Information;Order — ECLI:EU:C:2021:947
Date: 2021-11-17
Language of the case: Bulgarian
Court formation: Eighth Chamber
Subject matter: Principles, objectives and tasks of the Treaties
Procedure: Reference for a preliminary ruling - inadmissible
Origin: Bulgaria

Summary C-602/20 – 1 
Case C-602/20 
Summary of the reference for a preliminary ruling pursuant to Article 98(1) 
of the Rules of Procedure of the Court of Justice 
Date lodged:  
12 November 2020 
Referring court:  
Varhoven administrativen sad (Bulgaria) 
Date of the decision to refer:  
30 September 2020 
Appellant in the appeal in cassation:  
AKZ-Burgas EOOD 
Respondent in the appeal in cassation:  
Direktor na Direktsia Obzhalvane i danachno-osiguritelna praktika 
(Director of the Appeals and Tax Insurance Practice Directorate) 
  
Subject matter of the main proceedings 
Appeal in cassation against an assessment notice of the revenue authorities 
recognising under the relevant national law a right to statutory interest on 
improperly paid debts (social security contributions) from the date when the 
improperly paid debts to the state should have been refunded rather than from the 
date of the improper payment. Possible lack of proportionality of the national 
legislation which requires an interpretation of EU law to identify any infringement 
of the principle of sincere cooperation and the principles of equivalence and 
effectiveness deriving from it. 
Subject matter and legal basis of the reference 
Interpretation of EU law, Article 267 TFEU 
EN 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-602/20 
 
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Questions referred for a preliminary ruling 
1. Does EU law preclude national legislation such as that at issue in the main 
proceedings, which restricts statutory interest payable on refunds of social security 
contributions levied in breach of EU law to interest which accrues from the day 
after the application for a refund of the principal amount? 
2. Does EU law, in particular the principles of equivalence and of 
effectiveness, preclude national legislation such as that at issue in the main 
proceedings, which restricts statutory interest payable on refunds of compulsory 
social security contributions levied in breach of EU law to interest which accrues 
from the day after the application for a refund of the improperly paid/levied 
amounts to the date on which they are refunded? 
Applicable provisions of EU law 
Treaty on European Union, Article 4(3) and second sentence of Article 19(1) 
Treaty on the Functioning of the European Union, Article 291(1) and 
Article 267(1)(b) 
Case-law of the Court of Justice cited 
Judgments of the Court of 14 July 1977, Concetta Sagulo, Gennaro Brenca and 
Addelmadjid Bakhouche (8/77, EU:C:1977:131); of 9 November 1983, 
Аmministrazione delle Finanze dello Stato (199/82, EU:C:1983:318); of 17 July 
1997, GT-Link A/S (C-242/95, EU:C:1997:376); of 2 December 1997, Fantask 
A/S and Others (C-188/95, EU:C:1997:580); of 8 March 2001, Metallgesellschaft 
Ltd and Others, Hoechst AG and Hoechst (UK) Ltd (C-397/98 and C-410/98; 
EU:C:2001:134); of 7 September 2006, N (C-470/04; EU:C:2006:525); of 
12 December 2006, Test Claimants in the FII Group Litigation (C-446/04, 
EU:C:2006:774); of 13 March 2007, Test Claimants in the Thin Cap Group 
Litigation (C-524/04, EU:C:2007:161); of 15 March 2007, Reemtsma 
Cigarettenfabriken (C-35/05, EU:C:2007:167); of 10 April 2008, Мarks & 
Spencer plc (C-309/06, EU:C:2008:211); of 21 January 2010, Alstom Power 
Hydro (С-472/08, EU:C:2010:32); of 6 September 2011, Lady & Kid and Others 
(C-398/09, EU:C:2011:540); of 19 July 2012, Littlewoods Retail and Others 
(C-591/10, EU:C:2012:478); of 27 September 2012, Zuckerfabrik Jülich and 
Others (C-113/10, C-147/10 and C-234/10, EU:C:2012:591); and of 18 April 
2013, Mariana Irimie (С-565/11, EU:C:2013:250) 
AKZ-BURGAS 
 
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Provisions of national law cited 
Danachno-osiguritelen protsesualen kodeks (Code of Tax and Social Security 
Procedure, ‘the DOPK’), Articles 128 to 132, Article 162(2), points 1 and 9, and 
Article 163(1) 
Zakon za danatsite varhu dohodite na fizicheskite litsa (Law on Personal Income 
Tax, ‘the ZDDFL’), Article 42 
Brief summary of the facts, the arguments of the parties, and the procedure 
The facts of the dispute are common ground and may be summarised as follows: 
1 On 30 January 2017, following an audit, the revenue authority at the Teritorialna 
direktsia na Natsionalna agentsia za prihodite, Burgas (Regional Directorate of the 
National Revenue Agency, Burgas, ‘the NRA Regional Directorate, Burgas) 
issued AKZ-Burgas EOOD with a supplementary assessment notice for debts 
owed to the state in the form of a charge owed under Article 42 of the ZDDFL and 
outstanding social security contributions for the period from 1 January 2014 to 
31 August 2014, plus the statutory interest owed. 
 
The supplementary assessment notice was upheld in part by the competent 
revenue authority at next highest level following an objection procedure. Under 
Bulgarian law, supplementary assessment notices are provisionally enforceable, 
hence AKZ-Burgas EOOD paid the debts assessed before the legality of the 
supplementary assessment notice had been reviewed by the court. 
 
 
2 By judgment of 10 May 2018, the Burgaski administrativen sad (Administrative 
Court, Burgas) annulled the supplementary assessment notice mentioned above. 
Following an appeal in cassation, the Varhoven administrativen sad (Supreme 
Administrative Court, ‘the VAS’) upheld the judgment at first instance. 
3 On 13 February 2019, AKZ-Burgas EOOD applied to the NRA Regional 
Directorate, Burgas, for a credit or refund under Article 129 of the DOPK An ex-
post tax audit of the company was carried out, which was closed when a credit or 
refund decision (‘APV’) was issued on 5 May 2019. That decision stated that, 
based on Article 129(6) of the DOPK, no interest was payable on the principal 
amount paid by the company in the form of social security contributions further to 
the annulled supplementary assessment notice and that late payment interest on 
those debts for the period from payment thereof to the date of the APV had been 
assessed at a total of BGN 12 863.09. 
4 After its objection in the administrative procedure was unsuccessful, AKZ-Burgas 
EOOD lodged an application with the administrative court. By judgment of 
11 October 2019, the Administrativen sad Burgas (Administrative Court, Burgas) 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-602/20 
 
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dismissed the action contesting the APV of 5 March 2019 in so far as it denied the 
company statutory interest on the amount improperly levied in social security 
contributions for the period between payment of the improper amount and the date 
on which that sum should have been refunded. The court of first instance gave as 
its reason that sums paid improperly under Article 129(6) of the DOPK, with the 
exception of debts for social security contributions, are refunded with statutory 
interest for the period from the date on which they were paid to a revenue agency 
based on an assessment notice and that, in all other cases, the amounts are repaid 
with statutory interest from the day on which they should have been refunded to 
the taxpayer. In light of that national legislation, the court ruled that no interest 
was owed on the amounts paid improperly in social security contributions, as the 
legislature had expressly excluded them from the sums on which such interest is 
payable. 
5 AKZ-Burgas EOOD lodged an appeal in cassation against that judgment with the 
VAS, which is the referring court in the present case. The appellant in cassation 
argues that the court of first instance dismissed its action against the APV 
unlawfully in so far as the company was denied statutory interest on an amount 
wrongfully levied in social security contributions for the period between payment 
of the amount paid improperly and the date on which that amount should have 
been refunded. 
Brief summary of the basis for the reference 
6 First, the referring court makes a brief analysis of the relevant Bulgarian 
legislation. 
7 It notes that tax payments and compulsory social security contributions are debts 
to the State laid down in compulsory legislation, settlement of which does not 
depend on the will of the citizen. Tax payments and compulsory health and social 
security contributions differ in law. These two categories of debts to the State 
differ in terms of character and purpose, have different legal bases and produce 
different legal effects. Social security contributions are not fiscal in character. In 
return for their contributions, insured persons have a right to the corresponding 
services, whereas taxes are a debt to the State owed without any service in return. 
8 The Bulgarian legislature has provided in the DOPK for a common assessment 
procedure for taxes and compulsory social security contributions (Chapter 14 of 
the DOPK) and a common refund or credit procedure (Articles 128 to 132 of the 
DOPK) for cases in which the taxpayer’s right to a refund of amounts paid 
(levied) wrongly or improperly in charges and compulsory social security 
contributions levied or imposed by the revenue authorities is recognised by a final 
judgment or a final administrative decision. 
9 However, according to the first sentence of Article 129(6) of the DOPK, the debts 
that are repaid with statutory interest for the entire period between the improper 
payment and the date on which they are refunded based on a decision by a 
AKZ-BURGAS 
 
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revenue authority do not include compulsory social security contributions paid or 
levied improperly. According to that provision, interest only accrues on debts paid 
improperly in relation to social security contributions from the day on which a 
decision in due form was adopted that they are to be refunded to the taxpayer. 
10 Second, the referring court examines the relevant case-law of the Court, its 
findings on which include the following: 
11 The referring court cites the judgments in Metallgesellschaft and Others 
(C-397/98 and C-410/98), Test Claimants in the FII Group Litigation (C-446/04), 
Littlewoods Retail and Others (C-591/10) and Zuckerfabrik Jülich and Others 
(C-113/10, C-147/10 and C-234/10), in which the Court found that the Member 
States are obliged to refund tax levied in breach of EU law with interest. The 
question of payment of interest on amounts levied in breach of EU law is left to 
the Member States to decide in application of their administrative autonomy. 
12 The VAS notes that the Court has found in its case-law that the right to a refund of 
such charges, notwithstanding the lack of EU law on refunds of national taxes 
which are incompatible with EU law, is the consequence and complement of the 
rights conferred on individuals by EU law as interpreted by the Court. The 
Member State is required to repay charges levied in breach of EU law, whereby 
the right to a refund is a subjective right derived from EU law (Littlewoods Retail 
and Others, C-591/10, paragraph 24). 
13 In the absence of EU rules on this matter, it is for the domestic legal system of 
each Member State to designate the courts and tribunals having jurisdiction and to 
lay down the detailed procedural rules governing court proceedings for 
safeguarding rights which individuals derive from EU law in keeping with the 
principle of procedural autonomy, provided, first, that such rules are not less 
favourable than those governing similar domestic court proceedings (principle of 
equivalence) and, second, that they do not render practically impossible or 
excessively difficult the exercise of rights conferred by EU law (principle of 
effectiveness) (judgments in Metallgesellschaft and Others, C-397/98 and 
C-410/98, paragraph 85, and in Test Claimants in the FII Group Litigation, 
(C-446/ 04, paragraph 203). Under the principle of the procedural autonomy of the 
Member States, it is for the domestic legal system of each Member State to lay 
down the procedural means to safeguard the rights which individuals derive from 
EU law; however, this should not result in any restriction or impairment of the 
substance of those rights. 
14 Under the principle of equivalence, provisions governing the refund of amounts 
levied in breach of national law must also be applied to similar requests for 
refunds of amounts levied in breach of EU law (judgment in case C-591/10). The 
need to safeguard the principle of equivalence of itself suggests that the earliest 
possibility for determining the time when interest starts to accrue on amounts 
improperly levied in compulsory social security contributions should be applied, 
but the national legislation does not comply with that principle. 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-602/20 
 
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15 Under the equivalence principle, the earliest possible case for determining the 
time when interest starts to accrue on the improperly levied compulsory social 
security contributions must be identical to the time when interest starts to accrue 
on other/remaining amounts improperly paid or levied under an assessment notice 
issued by a revenue authority. The referring court therefore holds that the 
provision contained in the first sentence of Article 129(6) of the DOPK is 
disproportionate. 
16 The VAS reiterates that, in the absence of a relevant EU rule on the matter, it is 
for the internal legal order of each Member State to lay down the interest rate and 
calculation method for the interest owed in accordance with the principles of 
equivalence and effectiveness, such that they are not less favourable than those 
concerning similar claims based on provisions of national law or arranged in such 
as way as to make the exercise of rights conferred by the EU legal order 
practically impossible (judgment in Littlewoods Retail and Others, C-591/10, 
paragraphs 27 and 28. The Court has found that, although it is for the internal 
legal order of each Member State to lay down the conditions in which such 
interest must be paid, including the method of calculation of the interest, the 
national rules should not deprive the taxpayer of an adequate indemnity for the 
loss occasioned by the improper payment of the tax. 
17 The VAS clarifies that the Court regards interest as offsetting the unavailability of 
the sums of money paid in breach of EU law (judgments in Test Claimants in the 
Thin Cap Group Litigation, C-524/04, paragraphs 112 et seq., and in Test 
Claimants in the FII Group Litigation, (C-446/ 04, paragraphs 202 et seq. The 
referring court is of the opinion that the right to statutory interest to indemnify 
losses incurred because charges were paid improperly in breach of EU law exists 
alongside the right to a refund of charges paid improperly and is a subjective right 
derived from EU law. That subjective right includes the obligation to pay statutory 
interest from the time when the charge was paid. The VAS is of the opinion that it 
is clear that the taxpayer incurred a loss from that point rather than from a later 
point, because the sum of money concerned was unavailable to him. 
18 Thus, both the improperly levied charge and the amounts paid to or retained by 
the State relating directly to that charge are refunded. That includes losses due to 
the unavailability of sums of money because the tax was levied prematurely 
(judgments in Metallgesellschaft and Others (C-397/98 and C-410/98, 
paragraphs 87 to 89); Claimants in the FII Group Litigation (C-446/04, 
paragraph 205; Littlewoods Retail and Others (C-591/10, paragraph 25); and 
Zuckerfabrik Jülich and Others (C-113/10, C-147/10 and C-234/10, 
paragraph 65). 
19 As a result, the referring court has doubts with regard to the principles developed 
in the case-law of the Court as to whether legislation such as that at issue in the 
main proceedings, which restricts interest to the amount calculated from the day 
on which the debts improperly paid in social security contributions (under 
Article 129(1) to (4) of the DOPK) should have been refunded satisfies the 
AKZ-BURGAS 
 
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requirements established by the Court. The question arises as to whether the 
amount in interest should depend on the period of time in which the improperly 
paid amount was unavailable and whether that period of time also covers the 
period between the time when the amount in question was improperly paid and the 
time when it was refunded. 
20 The referring court therefore considers that the provisions of EU law, namely 
Article 4(3) of the Treaty on European Union (principle of sincere cooperation 
and the principles of equivalence and effectiveness deriving from it), the second 
sentence of Article 19(1) of the Treaty on European Union and Article 291(1) of 
the Treaty on the Functioning of the European Union, require interpretation in 
order to enable it to give proper judgment in the main proceedings.