The European Commission has referred Bulgaria, along with Spain, Hungary, the Netherlands, Austria, Portugal, and Finland, to the Court of Justice of the European Union for failing to transpose the Non-Performing Loans (NPL) Directive into their national legislation. The directive is designed to facilitate the development of a functional secondary market for non-performing loans by setting out rules for the licensing and supervision of loan purchasers and servicers, as well as establishing uniform criteria for cross-border loan servicing.

EU member states were required to implement the directive by December 29, 2023. While most have completed the process, Bulgaria and the six other countries have yet to notify the European Commission of full transposition. In response, the Commission initially sent letters of formal notice on January 24, 2024, followed by reasoned opinions in July 2024. After assessing the national authorities’ efforts, the Commission deemed them insufficient and proceeded with legal action.

As part of the referral, the Commission will request the Court of Justice to impose financial penalties on the non-compliant member states. The penalties are determined based on the severity and duration of the infringement, as well as the state’s financial capacity and the deterrent effect of the sanctions.

Additionally, Bulgaria has received two separate reasoned opinions from the Commission. One concerns the country’s failure to transpose EU rules aimed at expediting permit procedures for renewable energy projects, while the other pertains to the delayed implementation of amendments to the directive on the recovery and resolution of struggling banks. If Bulgaria does not take corrective action, the Commission may initiate further legal proceedings.