Judgment;Summary — ECLI:EU:C:2024:853
Date: 2024-10-04
Language of the case: Bulgarian
Court formation: Eighth Chamber
Subject matter: Economic, social and territorial cohesion;European Social Fund (ESF);European Regional Development Fund (ERDF);Cohesion Fund
Procedure: Reference for a preliminary ruling
Origin: Bulgaria

Summary C-175/23 – 1 
Case C-175/23 
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:  
21 March 2023  
Referring court:  
Administrativen sad Veliko Tarnovo (Bulgaria) 
Date of the decision to refer:  
8 March 2023 
Applicant:  
Obshtina Svishtov 
Defendant:  
Rakovoditel na Upravlyavashtia organ na Operativna programa 
‘Regioni v rastezh’ 2014–2020 
  
Subject matter of the main proceedings 
Appeal – on the ground of unlawfulness – of the decision of the Rakovoditel na 
Upravlyavashtia organ na Operativna programa ‘Regioni v rastezh’ 2014–2020 
(Head of the Managing Authority of the operational programme ‘Regions in 
Growth’ 2014–2020) in which, pursuant to Article 73(1) and Article 70(1)(9) of 
the Zakon za upravlenie na sredstvata ot evropeyskite fondove pri spodeleno 
upravlenie (Law on the Management of European Funds with Shared 
Management; ‘the ZUSEFSU’) and pursuant to Articles 2(36) and 143(2) of 
Regulation (EU) No 1303/2013, following the examination of a notification of 
detected breaches in the implementation of an open call for tenders under the 
Zakon za obshtestvenite porachki (Law on Public Procurement), a financial 
correction amounting to 5% of the financial contribution for two awarded public 
contracts was set 
EN 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-175/23 
 
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Subject matter and legal basis of the request 
Interpretation of Articles 2(36) and 143(2) of Regulation (EU) No 1303/2013, in 
particular in order to be able to determine whether the national provision is 
compatible with EU law; Article 267 TFEU 
Questions referred for a preliminary ruling 
1. In view of the logical and purposive interpretation of Articles 2(36) and 
143(2) of the Regulation of the European Parliament and of the Council 
laying down common provisions on the European Regional Development 
Fund, the European Social Fund, the Cohesion Fund, the European 
Agricultural Fund for Rural Development and the European Maritime and 
Fisheries Fund and laying down general provisions on the European 
Regional Development Fund, the European Social Fund, the Cohesion Fund 
and the European Maritime and Fisheries Fund and repealing Council 
Regulation (EC) No 1083/2006, is a national provision such as that of 
Article 70(2) of the ZUSEFSU in conjunction with Article 2(1) and (2) of 
the Naredba za posochvane na nerednosti, predstavlyavashti osnovania za 
izvarshvane na finansovi korektsii, i protsentnite pokazateli za opredelyane 
razmera na finansovite korektsii po reda na Zakona za upravlenie na 
sredstvata ot Evropeyskite strukturni i investitsionni fondove (Regulation on 
the detection of irregularities that constitute grounds for making financial 
corrections, and the percentage indicators for determining the amount of 
financial corrections under the Law on the Management of Funds from the 
European Structural and Investment Funds), which always assumes that 
there has been an irregularity in the event of a breach of the rules on the 
award of public contracts that are laid down in a schedule contained in a 
legislative act, compatible [with EU law]? 
2. In view of the need to individualise each concrete and specific breach of a 
rule applicable in the field of public procurement, does the national 
provision of Article 70(2) of the ZUSEFSU, in conjunction with Article 2(1) 
and (2) of the Regulation on the detection of irregularities that constitute 
grounds for making financial corrections, and the percentage indicators for 
determining the amount of financial corrections under the Law on the 
Management of European Structural and Investment Funds, comply with the 
principle of proportionality laid down in the [third] sentence of 
Article 143(2) of the Regulation of the European Parliament and of the 
Council laying down common provisions on the European Regional 
Development Fund, the European Social Fund, the Cohesion Fund, the 
European Agricultural Fund for Rural Development and the European 
Maritime and Fisheries Fund and laying down general provisions on the 
European Regional Development Fund, the European Social Fund, the 
Cohesion Fund and the European Maritime and Fisheries Fund and repealing 
Council Regulation (EC) No 1083/2006? 
OBSHTINA SVISHTOV 
 
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Provisions of European Union law relied on 
Regulation (EU) 2021/1060 of the European Parliament and of the Council of 
24 June 2021 laying down common provisions on the European Regional 
Development Fund, the European Social Fund Plus, the Cohesion Fund, the Just 
Transition Fund and the European Maritime, Fisheries and Aquaculture Fund and 
financial rules for those and for the Asylum, Migration and Integration Fund, the 
Internal Security Fund and the Instrument for Financial Support for Border 
Management and Visa Policy, Article 117(1) 
Regulation (EU) No 1303/2013 of the European Parliament and of the Council of 
17 December 2013 laying down common provisions on the European Regional 
Development Fund, the European Social Fund, the Cohesion Fund, the European 
Agricultural Fund for Rural Development and the European Maritime and 
Fisheries Fund and laying down general provisions on the European Regional 
Development Fund, the European Social Fund, the Cohesion Fund and the 
European Maritime and Fisheries Fund and repealing Council Regulation (EC) 
No 1083/2006, recital 120, Article 2(36) and Article 143 
Case-law of the Court of Justice of the European Union 
Judgment of the Court of Justice of 26 May 2016, Judeţul Neamţ and Judeţul 
Bacău, C-260/14 and C-261/14, EU:C:2016:360, No 1 of the operative part of the 
judgment 
Provisions of national law relied on 
Zakon za upravlenie na sredstvata ot evropeyskite fondove pri spodeleno 
upravlenie (Law on the Management of European Funds with Shared 
Management), Article 49(2)(1), Article 70(1)(9) and Article 70(2) 
Naredba za posochvane na nerednosti, predstavlyavashti osnovania za izvarshvane 
na finansovi korektsii, i protsentnite pokazateli za opredelyane razmera na 
finansovite korektsii po reda na Zakona za upravlenie na sredstvata ot 
Evropeyskite strukturni i investitsionni fondove (Regulation on the detection of 
irregularities that constitute grounds for making financial corrections, and the 
percentage indicators for determining the amount of financial corrections under 
the Law on the Management of Funds from the European Structural and 
Investment Funds; ‘the Naredba’), Articles 1(1), 2(1) and (2) and 5(1) and (2), and 
Annex No 1 Section I No 11 
Succinct presentation of the facts and procedure in the main proceedings 
1 As the beneficiary of a financial grant partly from the European Structural Funds 
(European Regional Development Fund), Obshtina Svishtov (Svishtov 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-175/23 
 
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Municipality) entered into a contract with the defendant in the main proceedings 
for the provision of a financial grant. 
2 In order to implement the measures under this contract, the beneficiary, as 
contracting authority under the Law on Public Procurement, conducted an open 
call for tenders for the award of a public works contract. The contract was divided 
into two lots. 
3 In the call for tenders the beneficiary stated that the total estimated value of both 
lots was 1 107 667 leva (BGN), that bids were to be submitted for one lot only and 
that the award criterion for both lots was the price-performance ratio. 
4 Furthermore, in the call for tenders the beneficiary laid down the requirements 
regarding the technical and professional capacity of the applicants for both lots. 
One of those requirements was that the applicant had to meet the conditions laid 
down in Article 163a of the Zakon za ustroystvo na teritoriata (Law on Spatial 
Planning; ‘the ZUT’). 
5 After the tender procedure had been concluded, the beneficiary entered into two 
contracts with the selected contractors, who are Bulgarian economic operators. 
The first participant won the contract for the first lot and entered into a contract 
with the municipality worth 412 850 leva excluding VAT, while a contract worth 
684 160.76 leva excluding VAT was entered into with the second participant, who 
won the contract for the second lot. 
6 Subsequently, the defendant examined a notification of an irregularity detected in 
this public contract. An administrative procedure was carried out which resulted in 
the adoption of a decision imposing a financial correction on the beneficiary in the 
amount of 129 145.29 leva including VAT, which equates to 10% of the grant for 
the two contracts entered into with the aforementioned two participants. The 
defendant stated in its decision that the unjustified expenditure was calculated on 
the basis of the eligible costs of the contracts, totalling 1 291 452.91 leva. 
7 The municipality appealed against this decision of the defendant before the 
Administrative sad Veliko Tarnovo (Administrative Court Veliko Tarnovo, 
Bulgaria) which overturned it. In particular, the Administrative Court decided that 
in this case there had been no breach of the national Law on Public Procurement 
and therefore no irregularity. 
8 The defendant appealed against that judgment before the Varhoven 
Administrativen sad (Supreme Administrative Court, Bulgaria; ‘the VAS’) of the 
Republic of Bulgaria. That court upheld the judgment of the Administrative Court, 
pointing out in particular that the defendant had assumed that the restrictive 
condition set by the beneficiary was not a requirement discriminating on the basis 
of nationality, but a requirement regarding the technical capacity of the candidate 
for a lot which had been set prematurely, namely at the time of the submission of 
the tender. According to the judgment of the VAS, under the rules of a national 
subordinate legislative act, that constituted a completely different irregularity, 
OBSHTINA SVISHTOV 
 
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which was described in the tabular annex to that legislative act and for which a 
different level of correction was provided. 
9 After the court proceedings had been concluded, the defendant carried out a ‘new’ 
irregularity examination procedure on the basis of another notification, in which it 
concluded, on the basis of exactly the same facts and circumstances, that the same 
breaches already established resulted in a different irregularity. In fact, the 
defendant ruled that the irregularity should be legally classified in accordance 
with the judgment of the Supreme Administrative Court handed down in the 
aforementioned appeal proceedings. Consequently, a financial correction of a 
different amount was set, namely 64 572,64 leva including VAT, which 
corresponded to 5% of the eligible costs of the contracts with the two economic 
operators. In those two cases, the defendant did not carry out an in-depth 
examination of the question of whether a specific loss had occurred or was 
possible, nor did it take into account the individual seriousness of the specific 
breaches, since it assumed (albeit implicitly) that they were listed as irregularities 
in the tables annexed to the Naredba, for which a percentage indicator for the 
correction and a formula for its application were provided. 
10 The beneficiary appealed against that decision before the referring court on the 
grounds that it was void and unlawful. 
The essential arguments of the parties in the main proceedings 
11 The applicant’s submissions regarding unlawfulness do not concern the 
interpretation of the institution of Community law required by the referring court. 
The applicant does not challenge the compatibility of the rules on the 
implementation of financial corrections provided for in national law with the 
principles and institutions of Community law. 
12 The defendant does not explicitly comment on the question of the compatibility of 
the national rules on the detection of irregularities and the correction of the grants 
in question, but implicitly, by referring to their provisions, considers those rules to 
be compatible with Community law. 
Succinct presentation of the reasoning in the request for a preliminary ruling 
13 According to the wording of Article 143(2) of Regulation (EU) No 1303/2013, 
financial corrections shall be made on the basis of individual or systemic 
irregularities detected. By their nature, they are limited to bringing about adverse 
legal consequences consisting in the cancellation of the public contribution to an 
operation or programme. In addition, the third sentence of the provision authorises 
but also obliges Member States to take into account the nature and gravity of the 
irregularities and the financial loss to the funds. 
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14 The Regulation contains a statutory definition of ‘irregularity’ as a legal concept. 
Irregularity means any breach of Community law, or of national law which is 
functionally related to and thus subordinate to a specific provision of Community 
law, which results from an act or omission of the beneficiary and which, simply 
put, has an adverse effect. The latter must have a causal link with the act or 
omission. The adverse effect may consist of direct loss to the Union budget or the 
creation of a real, tangible threat of such loss, which is or would be realised solely 
in the form of unjustified/unlawful expenditure. 
15 According to the referring court, taking into account the statutory definition of 
irregularity invoked, it can be assumed that the ‘nature’ of the irregularity lies in 
its quality, as indicated by the nature of the breach of a provision under 
Community law or national law. Accordingly, the referring court, taking into 
account the definition of irregularity and the analysed purpose of the provision of 
the Regulation, considers that the ‘gravity’ of the irregularity lies in its quantity, 
as indicated by the degree and intensity of the loss caused or likely to be caused in 
the form of a specific unjustified expenditure. 
16 It follows from that provision that the correction must be proportionate, that is to 
say, according to the referring court, the provision requires the application of the 
principle of proportionality to each irregularity and not merely the uniform 
application of a percentage ratio to be calculated from the total eligible cost of a 
project or programme and the unjustified expenditure. 
17 A comparison of the contents of Article 143(1) and 2(36) of Regulation (EU) 
No 1303/2013 leads to the conclusion that the purpose of making corrections is to 
compensate, in whole or in part, for actual or objectively possible losses to the 
expenditure part of the EU budget. 
18 The national provision of Article 70(1)(9) of the ZUSEFSU follows the 
systematics of the Regulation with regard to the requirement that there must be an 
irregularity given that it stipulates that the breach of the rules on the selection of 
the contractor, even if the contractor was selected by means of a public tender, 
must cause a loss to the resources of the European Funds under shared 
management (including resources belonging to the EU budget). 
19 On the other hand, Article 70(2) of the ZUSEFSU and Article 2 of the Naredba, 
however, introduce a de facto irrebuttable presumption according to which 
breaches of the national law (including the law laying down the rules for the 
award of public contracts) listed in the legislative act enacted by the Ministerski 
savet (Council of Ministers) are considered irregularities from the outset, also with 
regard to the presumption of loss caused or likely to be caused thereby and with 
regard to the presumption of a causal link between the violation and the loss or 
risk of loss. 
20 Accordingly, Article 1(1) of the Naredba provides that this subordinate legislative 
act shall list the individual irregularities, which constitute a breach of the rules on 
OBSHTINA SVISHTOV 
 
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the selection of the contractor under Chapter 4 of the Zakon za upravlenie na 
sredstvata ot Evropeyskite strukturni i investitsionni fondove (Law on the 
Management of European Structural and Investment Funds – the previous name of 
the Law) and which cause or would cause a loss to the resources of the European 
Structural and Investment Funds (ESIF) and constitute a basis for making a 
financial correction. In practice, that ‘listing’ of breaches creates an irrebuttable 
presumption that they are causally linked to losses incurred or likely to be 
incurred in the form of unjustified expenditure. An analysis of Articles 2(1) and 
2(2) of the Naredba shows that it involves a schedule that sets out groups of 
breaches of the national Law on Public Procurement (both the law currently in 
force and the law that has already been repealed) which are declared equivalent to 
an irregularity. 
21 That provision allows the Bulgarian managing authority, when investigating an 
alleged irregularity resulting from the breach or non-observance of a statutory 
provision of the Law on Public Procurement, to merely identify any breach of that 
Law or of a subordinate legislative act relating to its application that would fall 
under the relevant section of the Annexes to Article 2 of the Naredba, without 
having to examine and establish whether that breach has a causal link with any 
loss incurred or likely to be incurred in the form of unjustified expenditure. In that 
context, it is appropriate to point out that, in purely formal terms, the managing 
authority could invoke the provision of Article 5(1) and (2) of the Naredba; 
however, those provisions have no practical meaning or significance (and are 
therefore never applied in practice) as the Annexes to Article 2 of the Naredba are 
binding and exhaustively cover cases of breaches of the current and repealed Law 
on Public Procurement and the percentage indicators applicable to them. 
22 In that respect, it should be noted that the identification of a specific breach of the 
national law and its attribution to the corresponding section, type and sub-type 
according to the tables contained in the Annexes to Article 2(1) and (2) of the 
Naredba automatically lead to the managing authority setting the amount of the 
financial correction solely by applying the uniform percentage indicators listed in 
those tables and the formula in Article 5(3) of the Naredba. In fact, the authority is 
bound to take that decision, it has no authority to additionally individualise the 
corresponding correction with regard to the specific nature and/or severity of the 
specific breach and with regard to the specific loss caused or possibly caused by 
it. 
23 The referring court is of the opinion that, by being structured in that way, the 
national legislation does not comply with the spirit and purpose of the Regulation. 
It follows from the analysis of the definition given by the legislative act under 
Community law that only a breach causing certain undesirable effects or a real 
risk of such effects may be the basis for setting a financial correction. According 
to the referring court, the application of the principle of proportionality precludes 
a Member State from determining, by irrebuttable legal presumptions, that 
breaches of a national provision in the field of public procurement described in a 
schedule to a legislative act mean that, in every case, there is a loss caused or 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-175/23 
 
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likely to be caused and of a causal link with that damage caused or likely to be 
caused. If the opposite view were taken, both the characteristics of the definition 
of irregularity and the requirement of reasonableness (proportionality) in the 
application of the financial correction would be meaningless. 
24 Accordingly, the question asked by the referring court is whether the rules 
contained in the national provisions cited fully guarantee the application of the 
principle of proportionality with regard to the individualisation of each concrete 
and specific breach of a Community or national provision in the field of public 
procurement and the individualisation of the financial correction resulting from 
the breach, in so far as each formal breach of such a provision is classified in a 
schedule contained in a legislative act and a percentage correction is set for it, 
calculated solely on the basis of the expenditure affected by the breach. 
25 The Court’s judgment of 26 May 2016, Judeţul Neamţ and Judeţul Bacău, 
C-260/14 and C-261/14, EU:C:2016:360, interpreted Article 1(2) of Regulation 
(EC, Euratom) No 2988/95 and Article 2(7) of Regulation (ЕC No 1083/2006, the 
content of which was incorporated in Article 2(36) of Regulation No 1303/2013. 
Although that interpretation is also useful for the present case and leads to the 
result that breaches of the rules on the award of national public contracts which, 
on account of their estimated value, do not fall within the scope of Directive 
2004/18/ЕC may be regarded as irregularities within the meaning of Regulation 
(EU) No 1303/2013, the context of the present request is different, since it 
concerns the possibility, provided for in Community law, of determining/making 
financial corrections in accordance with the principle of proportionality.