Judgment;Summary — ECLI:EU:C:2023:793
Date: 2023-10-19
Language of the case: Bulgarian
Court formation: Fourth Chamber
Subject matter: State aids;Competition
Procedure: Reference for a preliminary ruling
Origin: Bulgaria

Summary C-325/22 – 1 
Case C-325/22 
Summary of the request for a preliminary ruling pursuant to Article 98(1) of 
the Rules of Procedure of the Court of Justice 
Date lodged:  
13 May 2022  
Referring court:  
Administrativen sad – Varna (Bulgaria) 
Date of the decision to refer:  
4 May 2022  
Applicants:  
TS 
HI 
Defendant:  
Ministar na zemedelieto, hranite i gorite  
  
Subject matter of the main proceedings 
Action against a notice establishing a receivable of the State in the amount of 
440 364.79 leva (BGN), finding that State aid incompatible with the internal 
market was granted in favour of the addressees of the notice through swaps of 
land (forest land), and that that State aid must be repaid. 
Subject matter and legal basis of the request 
Request under Article 267 TFEU for an interpretation of Article 107 TFEU, 
Article 16(3) of Council Regulation 2015/1589 and recital 127 of Commission 
Decision (EU) 2015/456. 
EN 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-325/22 
 
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Questions referred for a preliminary ruling 
1. Is a beneficiary of unlawfully granted State aid under a swap contract by 
which it acquired land in a forest area (owned by the State under private 
law) excluded from the definition of the term ‘undertaking’ where, as 
evidenced by its annual balance sheets, it carries out an economic activity by 
offering goods and services on the market concerned, but, in accordance 
with recital 127 of (Commission Decision [EU] 2015/456 of 5 September 
2014 on the aid scheme No SA.26212 [11/C] [ex 11/NN – ex CP 176/A/08] 
and SA.26217 [11/C] [ex 11/NN – ex CP 176/B/08], which applies to swaps 
of forest land in Bulgaria [notified under document C(2014) 6207]), does not 
directly or indirectly carry out economic activities with the land acquired by 
way of the swap, because national law provides for an objective prohibition 
preventing the beneficiary from changing the designated use of the land and 
from carrying out construction on the land removed from the forest stock or 
from selling that land? 
2. Must the provision of Article 107 TFEU be interpreted and applied in such a 
manner that, with regard to the status of ‘undertaking’ and in the application 
of the criteria for an ‘undertaking’, and having regard to the data collected in 
relation to the completed first stage of the administrative procedure for prior 
consent, the investment project as applied for and factually described of the 
beneficiary of unlawfully obtained State aid, which is to be realised on 
State-owned forest land acquired by means of a swap and which is a 
prerequisite for the initiation of a subsequent procedure concerning the 
removal from the forest stock of the land acquired for the purpose of the 
construction, must be taken into account as a legally relevant circumstance, 
irrespective of the fact that it has become objectively impossible for the 
investment project to be realised due to the moratorium imposed by 
parliament and the subsequently adopted statutory provision containing an 
express prohibition preventing a change of the designated use of the land 
acquired from the State and preventing construction on that land? 
3. Must Article 107 TFEU and Article 16(3) of Council Regulation (EU) 
2015/1589 be interpreted as precluding, for the purposes of determining the 
amount of State aid received by way of a swap of forest land (owned by the 
State under private law), national legislation such as the provisions of 
points 2 and 4 of Paragraph 1a (Supplementary Provisions) of the Zakon za 
darzhavnata sobstvenost (Law on State ownership) which prevents the 
establishment of a market price for the land due to the fact that it sets market 
indicators and valuation criteria for the calculation which result in a 
deviation from the actual value of the land, and, in that sense, does such 
national legislation infringe the principle of effectiveness? 
MINISTAR NA ZEMEDELIETO, HRANITE I GORITE  
 
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Provisions of European Union law and case-law relied on 
Treaty on the Functioning of the European Union – Article 57, Article 107 and 
Article 108(2). 
Commission Regulation (ЕU) No 1407/2013 of 18 December 2013 on the 
application of Articles 107 and 108 of the Treaty on the Functioning of the 
European Union to de minimis aid – Article 2(2)(d) 
Council Regulation (EU) 2015/1589 of 13 July 2015 laying down detailed rules 
for the application of Article 108 of the Treaty on the Functioning of the European 
Union – Article 16. 
Commission Decision (EU) 2015/456 of 5 September 2014 on the aid scheme No 
SA.26212 (11/C) (ex 11/NN – ex CP 176/A/08) and SA.26217 (11/C) (ex 
11/NN – ex CP 176/B/08) implemented by the Republic of Bulgaria in the context 
of swaps of forest land – recitals 127, 128 and 142 (‘the Commission Decision’). 
Recital 127: ‘With this in mind, it should be noted that certain beneficiaries of the 
contested swap transactions did not carry out economic activities with the 
swapped forest land during the period under review, nor do they carry out such 
activities at present. As a result, those beneficiaries cannot be considered 
undertakings within the meaning of Article 107(1) of the Treaty so that no State 
aid is considered to be present in the swap transactions they concluded with the 
Bulgarian State.’ 
Commission Communication on State aid elements in sales of land and buildings 
by public authorities (97/C 209/03) – Chapter II, point 2(b). 
Judgment of the Court of Justice of the European Union of 27 June 2017, 
Congregación de Escuelas Pías Provincia Betania, С-74/16, EU:C:2017:496. 
Judgment of the Court of Justice of the European Union of 16 December 2010, 
Seydaland Vereinigte Agrarbetriebe, С-239/09, EU:C:2010:778. 
Judgment of the General Court of the European Union of 15 June 2010, Mediaset 
v Commission, T-177/07, EU:T:2010:233. 
Judgment of the Court of Justice of the European Union of 10 January 2006, 
Cassa di Risparmio di Firenze and Others, C-222/04, EU:C:2006:8. 
Judgment of the Court of Justice of the European Union of 5 October 2004, 
Pfeiffer and Others, Joined Cases С-397/01 to С-403/01, EU:C:2004:584. 
Judgment of the Court of Justice of the European Union of 19 September 2000, 
Germany v Commission, С-156/98, EU:C:2000:467. 
Judgment of the Court of Justice of the European Union of 12 September 2000, 
Pavlov and Others, Joined Cases C-180/98 to C-184/98, EU:C:2000:428. 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-325/22 
 
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Judgment of the Court of Justice of the European Union of 11 April 2000, 
Deliège, Joined Cases С-51/96 and С-191/97, EU:C:2000:199. 
Judgment of the Court of Justice of the European Union of 12 July 1984, 
Hydrotherm, С-170/83, EU:C:1984:271. 
Provisions of national law relied on 
Administrativnoprotsesualen kodeks (Code of Administrative Procedure, 
Bulgaria) – Article 59(1) and (2) and Article 145. 
Danachno-osiguritelen protsesualen kodeks (Tax and Social Security Procedure 
Code, Bulgaria), points 6 and 9 of Article 162(2), Article 165 and Article 166 
Zakon za darzhavnite pomoschti (Law on State aid, Bulgaria) – Article 10, 
Article 20(4) and (5), Article 38. 
Zakon za gorite (Law on forests, Bulgaria) – Paragraph 3(1) and (2) of the 
transitional and final provisions. 
Zakon za darzhavnata sobstvenost (Law on State ownership, Bulgaria) – 
Article 32(2); points 2 and 4 of Paragraph 1а of the Supplementary Provisions. 
‘Supplementary provisions 
… 
Paragraph 1а … For the purposes of this Law: 
… 
[Point] 2. … “Market price” means the average values of all legal transactions 
involving the purchase and sale, exchange, creation of rights in rem or transfer of 
ownership in return for a construction obligation, a mortgage for guaranteeing a 
contract of sale, sales by auction by public or private bailiffs, by public authorities 
or by municipalities, and of other legal transactions for no consideration – with the 
exception of those relating to the non-material part of a property – in which at 
least one of the parties is an undertaking and which were concluded within the 
12 months preceding the valuation order and registered with the registration 
authority of the place where the property is located. Where more than 20 legal 
transactions have been registered with the registration authority in the 12 months 
preceding the valuation order, the 20 most recent registrations shall be taken into 
account for the determination of the market price. The average value shall be 
established on the basis of no less than two relevant legal transactions’. 
… 
MINISTAR NA ZEMEDELIETO, HRANITE I GORITE  
 
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[Point] 4. ‘Land located in the vicinity of the expropriated party is land which is 
located in the following areas: 
(a) in the same rayon (district) in the large cities divided into districts; 
(b) in the same quarter in other cities or residential areas or municipalities; 
(c) … in the same demarcated area of agricultural and forest land.’ 
Succinct presentation of the facts and procedure in the main proceedings 
1 On 26 November 2008, the Darzhawna agentsia po gorite (Executive Forest 
Agency) and the applicant, TS, concluded a land swap contract. Under that 
contract, TS swapped her own land, having a total surface area of 175 575 acres, 
for State-owned land having a total surface area of 20 780 acres. 
2 Two months later, TS transferred the ownership of the newly acquired land to the 
company HI, of which TS was a shareholder at the time. The object of the 
economic activity carried out by HI consisted primarily in the operation of hotels 
and restaurants, the harvesting and processing of wood and the sale of goods. 
3 The Commission Decision proceeds on the assumption that, in the case of swaps 
of forest land conducted during the period under review, the State conferred on 
certain private entities an advantage in the form of State resources within the 
meaning of Article 107(1) TFEU. 
4 On 8 July 2020, the Ministar na zemedelieto, hranite i gorite (Minister for 
Agriculture, Food and Forestry; ‘the defendant’) issued a notice establishing a 
receivable of the State by which, on the basis of the relevant provisions of national 
law and the Commission Decision, it was found that the applicants were jointly 
and severally liable for a receivable governed by public law, in the form of a 
recovery of incompatible State aid in the amount of BGN 440 364.79 
(BGN 294 627 principal and BGN 145 737.79 interest). 
5 The defendant states that, according to the valuation report that had been 
produced, the market value of the private land was BGN 60 430.58, while the 
market value of the State-owned land was BGN 381 231.17. 
The essential arguments of the parties in the main proceedings 
6 HI relies on recital 128 of the Commission Decision and submits that it concerned 
only the beneficiaries of the contested swaps that were undertakings within the 
meaning of Article 107(1) TFEU. HI claims that it was not an ‘undertaking’ and, 
therefore, the defendant’s legal categorisation by which the company was treated 
as a beneficiary of State aid was unlawful. 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-325/22 
 
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7 The defendant takes the view that not only HI but also TS had the status of 
‘undertaking’. The defendant submits that, in the application of EU competition 
law, the concept of ‘undertaking’ covered any undertaking which ‘carries out an 
economic activity’. 
8 Furthermore, the view concerning the activities of legal entities which was set out 
in recital 127 of the Commission Decision constituted a restriction of its scope by 
reducing the interpretation of the concept of ‘undertaking’ to the carrying out of 
economic activities with the land acquired by way of the swap, which, in turn, led 
to the exclusion from the recovery of the incompatible aid of the majority of the 
entities that received it. 
9 Nowhere in the case-law of the Court was it required, as regards the criteria for an 
undertaking, that the economic activity carried out by the relevant entity must be 
related solely and exclusively to a direct or indirect use of the aid. 
10 When evaluating information regarding the company HI, the defendant 
established that TS was a shareholder of HI at the time of the swap transaction. 
The defendant takes the view that that fact meant that TS was under the decisive 
commercial influence of the company when making decisions. 
11 Furthermore, the only possible conclusion that could be drawn from the foregoing 
was that the State aid received by TS through the acquisition of land under 
circumstances which were not in line with normal market conditions served the 
commercial interests of HI and constituted an indirect advantage for the company, 
of which the natural person was a shareholder and in the economic activities of 
which she participated. 
12 According to the defendant, that conclusion was confirmed by the case-law of the 
Court, according to which ‘an advantage granted directly to certain natural or 
legal persons who are not necessarily undertakings may constitute an indirect 
advantage, hence State aid, for other natural or legal persons who are 
undertakings’ (judgment of 15 June 2010, Mediaset v Commission, T-177/07, 
EU:T:2010:233, paragraph 75). 
Succinct presentation of the reasoning in the request for a preliminary ruling 
The first question 
13 The referring court takes the view that the first issue to be clarified in the dispute 
is whether the applicants are ‘undertakings’ within the meaning of Article 107(1) 
TFEU. 
14 The national case-law on that concept – which recital 127 of the Commission 
Decision ties to the carrying out of an economic activity with the swapped forest 
land – is contradictory. 
MINISTAR NA ZEMEDELIETO, HRANITE I GORITE  
 
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15 The prevailing view is that the non-exercise of an economic activity with the land 
implies the absence of the status of ‘undertaking’, with the result that recital 127 
of the Commission Decision applies. 
16 The other view taken is that the limitation in recital 127 should not be interpreted 
as meaning that only those entities that carry out an economic activity with the 
swapped land are considered to be ‘undertakings’, since ‘that situation is one of 
the possible situations as regards the economic activity carried out, but does not 
exhaustively cover the concept of “undertaking”’. The only relevant criterion is 
whether the entity carries out an economic activity, irrespective of the sector. 
The second question 
17 The referring court takes the view that the question at issue in the present case 
concerning the concept of ‘undertaking’ is directly linked to the question as to the 
correct interpretation of the concept of ‘economic activity’ contained in 
recital 127 of the Commission Decision. 
18 With regard to that concept, it is common ground in the main proceedings that, in 
2008 and 2009, HI submitted to the competent authorities a series of applications 
for the initiation of a procedure for a change of the designated use of one of the 
areas acquired by way of removal from the forest stock, whereby it expressly 
based its applications on the ground that it would be implementing an investment 
project for the construction of a hotel. 
19 In the meantime, that procedure has been suspended, as the decision of the 
National Assembly of 3 September 2009 prohibited the ‘removal by a change of 
the designated use of forest and land from the forest stock, acquired by natural and 
legal persons, other than municipalities, by way of swaps with forest and land 
from the forest stock – owned by the State under private law’. That prohibition 
was subsequently incorporated into the Law on forests. 
20 The investment project applied for and the initiated but incomplete procedure for a 
change of the designated use of the land for the purposes of the investment project 
have been rendered objectively impossible by the moratorium of the National 
Assembly and by the subsequently introduced statutory provision containing the 
express prohibition preventing a change of the designated use of the land and 
construction on the land. However, those circumstances do not simply undo the 
procedure for a change of the designated use of the land and for construction on 
the land that had been initiated. 
21 For those reasons, the question arises as to whether the investment project applied 
for by the beneficiary is to be regarded as an economic activity, even though it 
must be assessed in the light of the objective impossibility that subsequently arose 
due to the moratorium. 
The third question 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-325/22 
 
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22 The referring court states that the dispute also concerns the market price of the 
State-owned land in the amount of BGN 381 231.17, as determined in the notice 
establishing a receivable of the State. The determination is challenged by both 
applicants on the ground that the valuation report prepared during the 
administrative procedure was based on irrelevant market information. 
23 Accordingly, they seek a judicial valuation report to determine the market prices 
for those areas of land in accordance with the provisions of points 2 and 4 of 
Paragraph 1a of the Supplementary Provisions to the Law on State ownership 
(‘the DR na ZDS’). 
24 The defendant takes the view that the 12-month limitation provided for in that 
provision does not apply because it concerns cases of adequate financial 
compensation in the event of expropriation of land for State purposes, and the 
facts of the present case do not fall within the scope of those cases. 
25 The referring court takes the view that the Court of Justice of the European Union 
has established an objective criterion for calculating the market value of land 
when it is sold by public authorities, stating that ‘such a sale may include elements 
of State aid, in particular where it is not made at market value, that is to say, 
where it is not sold at the price which a private investor, operating in normal 
competitive conditions, would have been able to fix’ (judgment of 16 December 
2010, Seydaland United Agricultural Holdings, С-239/09, EU:C:2010:778, 
paragraph 34), or at the market value that the owner could have obtained if the 
land were sold on the open market. 
26 That objective criterion for market value is at variance with the procedure for 
fixing the market price under points 2 and 4 of Paragraph 1a of the DR na ZDS. 
The referring court states that the determination of the market price is a necessary 
precondition for the determination of the amount of State aid in accordance with 
the methodology laid down in a binding manner in the Commission Decision. 
27 The determination of the market value in accordance with the cited provisions is 
based on legal transactions registered with the registration authority, whereby the 
asset valuer and the court are obliged to assess the registered value and compare it 
with the value in the notarial deed, even though there is a possibility that that 
value may be close to the tax value of the property and may therefore not reflect 
the actual market value. 
28 It is common knowledge that it is established practice for parties to a legal 
transaction concerning land to state the lowest possible price in order to reduce the 
property tax and notary fee due. In addition, the above provision establishes a 
temporal criterion for the application of market comparisons, namely 12 months 
prior to the date of the valuation, whereby, in the case in the main proceedings, the 
period prior to the conclusion of the swap transaction must be taken into account, 
with the result that the asset valuer may examine comparisons in that period only 
MINISTAR NA ZEMEDELIETO, HRANITE I GORITE  
 
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and must exclude legal transactions with identical characteristics in the vicinity of 
the land at issue that are not covered by that period. 
29 The case-law of the European Court of Human Rights contains judgments in cases 
initiated on appeal by Bulgarian citizens against final judgments of the Varhoven 
administrativen sad (Supreme Administrative Court) concerning the determination 
of adequate financial compensation in the case of expropriation of private land for 
State purposes, in which the compensation due was calculated in accordance with 
points 2 and 4 of Paragraph 1a of the DR na ZDS. The ECtHR stated in the 
grounds for those judgments that the compensation determined did not correspond 
to the market price and the expropriation compensation provided for, and it 
therefore ruled that such a substantial difference constituted a lack of 
compensation. 
30 The judgment of the Konstitutsionen sad (Constitutional Court) of 4 July 2006 
concerning the determination of adequate financial compensation in the case of 
expropriation of private land for State purposes by the application of points 2 and 
4 of Paragraph 1a of the DR na ZDS states that the application of the comparative 
method ensures that the same objective criteria are taken into account as in the 
case of legal transactions for land located in the vicinity of the expropriated land 
and having similar characteristics, concluded at market prices between parties of 
which at least one is an undertaking. That decision was delivered despite the 
dissenting opinion (dissent) of four judges who took the view that the 
abovementioned rules led to valuations that were ‘manifestly and extremely low’.