THE EURO BECOMES THE OFFICIAL CURRENCY IN BULGARIA FROM 01.01.2026 – what next?

Legal and tax aspects for businesses and citizens

1.What has happened so far and what next?

On 8 July 2025, the Council of the European Union formally approved Bulgaria’s accession to the euro area on 1 January 2026 and set the exchange rate at 1.95583 lev to 1 euro.

Within one month of the publication of this decision in the Official Journal of the EU (i.e. after 8 August 2025), Bulgaria should apply the dual indication of prices in euro and in lev. This obligation only applies to traders who deal with consumers within the meaning of the Consumer Protection Act, i.e. natural persons. The obligation to dual display prices expires on 1 January 2027.

For the avoidance of doubt, the dual labelling does not apply to invoicing and to taxi displays.

From 01 January 2026, the euro becomes the official currency of the Republic of Bulgaria. The one-month period for dual circulation and use of the two currencies, the leva and the euro, starts.

On 1 February 2026, the dual circulation period expires and the euro will be used as the sole means of payment. However, the BNB will continue to exchange banknotes and coins from levs into euro free of charge, in unlimited quantities and without time limit at the official exchange rate.

2. Legal implications for businesses and citizens

All amounts in BGN available on bank accounts as of 01.01.2026 will be automatically converted into EUR at the official exchange rate. In other words, there is no need for citizens/companies to buy euros in advance. This does not apply to traders who have to make change – they have to obtain so-called “starter kits” in advance, which will be sold in advance by the BNB.

Basic principles of the introduction of the euro as the official currency:

• The revaluation may not lead to price increases, except for objective economic reasons;
• Continuity and automatic revaluation: this means that values quoted in euro will be deemed to be in euro without the need to change “legal instruments*” , except where provided for by law. In other words, there is no legal obligation to change as of 01.01.2026 the:

1. Employment contracts and employers’ bylaws;
2. Any other type of contract concluded between companies and individuals and/or between traders only.

The exceptions to this principle are:

1. The capital of commercial companies will be automatically converted to the Commercial Register and the Register of Non-Profit Companies on 01.01.2026. All commercial companies are obliged to amend their articles of incorporation in accordance with this change by 31.12.2026. For more details in this regard, you may contact us for further information.
2. The state authorities and local self-government bodies shall adopt within 6 months from the entry into force of the Euro Adoption Act amendments and supplements to by-laws necessary for the implementation of this Act in connection with the introduction of the euro as the currency of the Republic of Bulgaria. The amendments and additions to the acts referred to in par. The amendments and additions to the by-laws referred to in paragraph 1(2) shall enter into force on the date of introduction of the euro in the Republic of Bulgaria.

• Rule for conversion from levs to euros: conversion from levs to euros is done by dividing the numerical value in levs by the full numerical value of the official exchange rate expressed in six digits with all five decimal places. The official exchange rate shall not be rounded or truncated when making the conversion.
• Rounding rule: after translation, the resulting amount shall be rounded to the second decimal place on the basis of the third decimal place in accordance with the following mathematical rounding rule:

1. when the third decimal place is less than five, the second decimal place remains unchanged;
2. when the third decimal place is equal to or greater than five, the second decimal place is incremented by one. There are exceptions to this principle, which will be discussed below.

• Right to information: for a period of one year from the date of introduction of the euro in the Republic of Bulgaria, every person shall have the right to obtain information on the monetary values in lev of his property rights and obligations on the date of conversion. Persons who have converted shall provide the information free of charge within 7 days of the request.

Period of dual circulation of the lev and the euro:

From the date of the introduction of the euro in the Republic of Bulgaria for a period of one month lev banknotes and coins shall continue to be legal tender on the territory of the Republic of Bulgaria (period of dual circulation of the lev and the euro).

Rules during the dual circulation period:

During the dual circulation period, if a payment is received in cash in BGN or EUR, the trader shall return the balance in full in EUR. Where the trader does not have sufficient instant cash to return the balance in full in euro, he shall return the balance in full in levs.

During the period of double circulation in the event of a complaint for goods or services, where the consumer has the right to cancel the contract and be refunded the amount paid by him, the trader shall return the amount paid in full in euro. Where the trader does not have sufficient cash available at the time to refund the amount paid in euro, he shall refund the amount paid in full in levs.

From the date of the introduction of the euro in the Republic of Bulgaria, only the euro shall be used for cash transactions carried out by traders using self-service machines, devices and systems, including those without an electrical supply. From 01.01.2025, withdrawals from ATMs shall be made only in euro. It will be possible to deposit euro but not to withdraw it.

During the period of dual circulation, traders may not increase the prices of their goods and services where this is not justified by objective economic factors.

3. Obligations of employers/commercial companies:

3.1. Labour law aspects:

All accruals on pay slips are translated separately (line by line), not the whole amount at the end.

Coupons, meal vouchers, etc. are revalued and rounded off according to the general mathematical rule.

Rewards are paid in euros and may be rounded using the general mathematical rule. An exception to this rule is provided for remuneration for work done, benefits, cash and social allowances, pensions under Part One of the Social Security Code and supplements thereto, and guaranteed claims under the Employers’ Guaranteed Claims Act: if the third decimal place is greater than zero, the second decimal place is increased by one.

The payroll/pay slip for December 2025 will be prepared in euro (the official currency at that time) and the payment will be made in euro if agreed to be paid in January 2026.

3.2. Accounting aspects:

On the date of introduction of the euro in the Republic of Bulgaria, the balances on the BGN accounts shall be converted into euro in accordance with the translation and rounding principles set out above.

Until the end of a given accounting period, the accounting shall be possible in euro. For further details and assistance in this regard, please contact the TPA Bulgaria team.

Exchange differences on translation are recognised as an expense for tax purposes.

The preparation of the 2025 financial statements will be carried out in BGN and the 2026 financial statements in EUR. The same applies to the tax returns of individuals.

3.3. Adaptation of information systems:

State and municipal authorities and all organisations providing public services are obliged to adapt the information systems they use within three months before the introduction of the euro.

For private sector organisations there is no such mandatory deadline, but they are also advised to adapt their software and other systems before 01.01.2026.

*As defined in Article 1 of Regulation (EC) No 974/98, “legal instruments” means legislative and statutory provisions, acts of administration, judicial decisions, contracts, unilateral legal acts, payment instruments other than banknotes and coins and other instruments having legal effect.

Greetings,

The team of TPA Advisory Ltd.