Judgment;Summary — ECLI:EU:C:2025:155
Date: 2025-03-06
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);Fundamental rights;Cohesion Fund;Charter of Fundamental Rights
Procedure: Reference for a preliminary ruling
Origin: Bulgaria

Summary C-471/23 – 1 
Case C-471/23 
Summary of the request for a preliminary ruling under Article 98(1) of the 
Rules of Procedure of the Court of Justice 
Date lodged: 
25 July 2023 
Referring court: 
Varhoven administrativen sad (Bulgaria) 
Date of the decision to refer: 
13 July 2023 
Appellant: 
Obshtina Veliko Tarnovo 
Respondent: 
Rakovoditel na Upravlyavashtia organ na Operativna programa 
‘Regioni v rastezh’ 2014 – 2020 
  
Subject matter of the main proceedings 
The proceedings originated in an appeal on a point of law lodged by Obshtina 
Veliko Tarnovo (municipality of Veliko Tarnovo) against the judgment of the 
administrative court of first instance dismissing its action against the decision of 
the Rakovoditel na Upravlyavashtia organ na Operativna programa ‘Regioni v 
rastezh’ 2014 – 2020 (Head of the Administrative Authority for the Operational 
Programme ‘Regions in Growth’, 2014-2020) imposing a financial correction. 
Subject matter and legal basis of the request 
Interpretation of EU law: first paragraph, point (b), and third paragraph of 
Article 267 TFEU 
EN 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-471/23 
 
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Questions referred for a preliminary ruling 
1. Does the manager of State aid in the form of resources from European 
Structural and Investment Funds (‘ESI Funds’) who is not the recipient of the aid 
fall into the category of a ‘beneficiary’ of aid in the context of State aid within the 
meaning of Article 2(10) of 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? 
2. Can the manager of State aid in the form of resources from ESI Funds who 
is not the person using the aid on the basis of a public contract be the right 
addressee of a decision determining a financial correction to be imposed on 
account of a breach of national or EU law committed in connection with the 
awarding of the public contract? 
3. With regard to the person who is the addressee of the administrative measure 
comprising a financial correction on account of an irregularity within the meaning 
of Article 2(36) of Regulation No 1303/2013, in the case of State aid in the form 
of resources from ESI Funds, must two cumulative conditions be satisfied, namely 
that the person is the recipient of the grant from the resources which are affected 
by the irregularity and is also the person who used the resources in question? 
4. Can liability for breaches of the law in the use of State aid in the form of 
resources from ESI Funds be regulated or reassigned by a contract between the 
beneficiary and the aid manager, or does liability lie with the beneficiary of the 
aid who uses it unlawfully? 
5. Is there joint and several liability of the aid beneficiary and the aid manager, 
and must such liability be prescribed in the contract awarding the aid? 
6. Do Articles 41 and 47 of the Charter of Fundamental Rights of the European 
Union preclude a national administrative practice and case-law in a case such as 
that in the main proceedings, whereby a ‘public service operator’, such as the 
Organizatsia na dvizhenieto, parkingi i garazhi EOOD, which is alleged to have 
been found in breach, in the procedure implemented by it, of the Zakon za 
obshtestvenite porachki (Law on public procurement) in connection with the 
award of a public contract in the procedure for the use of resources from ESI 
Funds (which constitute State aid), is granted neither the right to participate in the 
procedure for determining a financial correction in respect of a contract which it 
has concluded nor the right to participate in the judicial proceedings challenging 
that administrative act, on the ground that the said operator, as a partner of the 
municipality, bears civil liability for redress under the partnership agreement? 
OBSHTINA VELIKO TARNOVO 
 
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Provisions of EU legislation and EU case-law relied on 
Charter of Fundamental Rights of the European Union (‘the Charter’): Articles 41, 
47 and 51(1) 
Regulation (EC) No 1370/2007 of the European Parliament and of the Council of 
23 October 2007 on public passenger transport services by rail and by road and 
repealing Council Regulations (EEC) Nos 1191/69 and 1107/70: Article 2 
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: Article 2(10), (36) and (37) 
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 
Provisions of national law relied on 
Zakon za obshtestvenite porachki (Law on public procurement; ‘the ZOP’): 
Article 2(2), Article 49(1) and Paragraph 3 of the Additional Provisions 
Zakon za upravlenie na sredstvata ot evropeyskite fondove pri spodeleno 
upravlenie (Law on the management of resources from European Funds with 
shared management; ‘the ZUSEFSU’), in force since 1 July 2022, and its previous 
version entitled Zakon za upravlenie na sredstvata ot Evropeyskite strukturni i 
investitsionni fondove (Law on the management of resources from the European 
Structural and Investment Funds; ‘the ZUSESIF’): Article 70(1)(9), Article 70(2) 
and Article 73(1) 
Zakon za darzhavnite pomoshti (Law on State aid; ‘the ZDP’): Articles 9, 12 and 
20 and Paragraph 1(7) of the Additional Provisions 
Naredba za posochvane na nerednosti, predstavlyavashti osnovania za izvarshvane 
na finansovi korektsii, i protsentnite pokazateli za opredelyane razticna 
finansovite korektsii po reda na Zakona za upravlenie na sredstvata ot 
Evropeyskite strukturni i investitsion fondniove (Regulation on the determination 
of irregularities which constitute grounds for making financial corrections and on 
the percentage indicators for determining the amount of financial corrections 
under the Law on the management of resources from the European Structural and 
Investment Funds – ‘the Regulation on the determination of irregularities’): 
point 10 of Annex 1 to Article 2(1) 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-471/23 
 
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Naredba No 2 za usloviyata i reda za utvarzhdavane na transportni shemi i za 
osashtestvyavaneto na obshtestveni prevozi na patnitsi s avtobusi (Regulation No. 
2 on the conditions and procedure for establishing transport routes and providing 
public passenger transport by bus – ‘Regulation No 2’ – of 15 March 2002): 
Articles 2 and 16c as well as Paragraph 1, points 7, 8, 10, 12 and 13, of the 
Additional Provisions 
Succinct presentation of the facts and procedure 
1 Procedure No BG16RFOP001-1.001-039 for the awarding of financial grants for 
the ‘Implementation of integrated plans for urban regeneration and development, 
2014-2020’, is executed within priority axis No 1 – Sustainable and integrated 
urban development – of the Operational Programme ‘Regions in Growth’, 2014-
2020 (‘the Operational Programme’). 
2 Priority axis No 1 is being implemented in accordance with Article 7 of 
Regulation No 1301/2013. 
3 The guidelines for the submission of applications in that procedure state that, in 
the context of ‘Integrated urban transport’, the investment priority which is 
relevant in the present case, financial aid is granted to the recipient municipalities 
in their capacity as managing entities and owners of the public infrastructure. It is 
expressly stated that support measures are generally implemented through a 
partnership with economic operators. In that case, the recipient municipalities act 
as State aid managers with regard to the resources made available to the partners. 
The resources made available to the partners are to be understood as part of the 
compensation granted for the provision of a transport service required in the 
general economic interest. In that case, the public service contract is signed by the 
economic operator which is a project partner, the procedure being carried out in 
accordance with Regulation No 1370/2007, which is the relevant instrument in 
this context. 
4 According to point 5.4.2 of the guidelines for applicants, the authorised partners in 
that procedure are the municipal urban public transport companies, which are the 
‘internal operators’ defined in Paragraph 1(7) of the Additional Provisions to 
Regulation No 2. 
5 In the context of the procedure described above, the municipality of Veliko 
Tarnovo concluded with the managing authority for the Operational Programme 
an Administrativen dogovor za predostavyane na bezvazmezdna finansova 
pomosht (management contract on the award of a financial grant; ‘the ADBFP’) 
for the implementation of the project proposal ‘Integrated public transport for the 
town of Veliko Tarnovo’. Article 1 of the ADBFP designates the municipality as 
the ‘beneficiary’ of the grant. 
6 Under Article 2.3 of the ADBFP, part of the amount included in the total value of 
the financial contribution comprises State aid to the public passenger transport 
OBSHTINA VELIKO TARNOVO 
 
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operator in the form of public service compensation within the meaning of 
Regulation No 1370/2007. The manager of that State aid is the municipality of 
Veliko Tarnovo. The municipality undertakes to ensure compliance with the 
applicable rules in accordance with the requirements of Regulation No 1370/2007, 
including the establishment and application of adequate implementation 
verification mechanisms. 
7 Under Article 6(2) of the General Conditions for the ADBFP, the beneficiary is 
responsible to the managing authority of the Operational Programme for the 
actions of the partners and external contractors in the implementation of the 
project, with liability ‘for all risks, including unjustified expenditure and financial 
corrections, at its own expense’. 
8 On 24 August 2018, the municipality of Veliko Tarnovo and the Organizatsia na 
dvizhenieto, parkingi i garazhi EOOD (Organisation for Transport, Car Parks and 
Garages EOOD; ‘the municipal company’), concluded a partnership agreement 
under which the municipality of Veliko Tarnovo is the ‘lead partner’ and the 
municipal company is the ‘partner’ in the project. The partnership agreement is an 
integral part of the ADBFP. 
9 If, in the course of the public procurement procedure, infringements occur which 
warrant the imposition of a financial correction, the funds corresponding to the 
amount of the financial correction are charged to the contracting authority under 
Article 14(2) of the partnership agreement. 
10 In its capacity as the operator of a service of general economic interest (public 
passenger transport) and the actual beneficiary of the State aid, the municipal 
company conducted a procedure for the award of a public contract for the 
purchase and delivery of electric buses in the context of the project ‘Integrated 
public transport for the town of Veliko Tarnovo’. 
11 As a result, a public procurement contract was concluded with the sole bidder, a 
consortium formed by Excelor Holding Group EOOD, Bulgaria, and Jiangsu Alfa 
Bus Co., China. 
12 By a decision of 11 May 2022, the head of the managing authority for the 
Operational Programme imposed a financial correction on the municipality of 
Veliko Tarnovo on account of an irregularity under Article 70(1)(9) of the 
ZUSESIF. According to the decision, the irregularity occurred during the award of 
the public contract and consists in the imposition of a discriminatory condition for 
the performance of the contract within the meaning of point 10(a) of Annex No 1 
to Article 2(1) of the Regulation on the determination of irregularities. The 
correction imposed amounted to 25% of the resources from the European 
Structural and Investment Funds (ESI Funds) allocated to finance the public 
procurement contract concluded by the municipal company. 
13 The municipality of Veliko Tarnovo brought an action against that decision before 
the Administrativen sad Veliko Tarnovo (Veliko Tarnovo Administrative Court, 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-471/23 
 
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Bulgaria). That court dismissed the action, finding that the administrative 
authority had correctly concluded that there had been a breach of national public 
procurement law, a breach which constituted an irregularity within the meaning of 
the ZUSESIF. The court held that it was precisely the municipality, as a party to 
the ADBFP, which was the right addressee of the decision determining the 
financial correction. It dismissed the objection that the municipality itself was not 
the contracting authority and consequently had not committed the irregularity. The 
fact that the beneficiary of the financial grant had concluded partnership 
agreements for certain activities did not exempt it from liability as a party to the 
ADBFP, the court ruled. It found that the nature of the clause in the partnership 
agreement governing liability for breaches and risks, including financial 
corrections, was that of a right of redress; its purpose was only to regulate, within 
the internal relationship between the partners, which of them should bear the cost 
of the financial correction. The partner of the municipality, the court held, was 
neither a beneficiary within the meaning of the ADBFP, nor was it the addressee 
of State aid; it had no direct relationship with the managing authority of the 
Operational Programme and so could not be the addressee of any decisions made 
by that authority. 
14 The municipality of Veliko Tarnovo brought an appeal on a point of law against 
that judgment of the Administrativen sad Veliko Tarnovo (Veliko Tarnovo 
Administrative Court) before the Varhoven administrativen sad (Supreme 
Administrative Court, Bulgaria), the referring court. 
The essential arguments of the parties in the main proceedings 
15 The municipality contests the findings of the court of first instance that it was the 
sole beneficiary of the financial grant to the project and that, as such, it had 
committed a breach of the public procurement rules. Relying on the legal 
definition of the term ‘beneficiary’ in Article 2(10) of Regulation No 1303/2013, 
it submits that the municipal company is the beneficiary of the aid for which the 
correction was determined, since it is the direct recipient of the aid and a body 
governed by public law which is responsible for the specific project for the 
acquisition of electric buses. Article 2.3 of the ADBFP, it argues, expressly 
provides that the municipal company receives the aid and that the municipality is 
merely the manager of the aid. 
16 The municipality also challenges the finding of the court of first instance that, in 
the procedure for determining the financial correction, the municipality assumes 
liability to the managing authority for the actions of its partners by assuming the 
risks pertaining to the use of the grant. According to the municipality, the 
financial correction is an administrative measure and not a penalty, so that 
irregularity and correction should not be interpreted as a ‘risk associated with 
performance of the contract’. 
OBSHTINA VELIKO TARNOVO 
 
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17 According to the municipality, the fact that the grant from ESI Funds constitutes 
State aid and, more specifically, public service compensation within the meaning 
of Regulation No 1370/2007 is also relevant in the present case. The aid 
application guidelines, it submits, expressly state that a recipient of aid from 
partners, in this case the municipal urban public transport company, has the status 
of an ‘internal operator’. It is therefore necessary, according to the municipality, 
to distinguish between the concepts of ‘recipient of State aid from ESI Funds’ and 
‘manager of State aid from ESI Funds’. It submits that, if the State aid consisted 
of resources from ESI Funds, the financial correction could only be imposed on 
the aid recipient. It, the municipality argues, was the economic operator which 
established a discriminatory selection criterion and committed the irregularity 
within the meaning of the Regulation on the determination of irregularities. 
According to the municipality, the manager of the State aid, in this case the 
municipality of Veliko Tarnovo, can at most be held liable for breaches of the 
State aid rules within the meaning of Article 107 TFEU. 
18 The municipality also objects to the fact that the partner was not admitted as a 
party to the procedure for determining the financial correction. 
19 The respondent is contesting the appeal on a point of law. 
Succinct presentation of the reasoning in the request for a preliminary ruling 
20 The basis for the financial correction imposed on the municipality, which was 
challenged in the main proceedings, is the breach, committed by the act of another 
economic operator, of an EU provision transposed into national law. 
21 The established case-law of the Varhoven administrativen sad (Supreme 
Administrative Court) concerning the examination of the legality of decisions 
imposing a financial correction takes no account of the definition of the concept of 
‘beneficiary’, within the meaning of Article 2(10) of Regulation No 1303/2013, in 
the context of State aid, or of the significance of the terms ‘public passenger 
transport’, ‘public service operator’, ‘public service obligation’, ‘beneficiary of 
State aid from ESI Fund resources’ or ‘public service compensation’, within the 
meaning of Regulation No 1370/2007. 
22 In order to be able to answer the question whether the municipality of Veliko 
Tarnovo is the sole beneficiary of the financial grant in the context of the project 
and whether, as such, it committed a breach of national public procurement rules, 
it is necessary to interpret the concept of ‘beneficiary’ within the meaning of 
Article 2(10) of Regulation No 1303/2013. 
23 According to the facts of the specific case concerning the resources used for the 
purchase of electric buses, the municipality of Veliko Tarnovo is the manager of 
the State aid from ESI Funds. So that the right decision can be reached in the 
dispute regarding the financial correction, it is necessary to ascertain whether the 
SUMMARY OF THE REQUEST FOR A PRELIMINARY RULING – CASE C-471/23 
 
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municipality, as the aid manager, is also the beneficiary of the grant from the ESI 
Funds awarded to the municipal company as State aid. 
24 The financial correction is imposed as an administrative measure on an economic 
operator as a result of its having committed an act or omission which was contrary 
to national or EU law when using resources from ESI Funds. Is it permissible that 
the municipality, which did not use the resources from ESI Funds in a public 
procurement procedure, be held liable as a legal person by means of financial 
corrections for infringements committed in the course of the procedure? This also 
raises the question whether the addressee of the administrative measure 
comprising a financial correction relating to State aid from ESI Funds must 
simultaneously fulfil both conditions of being the recipient of the grant affected by 
the irregularity and being the user of the resources in question. 
25 To the extent that the clause in the partnership agreement relating to liability for 
financial corrections is interpreted by the courts as a redress clause which only 
applies within the internal relationship between the partners, it must be determined 
whether liability for breaches of the law in the use of State aid from ESI Funds 
can be regulated or reassigned by the contract between the recipient and the aid 
manager or whether the recipient who has used it unlawfully is fully liable. 
26 Furthermore, the right to good administration is a fundamental right conferred on 
individuals by Article 41 of the Charter. The right to good administration 
includes: 1. the right of every person to be heard, before any individual measure 
which would affect him or her adversely is taken; 2. the right of every person to 
have access to his or her file; 3. the obligation of the administration to give 
reasons for its decisions. Under its Article 51, the Charter applies to the Member 
States when they are implementing Union law. The award of a financial grant is 
made in direct application of Union law; this circumstance obliges the national 
authorities within whose competence the application of the law falls to comply 
with Article 41 of the Charter. 
27 That is also the thrust of the question whether Articles 41 and 47 of the Charter 
preclude national case-law and administrative practice according to which a public 
service operator, such as the municipal company in the main proceedings, has 
neither the right to participate in the procedure for determining a financial 
correction relating to a contract which it has concluded nor the right to take part in 
the judicial proceedings challenging that administrative measure, on the ground 
that the operator, as a partner of the municipality, bears civil liability for redress 
under the partnership agreement.