The biggest risk when the introduction of the euro is that prices will be rounded up is in beauty salons, restaurants, hotels and entertainment services.
January 1, 2024 is the estimated date for entry into the euro area. BGN 1.95583 per euro remains
The prices of goods and services in the country will be announced in BGN and EUR for a period of about 17 months upon our entry into the euro area. The aim is for traders not to round up prices and for inflation to fall when the euro is introduced. The working date for Bulgaria‘s accession to the euro area is January 1, 2024.
This is written in a draft National Plan for the introduction of the euro in Bulgaria, which the newspaper “Trud” has.
The recalculation of prices from BGN to EUR will take place at the fixed exchange rate of BGN 1.95583 per EUR. All five decimal places must be used, and only then can the result be rounded to one euro cent, according to the Euro Introduction Plan.
The obligation to show prices in levs and euros is scheduled to begin 30 days after the EU Council adopts a decision according to which Bulgaria meets the conditions for the introduction of the euro and confirms the exchange rate at which we will enter the eurozone. This decision is expected to be made six months before the introduction of the euro in Bulgaria. Which means that from August 2023 the prices will be in BGN and EUR. The announcement of prices in two currencies will continue 12 months after our entry into the euro area. During this period, prices must be in BGN and EUR in stores, in all advertisements of merchants and on their websites. The double display of prices will also apply to the administration. During this period, all amounts due by citizens of the state and municipalities, such as taxes, fees, etc., will be written in BGN and EUR.
In order to encourage fair traders in setting prices in euros, the Consumer Protection Commission (CPC) will organize an “Fair Trader” campaign. Traders who follow the rules for accurate conversion of prices from BGN to EUR and clearly write them, will receive a sticker “Honest Trader”. And the names of traders who violate the rules of conversion or rounding will be blacklisted, which will be uploaded on the CPC website. Citizens will be able to report traders who do not follow the rules for writing prices. Data from the countries that last introduced the euro show that the risk of rounding up is greatest in services, especially in the catering sector, beauty salons, hotels and leisure services.
They return the rest to us in euro coins
We pay 30 days with both currencies
Banks exchange free of charge for 6 months
For half a year the banks will exchange levs for euros free of charge.
In the first month of our entry into the euro area, the lev and the euro will be in circulation at the same time, and both currencies will be legal tender. This means that if our country joins the euro area on January 1, 2024, until January 31, 2024 we will be able to shop with both levs and euros. And traders will only return change in euros, unless they can do so for practical reasons.
Thus, the levs will be withdrawn from circulation. There will also be a rule according to which in this one month traders will not be obliged to accept more than 50 coins in one purchase. The goal is not to be hampered by people who go shopping with an envelope of pennies.
After the first month of our entry into the eurozone, we will shop only in euros.
During the first six months of the introduction of the euro, banks and Bulgarian Posts EAD will exchange free of charge banknotes and coins from BGN to EUR, and in the next six months they will be able to charge a fee for this service. One year after our entry into the eurozone, banks will exchange levs for euros only at their request. But the BNB will exchange levs for an unlimited period of time and will not charge a fee for it.
Taxes
New tax rules
In the tax returns and forms that citizens and companies will fill out after the introduction of the euro, and which relate to liabilities to the treasury for the previous year (before the introduction of the euro), the amounts due will be in Bulgarian levs. However, the payments to the treasury themselves will have to be in euros, calculated at the fixed exchange rate of the lev. If there is rounding, it should be in favor of the citizens – ie they can pay a few cents less, but not more than what is due in BGN.
The terms of the loans will not be changed
There may be a new formula for interest on loans
All bank accounts in euros only
From the date of Bulgaria’s membership in the euro area, all current, savings and deposit accounts in banks will be automatically and free of charge converted into euros. This will happen at the fixed exchange rate of BGN 1.95583 per euro. From the first day of adoption of the euro, account holders will be able to withdraw only euros from their BGN accounts, regardless of whether they do so through an ATM or in a bank office. Cashless payments will also be in euros only.
All contracts for deposits and loans in BGN will continue to operate after our entry into the euro area. From the day of the introduction of the euro, all loans granted in BGN will be considered loans in EUR. Currency conversion is not allowed to be used as a condition for renegotiation of clauses under already concluded contracts between banks and their clients, which would put them in a less favorable financial position compared to their situation before currency conversion.
The introduction of the euro does not require changes in the existing lending agreements, as the issue of their transformation will be regulated by a law governing the introduction of the euro in Bulgaria. This “European law” will stipulate that the loan agreements remain in force and the amounts in BGN will be considered as amounts in EUR, being converted at the fixed exchange rate. If the interest rate on the loan is fixed, it will be valid after the introduction of the euro. If the loan has a variable interest rate, this parameter will be changed with the “European law”. However, this must be done in a way that does not aggravate the financial condition of the clients and does not lead to additional costs, compared to the interest costs that the client would make when repaying the loan in BGN, the Plan says. Banks will inform their customers about the upcoming changes a few months before the changeover to the euro, incl. and by publishing its sites to the interest recalculation algorithm.
