000 – for works; 
(b) (amended by State Gazette No 86 of 2018, in force since 1 March 2019, and 
No 102 of 2019, in force since 1 January 2020) BGN 837 000 – for supplies and 
services; 
(c) (amended by State Gazette No 86 of 2018, in force since 1 March 2019) 
BGN 1 500 000 – for services listed in Annex 2; 
4. public and sectoral contracting entities award contracts in the fields of 
defence and security with a value estimated to be equal to or greater than: 
(a) (amended by State Gazette No 86 of 2018, in force since 1 March 2019, and 
No 102 of 2019, in force since 1 January 2020) BGN 837 000 – for the supply of 
military equipment, including parts, components and/or assembly elements 
therefor, including equipment listed in the catalogue of defence-related products 
adopted on the basis of Article 2(1) of the Zakon za eksportnia kontrol na 
produkti, svarzani s otbranata, i na izdelia i tehnologii s dvoyna upotreba (Law on 
export control of defence-related products and dual-use items); 
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(b) (amended by State Gazette No 86 of 2018, in force since 1 March 2019, and 
No 102 of 2019, in force since 1 January 2020) BGN 837 000 – for supplies of 
sensitive equipment, including parts, components and/or assembly elements 
therefor; 
(c) (amended by State Gazette No 86 of 2018, in force since 1 March 2019, and 
No 102 of 2019, in force since 1 January 2020) BGN 837 000 – for services 
directly connected to the equipment referred to in points (a) and (b), for each and 
every element of its life cycle; 
(d) (amended by State Gazette No 86 of 2018, in force since 1 March 2019) 
BGN 10 000 000 – for works directly connected to the equipment referred to in 
points (a) and (b) above, for each and every element of its life cycle; 
(e) (amended by State Gazette No 86 of 2018, in force since 1 March 2019, and 
No 102 of 2019, in force since 1 January 2020) BGN 837 000 – for services for 
specific military purposes or for sensitive services; 
(f) (amended by State Gazette No 86 of 2018, in force since 1 March 2019) 
BGN 10 000 000 – for works for specific military purposes or for sensitive works; 
5. the contracting entities organise a design contest with a value equal to or 
greater than BGN 70 000. 
(2) The contracting entities shall use the procedures specified in 
Article 18(1)(12) or Article 18(1)(13) when the public contracts are of the 
following estimated value: 
1. (amended by State Gazette No 86 of 2018, in force since 1 March 2019) for 
works – between BGN 270 000 and BGN 10 000 000; 
2. for supplies and services, including the services listed in Annex 2 – between 
BGN 70 000 and the relevant threshold specified in paragraph 1, depending on the 
type of contracting entity and the subject matter of the contract.’ 
Article 238. ‘(1) External monitoring of the implementation of the present 
law, including monitoring of the performance of public procurement contracts and 
framework agreements, shall be carried out by the Court of Auditors and the 
bodies of [the ADFI]. 
(2) Contracting entities coming within the scope of the Zakon za Smetnata 
palata (Law on the Court of Auditors) shall be subject to review by the Court of 
Auditors. 
(3) Contracting entities coming within the scope of [the ZDFI] shall be 
reviewed in respect of their compliance with the present law within the framework 
of a financial inspection by the bodies of [the ADFI].’ 
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Article 256. ‘(1) (amended by State Gazette No 86 of 2018, in force since 
1 March 2019, and No 102 of 2019, in force since 1 January 2020) A contracting 
entity awarding a public contract by concluding an agreement or incurring 
expenditure or entering into an obligation to incur expenditure which is equal to or 
exceeds the minimum thresholds specified in Article 20(1) or (2), without 
conducting one of the procedures specified in Article 18(1) in line with the value 
of the contract where the grounds for so doing are in place, shall be penalised with 
a fine of 2% of the value of the contract including value-added tax and, if no 
written agreement is in place, of the expenditure incurred or the obligation entered 
into to incur expenditure, but not exceeding BGN 50 000.’ 
Article 257. ‘(1) (amended by State Gazette No 86 of 2018, in force since 
1 March 2019) In the cases referred to in Articles 247, 249 to 255 and 256 to 
256b, where no total value is indicated in the agreement or can be determined, the 
amount of the fine shall be determined on the basis of the estimated value 
indicated in the contract notice, the expenditure incurred or the obligation entered 
into to incur expenditure, or, in the absence of such basis, the funds set aside for 
the activity concerned in the budget of the contracting entity.’ 
ADDITIONAL PROVISIONS 
Paragraph 2. ‘For the purposes of the present law, the following definitions shall 
apply: 
…….. 
Point 43. A “body governed by public law” is a legal person which fulfils the 
following conditions: 
(a) it was established for the specific purpose of meeting needs in the general 
interest, not having an industrial or commercial character; 
(b) it is financed, for the most part, by the State, regional or local authorities, or 
by other bodies governed by public law; or is subject to management supervision 
by those bodies or authorities; or has a managerial or supervisory board, more 
than half of whose members are appointed by a public contracting entity within 
the meaning of Article 5(2)(1) to (2)(14). 
Needs in the general interest have an industrial or commercial character where the 
person operates under normal market conditions and aims to make a profit, while 
it alone bears the losses resulting from the exercise of its activity. 
A medical body – a company at least two thirds of the capital of which is privately 
owned, which is more than 50% financed by the State, regional or local 
authorities, or by other bodies governed by public law or is subject to management 
supervision by those authorities or bodies; or which has an administrative, 
managerial or supervisory board, more than half of whose members are appointed 
by the State, regional or local authorities, or by other bodies governed by public 
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law, and which has a commercial or industrial character although it meets needs in 
the general interest – is not a “body governed by public law” within the meaning 
and for the purposes of [the ZOP]. 
Paragraph 3. The present law implements the following requirements: 
1. Directive 2014/24/EU of the European Parliament and of the Council of 
26 February 2014 on public procurement and repealing Directive 2004/18/EC (OJ 
2014 L 94, p. 65).’ 
11 EU law: 
Directive 2014/24/EU of the European Parliament and of the Council of 
26 February 2014 on public procurement and repealing Directive 2004/18/EC (OJ 
2014 L 94, p. 65) 
Article 2(1). ‘For the purposes of this Directive, the following definitions apply: 
[…] 
(4) “bodies governed by public law” means bodies that have all of the following 
characteristics: 
(a) they are established for the specific purpose of meeting needs in the general 
interest, not having an industrial or commercial character; 
(b) they have legal personality; and 
(c) they are financed, for the most part, by the State, regional or local 
authorities, or by other bodies governed by public law; or are subject to 
management supervision by those authorities or bodies; or have an administrative, 
managerial or supervisory board, more than half of whose members are appointed 
by the State, regional or local authorities, or by other bodies governed by public 
law;’ 
Article 4. ‘This Directive shall apply to procurements with a value net of value-
added tax (VAT) estimated to be equal to or greater than the following thresholds: 
[…] 
(c) EUR 207 000 for public supply and service contracts awarded by sub-central 
contracting authorities and design contests organised by such authorities; that 
threshold shall also apply to public supply contracts awarded by central 
government authorities that operate in the field of defence, where those contracts 
involve products not covered by Annex III’. 
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IV. Positions of the parties 
12 The applicant NV has not explicitly expressed a view and has not made use of the 
period available for submission of further questions for inclusion in the request for 
a preliminary ruling following assessment by the Sofia District Court. 
13 ADFI: 
13.1 The penalising authority, acting via its agents, has submitted written 
observations in which it claims that, although the legal definition of the term 
‘body governed by public law’ in Article 2(1)(4) of Directive 2014/24 has been 
transposed in Paragraph 2(43) [of the Additional Provisions to] the ZOP, that act 
of secondary EU legislation is not applicable, as the value of the contract at issue 
in the main proceedings is below the minimum threshold of EUR 207 000 laid 
down in Article 4(c) of Directive 2014/24. For those reasons, it argues, the request 
for a preliminary ruling is inadmissible, in so far as the national legislation – 
Article 20(2)(2) of the ZOP – lays down a lower minimum threshold of 
BGN 70 000. 
IV. Grounds for the reference 
14 The subject matter of the present proceedings is an examination of the question 
whether the applicant NV, in his capacity as executive director of the company 
‘Montazhi’ EAD, has committed an administrative offence, specifically in relation 
to the expenditure of BGN 89 195.66, net of VAT, incurred within the framework 
of a supply contract dated 15 June 2020, concluded between ‘Montazhi’ EAD and 
‘Reyr Studio BG’ EOOD without any of the procedures under Article 18(1) of the 
ZOP being used. 
15 Clarification is required in the first place as to whether the company ‘Montazhi’ 
EAD constituted a ‘body governed by public law’ during the review period from 
1 January 2017 to 30 August 2020, particularly at the point when the expenditure 
was incurred, namely on 18 August 2020, which would make its representative a 
public contracting entity awarding public contracts within the meaning of 
Article 5(2)(14) of the ZOP and a person potentially liable under administrative 
law for non-compliance with the requirements of Article 17(1) of the ZOP, read in 
conjunction with Article 20(2)(2) thereof. 
16 The Chamber is uncertain as to the proper transposition of the provisions of 
Directive 2014/24 into the national law of the Republic of Bulgaria, as the ZOP 
provides that the term ‘body governed by public law’ applies also in respect of 
public contracts which are below the minimum thresholds established in that act 
of secondary EU legislation, thereby extending its material scope. 
17 In the light of the above, there is a need for a ruling from the Court of Justice of 
the European Union as to whether national legislation under which the provisions 
of Directive 2014/24, in particular the legal definition of ‘body governed by 
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public law’ under Article 2(1)(4), apply also in respect of public contracts of an 
estimated value, net of value-added tax (VAT), that is below the minimum 
thresholds laid down in Article 4 of the directive. 
On those grounds, the Sofia District Court […] 
MAKES THE FOLLOWING ORDER: 
THE FOLLOWING QUESTION IS REFERRED TO THE COURT OF 
JUSTICE OF THE EUROPEAN UNION FOR A PRELIMINARY RULING 
under the second paragraph of Article 267 of the Treaty on the Functioning of the 
European Union: 
Is national legislation permissible under which the provisions of Directive 
2014/24/EU of the European Parliament and of the Council of 26 February 2014 
on public procurement and repealing Directive 2004/18/EC ([OJ] 2014 L 94, [p.] 
65), in particular the legal definition of ‘body governed by public law’ under 
Article 2(1)(4) thereof, apply also in respect of public contracts with a value net of 
value-added tax (VAT) estimated to be below the minimum thresholds laid down 
in Article 4 of the directive? 
[information on remedies, service of copies][…] 
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