1 This request for a preliminary ruling concerns the interpretation, first, of Article 325 TFEU, secondly, of Article 273 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax (OJ 2006 L 347, p. 1; ‘the VAT Directive’), and, thirdly, of the first paragraph of Article 47, Article 48(1), Article 49(3) and Article 50 of the Charter of Fundamental Rights of the European Union (‘the Charter’).
2 The request has been made in proceedings between the commercial company ‘Beach and bar management’ EOOD and the Nachalnik na otdel ‘Operativni deynosti’ - Burgas pri Direktsia ‘Operativni deynosti’ pri Tsentralno upravlenie na Natsionalna agentsia za prihodite (Head of the ‘Operational Activities’ Department - City of Burgas, at the ‘operational activities’ Directorate at the National Public Revenue Agency, Bulgaria) (‘the tax authority’), concerning a coercive administrative measure imposed following the finding of administrative infringements which are also subject to financial penalties, imposed together with that measure.
3 Article 325 TFEU: ‘1. The [European] Union and the Member States shall counter fraud and any other illegal activities affecting the financial interests of the Union through measures to be taken in accordance with this Article, which shall act as a deterrent and be such as to afford effective protection in the Member States, and in all the Union’s institutions, bodies, offices and agencies. 2. Member States shall take the same measures to counter fraud affecting the financial interests of the Union as they take to counter fraud affecting their own financial interests. 3. Without prejudice to other provisions of the Treaties, the Member States shall coordinate their action aimed at protecting the financial interests of the Union against fraud. To this end they shall organise, together with the [European] Commission, close and regular cooperation between the competent authorities. 4. The European Parliament and the Council [of the European Union], acting in accordance with the ordinary legislative procedure, after consulting the [European] Court of Auditors, shall adopt the necessary measures in the fields of the prevention of and fight against fraud affecting the financial interests of the Union with a view to affording effective and equivalent protection in the Member States and in all the Union’s institutions, bodies, offices and agencies. 5. The Commission, in cooperation with Member States, shall each year submit to the European Parliament and to the Council a report on the measures taken for the implementation of this Article.’
4 Article 49(3) of the Charter is worded as follows: ‘The severity of penalties must not be disproportionate to the criminal offence.’
5 Article 50 of the Charter states: ‘No one shall be liable to be tried or punished again in criminal proceedings for an offence for which he or she has already been finally acquitted or convicted within the Union in accordance with the law.’
6 Article 2(1)(a) of the VAT Directive provides that the supply of goods for consideration within the territory of a Member State by a taxable person acting as such is subject to value added tax (VAT).
7 Under Article 273 of that directive: ‘Member States may impose other obligations which they deem necessary to ensure the correct collection of VAT and to prevent evasion, subject to the requirement of equal treatment as between domestic transactions and transactions carried out between Member States by taxable persons and provided that such obligations do not, in trade between Member States, give rise to formalities connected with the crossing of frontiers. The option under the first paragraph may not be relied upon in order to impose additional invoicing obligations over and above those laid down in Chapter 3.’
8 Article 118(1) of the Zakon za danak varhu dobavenata stoynost (Law on value added tax) (DV No 63 of 4 August 2006), in the version applicable to the facts at issue in the dispute in the main proceedings (‘the Law on VAT’), provides: ‘Any person registered or not registered under this law is obliged to register and record in writing the supplies and sales made by him or her on business premises by issuing a fiscal cash register receipt generated by a fiscal memory device (cash register receipt) or a cash register receipt generated by an automatic integrated business management system (system receipt), irrespective of whether or not another tax document is requested. The recipient must receive the cash register receipt or the system receipt and keep it until he or she has left the premises.’
9 Article 185(1) and (2) of that law provides: ‘(1) Failure to issue a supporting document referred to in Article 118(1) shall, for natural persons who are not traders, be sanctioned by a fine of between 100 and 500 [leva] (BGN) [approximately EUR 50 to EUR 250] and, for legal persons and individual traders, by a financial penalty of between BGN 500 and BGN 2 000 [approximately EUR 250 to EUR 1 000]. (2) Apart from the cases referred to in paragraph 1, any person who commits or permits the commission of an offence referred to in Article 118 or in a legislative act implementing that article shall be liable to a fine of between BGN 300 and BGN 1 000 [approximately EUR 150 to EUR 500] for natural persons who are not traders, or to a financial penalty of between BGN 3 000 and BGN 10 000 [approximately EUR 1 500 to EUR 5 000] for legal persons and individual traders. Where the offence does not result in a failure to indicate tax revenue, the penalties provided for in paragraph 1 shall be imposed.’
10 Article 186 of that law, in the version applicable to the facts at issue in the dispute in the main proceedings, provides: ‘(1) The coercive administrative measure of sealing business premises for a period of up to 30 days shall be ordered, irrespective of the fines or financial penalties provided for, against any person who: (3) The coercive administrative measure pursuant to paragraph 1 shall be applied by means of a reasoned injunction issued by the revenue service or by an official authorised by that department. (4) An appeal shall lie against the injunction referred to in paragraph 3 in accordance with the procedure laid down in [the Administrativnoprotsesualen kodeks (Code of Administrative Procedure) (DV No 30 of 11 April 2006), in the version applicable to the facts at issue in the main proceedings].’
11 Article 187(1) of that law is worded as follows: ‘Where a coercive administrative measure is ordered pursuant to Article 186(1), access to the person’s business premises shall also be prohibited and the property present in those premises and in the adjoining storage facilities shall be removed by the person or by his or her authorised representative. The measure shall apply to the premises where the offences were established, including where the premises are managed by a third party at the time of sealing, if that third party knows that the premises will be placed under seal. The National Revenue Agency shall publish on its website the lists of business premises to be sealed and their location. The person shall be deemed to be aware of the sealing of the premises where a notice of sealing has been permanently affixed to the premises or where information about the business premises to be sealed and their location has been published on the website of the revenue administration.’
12 Under Article 188(1) of the Law on VAT, in the version applicable to the facts at issue in the main proceedings: ‘The coercive administrative measure referred to in Article 186(1) shall be provisionally enforceable under the conditions laid down in Article 60(1) to (7) [of the Code of Administrative Procedure].’
13 Article 22 of the Zakon za administrativnite narushenia i nakazania (Law on administrative offences and penalties) (DV No 92 of 28 November 1969), in the version applicable to the facts at issue in the dispute in the main proceedings, provides: ‘Coercive administrative measures may be applied to prevent and stop administrative offences and to prevent and eliminate their harmful consequences.’
14 Article 27(1), (2), (4) and (5) of that law provides: ‘(1) The administrative penalty shall be determined in accordance with the provisions of this Law within the limits laid down for the offence committed. (2) In the determination of the penalty, account shall be taken of the severity of the offence, the reasons for its commission and other mitigating and aggravating circumstances, as well as the financial situation of the offender. … (4) Except in the cases provided for in Article 15(2), the penalties attached to offences may not be replaced by penalties of a lighter nature. (5) Nor is it permissible to fix the penalty below the minimum penalty provided for, whether it be a fine or a temporary deprivation of the right to pursue a particular occupation or activity.’
15 Beach and bar management is a legal person governed by Bulgarian law which operates a commercial premises comprising a bar and a restaurant.
16 On 4 August 2022, during an inspection of those premises, inspectors from the National Public Revenue Agency found that Beach and bar management had failed to register 85 sales by means of fiscal cash register receipts, which had therefore not been issued to customers. On that basis, in total, a finding of 85 administrative offences of the Law on VAT was established.
17 On 12 August 2022, the tax authorities issued an order imposing a coercive administrative measure ‘sealing the business premises and prohibiting access thereto’ for a period of 14 days. That measure was coupled with an order authorising its provisional enforcement.
18 The measure sealing the business premises and the provisional enforcement order that was incorporated into the order itself were the subject of two separate actions brought before the Administrativen sad Burgas (Administrative Court, Burgas, Bulgaria). The actions at issue were dismissed. The measure sealing the business premises and prohibiting access thereto for a period of 14 days was carried out.
19 In addition, for each of the 85 offences committed by Beach and bar management, a financial penalty of BGN 500 (approximately EUR 250) was imposed. Accordingly, the total penalty for all of those offences amounted to BGN 42 500 (approximately EUR 21 250), whereas the total amount of VAT evaded on account of the failure to issue fiscal cash register receipts in respect of all the payments corresponding to those offences, made by a cash register, amounted to BGN 268.02 (approximately EUR 134).
20 As is apparent from the order for reference, the legality of the 85 financial penalties was challenged before the Rayonen sad Burgas (District Court, Burgas, Bulgaria). That court dismissed the actions concerning those measures before the judgment of 4 May 2023, MV - 98 (C‑97/21, EU:C:2023:371), was delivered. In the grounds for its decisions, that court neither took account of the fact that, following the order imposing the coercive administrative measure in respect of all of the 85 offences and the provisional enforcement of that measure, the sealing of the business premises concerned and prohibiting access thereto for a period of 14 days had been carried out, nor examined or considered the legal effects of that enforcement on the proceedings relating to the review of the legality of the financial penalties imposed at the same time.
21 The 85 decisions of that court were all the subject of an action before the Administrativen sad Burgas (Administrative Court, Burgas), which is the referring court.
22 The referring court notes that, in the event of an infringement of Article 118(1) of the Law on VAT, that law provides, in Article 185 thereof, not only for the imposition of a financial penalty but also, in Article 186 thereof, for the obligation, on the basis of the same facts, for the imposition of a coercive administrative measure involving the sealing of the premises in question.
23 The referring court states that the financial penalty and the placing under seal are imposed following separate and independent procedures and that, in the event of an action against those two measures, each of them falls within the jurisdiction at first instance of different courts, namely the Rayonen sad (District Court) for the financial penalty and the Administrativen sad (Administrative Court) for the sealing measure, and that the Bulgarian procedural rules do not provide for the possibility of staying one set of proceedings until the conclusion of the other set of proceedings, with the result that there is no coordination mechanism between those proceedings. In addition, the referring court notes that although, in its judgment of 4 May 2023, MV - 98 (C‑97/21, EU:C:2023:371), the Court held that a coercive administrative measure involving sealing is of a criminal and punitive nature, the referring court is of the view that, in the present case, the preventive nature outweighs the punitive nature of that measure, which is intended only to limit the extent of the harmful consequences to the financial interests of the European Union.
24 Lastly, that court considers that the reasoning in the judgment of 4 May 2023, MV - 98 (C‑97/21, EU:C:2023:371), cannot be applied, without infringing Article 325 TFEU and Article 273 of the VAT Directive, to the penalty imposed in respect of 85 separate offences, since the failure to specify individually such a penalty does not make it possible to ascertain whether the measures adopted have a genuinely deterrent effect and offer effective protection in order to ensure the recovery of the exact amount of VAT evaded and to prevent tax avoidance.
25 In those circumstances, the Administrativen sad Burgas (Administrative Court, Burgas) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:
26 According to the Bulgarian Government, the first and third questions are inadmissible because they bear no relation to the subject matter of the dispute in the main proceedings in so far as they concern the imposition of a coercive administrative measure. The referring court does not need the requested interpretation in order to resolve the dispute before it.
27 Furthermore, Beach and bar management submits that the third question is inadmissible, since an action against a coercive administrative measure has not been brought before the referring court.
28 The Commission, for its part, considers that the first question could be rephrased to render it admissible, which is not the case for the third question.
29 In that regard, it is clear from the Court’s settled case-law that questions on the interpretation of EU law referred by a national court, in the factual and legislative context which that court is responsible for defining, and the accuracy of which is not a matter for the Court to determine, enjoy a presumption of relevance. The Court may refuse to rule on a question referred for a preliminary ruling from a national court only where it is quite obvious that the interpretation of EU law sought bears no relation to the actual facts of the main action or its purpose, where the problem is hypothetical, or where the Court does not have before it the factual or legal material necessary to give a useful answer to the questions submitted to it (judgment of 8 May 2025, Stadt Wuppertal, C‑130/24, EU:C:2025:340, paragraph 42 and the case-law cited).
30 In the present case, it is apparent from the request for a preliminary ruling that the dispute in the main proceedings does not concern an action against the sealing of the business premises at issue, which constitutes a coercive administrative measure. Consequently, the third question referred for a preliminary ruling must be declared manifestly inadmissible, since it bears no relation to the subject matter of the dispute in the main proceedings.
31 In addition, as the Advocate General observed in point 37 of his Opinion, it is apparent from that request for a preliminary ruling that, by its first question, the referring court seeks, in essence, to determine whether the financial penalties at issue in the main proceedings comply with EU law and that that question clearly concerns the interpretation of provisions of EU law. Thus reformulated, the first question must be considered to be admissible.
32 By the first question, the referring court asks, in essence, whether Article 325 TFEU, Article 273 of the VAT Directive and Article 50 of the Charter must be interpreted as precluding national legislation which provides for the imposition of a financial penalty on a taxable person on the ground that he or she has not issued fiscal cash register receipts relating to sales made where that offence has already given rise to the imposition of a coercive administrative measure to seal the business premises in which that offence was committed and prohibiting access thereto.
33 As regards the assessment as to whether the proceedings and penalties under Article 50 of the Charter are criminal in nature, it must be noted that, according to the Court’s settled case-law, three criteria are relevant. The first is the legal classification of the offence under national law, the second concerns the intrinsic nature of the offence, and the third relates to the degree of severity of the penalty which the person concerned is liable to incur (judgment of 4 May 2023, MV - 98, C‑97/21, EU:C:2023:371, paragraph 38 and the case-law cited).
34 Nevertheless, the application of Article 50 of the Charter is not limited to proceedings and penalties which are classified as ‘criminal’ by national law, but extends, irrespective of such a classification under domestic law, to proceedings and penalties which must be considered to have a criminal nature on the basis of the two other criteria referred to in paragraph 33 of the present judgment. The intrinsic nature of the offence in question and the degree of severity of the penalties which it is liable to entail may result in its being criminal in nature (judgment of 4 May 2023, MV - 98, C‑97/21, EU:C:2023:371, paragraph 41 and the case-law cited).
35 In the present case, it should be borne in mind, at the outset, that a placing under seal for a period of 30 days could, particularly for an individual trader who has only one set of business premises, be categorised as severe, especially, since it prevents him or her from carrying on his or her business, thus depriving him or her of his or her income (see, to that effect, judgment of 4 May 2023, MV - 98, C‑97/21, EU:C:2023:371, paragraph 47).
36 As regards the financial penalty, first, the fact that the amount thereof, in respect of a first offence, cannot be less than BGN 500 (approximately EUR 250) and may be as high as BGN 2 000 (approximately EUR 1000) and, secondly, the fact that the relationship between the VAT evaded on account of the failure to issue fiscal cash register receipts in respect of all payments corresponding to the offences at issue in the main proceedings, namely a total amount of BGN 268.02 (approximately EUR 134), and the penalty imposed, which, according to the information provided by the referring court, amounts to BGN 42 500 (approximately EUR 21 250), seems particularly high, attest to the severe nature of that penalty (see, to that effect, judgment of 4 May 2023, MV - 98, C‑97/21, EU:C:2023:371, paragraph 48).
37 In that context, since the financial penalties at issue must be classified as penalties of a criminal nature, the cumulation of those penalties must be regarded as entailing a limitation of the fundamental right guaranteed in Article 50 of the Charter (see, to that effect, judgment of 4 May 2023, MV - 98, C‑97/21, EU:C:2023:371, paragraph 49).
38 The Court has held that Article 273 of the VAT Directive and Article 50 of the Charter must be interpreted as precluding national legislation under which a financial penalty and a measure involving sealing of business premises may be imposed on a taxpayer for one and the same offence relating to a tax obligation at the end of separate and autonomous procedures, where those measures are liable to challenge before different courts and where that legislation does not ensure coordination of the procedures enabling the additional disadvantage associated with the cumulation of those measures to be reduced to what is strictly necessary and does not ensure that the severity of all penalties imposed is commensurate with the seriousness of the offence concerned (judgment of 4 May 2023, MV - 98, C‑97/21, EU:C:2023:371, paragraph 63).
39 According to the referring court, the approach adopted in the judgment of 4 May 2023, MV - 98 (C‑97/21, EU:C:2023:371), is not necessarily applicable to the circumstances of the case in the main proceedings, since, in the present case, a single coercive administrative measure penalises 85 separate offences. In the light of the repetitive, or even ‘systematic’, nature of the conduct penalised, that measure is intended only to limit the extent of the consequences harmful to the financial interests of the European Union, with the result that its preventive nature could outweigh its punitive nature.
40 It must be stated, however, that, as the Advocate General observed in point 63 of his Opinion, that assessment by the referring court cannot be accepted, since the preventive aspect of the sealing measure of the business premises at issue in the main proceedings does not apply in such a way as to outweigh the punitive aspect of that measure.
41 In that regard, it should be stated that the situation at issue in the main proceedings falls within the principle that the mere fact that a penalty with a punitive purpose also pursues a preventive purpose does not mean that it cannot be characterised as a criminal penalty within the meaning of Article 50 of the Charter (see, to that effect, judgment of 20 March 2018, Menci, C‑524/15, EU:C:2018:197, paragraph 31).
42 In the light of the finding in paragraph 40 above, it follows that the coercive administrative measure at issue in the case in the main proceedings does not lose its classification as a criminal penalty within the meaning of that provision by the mere fact that it also has a preventive purpose.
43 In any event, as recalled in paragraph 34 above, it is the inherent severity of the measure placing commercial premises under seal which justifies its criminal classification and leads to the applicability of Article 50 of the Charter. That severity is not qualified by the fact that, as the Advocate General observed in points 61 and 64 of his Opinion, the large number of offences committed in the present case could even have led to a considerably longer period of sealing being applied to the commercial premises at issue in the main proceedings.
44 As a consequence, it must be held that the administrative measure involving the sealing of a business premises and prohibiting access thereto for a period of 14 days retains its punitive nature, whether imposed in response to a single specific offence under the Law on VAT or on account of the commission, during a specified period, of 85 offences under that law, taken as a whole.
45 In the light of the foregoing considerations, the answer to the first question is that Article 325 TFEU, Article 273 of the VAT Directive and Article 50 of the Charter must be interpreted as precluding national legislation which provides for the imposition of a financial penalty on a taxable person on the ground that he or she has not issued fiscal cash register receipts relating to sales made where that offence has already given rise to the imposition of a coercive administrative measure to seal the business premises in which that offence was committed and prohibiting access thereto.
46 By its second question, the referring court asks, in essence, whether Article 273 of the VAT Directive and Article 49(3) of the Charter must be interpreted as precluding national legislation which provides for, as an administrative penalty, a financial measure of a high amount without the court hearing a challenge to that measure having the procedural possibility of imposing an amount less than that provided for by that legislation or another more lenient type of penalty.
47 In that regard, it must be borne in mind that, in accordance with Article 49(3) of the Charter, the severity of penalties must not be disproportionate to the offence. Similarly, the Court held that, in the absence of EU legislation in the field of the sanctions applicable, the Member States have the power to determine the nature and level of those penalties, subject, inter alia, to the principle of proportionality (judgment of 19 October 2023, G. ST. T. (Proportionality of the penalty for trade mark infringement), C‑655/21, EU:C:2023:791, paragraph 64 and the case-law cited).
48 According to the Court’s case-law, in accordance with that principle, the punitive measures permitted under national legislation must not go beyond what is necessary in order to attain the objectives legitimately pursued by that legislation. The severity of the sanctions must be commensurate with the seriousness of the infringements for which they are imposed, in particular by ensuring a genuinely deterrent effect, while not going beyond what is necessary to attain that objective (judgment of 19 October 2023, G. ST. T. (Proportionality of the penalty for trade mark infringement), C‑655/21, EU:C:2023:791, paragraph 65 and the case-law cited).
49 Furthermore, the principle of proportionality requires that the individual circumstances of the particular case are taken into account in determining the penalty and fixing the amount of the fine (judgment of 19 October 2023, G. ST. T. (Proportionality of the penalty for trade mark infringement), C‑655/21, EU:C:2023:791, paragraph 67).
50 In order to assess the proportionality of penalties, account must be also be taken of the possibility for national courts to amend the categorisation as set out in the bill of indictment, that possibility being capable of leading to a less severe penalty, and of the possibility to vary the penalty depending on the seriousness of the offence identified (judgment of 19 October 2023, G. ST. T. (Proportionality of the penalty for trade mark infringement), C‑655/21, EU:C:2023:791, paragraph 68 and the case-law cited).
51 Subject to verification by the referring court, there appears to be no possibility of amending the classification of the offence concerned in the legislation at issue in the main proceedings.
52 In addition, having regard to the fact that the amount of the financial penalty for a first offence cannot, under that legislation, be less than BGN 500 (approximately EUR 250) and that that amount is almost 200 times higher than the amount of the VAT evaded for each infringement committed in the present case, namely BGN 2.70 (approximately EUR 1.35), it seems extremely difficult to set a penalty with a degree of severity that does not exceed the seriousness of the offence identified.
53 In the light of the foregoing considerations, the answer to the second question is that Article 273 of the VAT Directive and Article 49(3) of the Charter must be interpreted as precluding national legislation which provides for, as an administrative penalty, a financial measure of a high amount without the court hearing a challenge to that measure having the procedural possibility of imposing an amount less than that provided for by that legislation or another more lenient type of penalty.
54 Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the referring court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable. 1. Article 325 TFEU, Article 273 of Council Directive 2006/112/EC of 28 November 2006 on the common system of value added tax, and Article 50 of the Charter of Fundamental Rights of the European Union 2. Article 273 of Directive 2006/112 and Article 49(3) of the Charter of Fundamental Rights