Bulgaria refers question on wind-solar fee to European high court


The Bulgarian Supreme Court of Cassation has just referred a question to the EU's Court of Justice (CJEU) on whether a state fee applied to the income of wind and solar energy producers conforms with EU law.

The civil case before the Supreme Court revolves around the question: does this fee constitute unjust enrichment by the state given that the Bulgarian Constitutional Court had previously ruled the fee to be unconstitutional?

According to the Supreme Court, the introduction of the state fee could be a breach of Directive 2009/28/EC of the European Parliament and of the Council (23 April 2009) on promoting the use of renewable energy and a violation of core EU principles.

Constitutional Court says no

In 2014, the Bulgarian parliament passed amendments to the Energy from Renewable Sources Act, which introduced a state fee that applies only to wind and solar energy producers. The fee was collected on a quarterly basis and represented 20% of the income earned by solar and wind electrical power plants.

The Bulgarian Constitutional Court later repealed the fee, stating that it created a special differentiated legal regime for certain business entities and represented unfair competition as defined by the constitution. This decision came into force on 10 August 2014.

As a result, a renewable-energy company filed a claim for reimbursement of the fees collected between the 2014 passage of the amendments and the repeal. After lower courts in the first and second instance rejected the claim, the dispute went to the Supreme Court of Cassation.

After reviewing the case, the court's judicial panel decided that in order to proceed with a substantive examination of the main case, it is necessary to ascertain whether in the case at hand there is a breach of EU law, as based on European case law Member States shall reimburse any taxes levied contrary to the community law.

The judges pointed out that the 2014 Constitutional Court judgement, which found that the fee violated the Bulgarian constitution, did not review its conformity with the EU legislation.

The Supreme Court justices expressed doubts that the obligations under Directive 2009/28/EC on the promotion of the use of energy from renewable sources, the freedom to conduct business stipulated in the EU's Charter of Fundamental Rights and the core principles of legal certainty and legitimate expectations preclude the introduction of any additional fees for renewable energy production, like the one central to the proceeding.

As a result, the court referred the case to the CJEU with a request for a preliminary ruling. The court ruling is final and cannot be appealed.

CJEU to decide

The CJEU will decide whether the question is admissible and whether the court has ruled on a similar question before. It is expected that most of the cases pending before the Bulgarian courts regarding the fee (either on the grounds of unjust enrichment or as a damage claim) will be suspended until the CJEU makes its ruling.

The ruling is being hotly anticipated since it will provide an interpretation of EU legislation that will be binding on the Bulgarian judiciary. If the state fee is found to be in breach of EU law, a wave of decisions favouring business is likely to follow.

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