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July 30, 2018

 LAW ON THE ADMINISTRATIVE REGULATION OF ECONOMIC ACTIVITIES RELATED TO PETROLEUM AND PETROLEUM PRODUCTS

In State Gazette, issue 62 of 27.07.2018 a Law on the Administrative Regulation of Economic Activities Related to Petroleum and Petroleum Products (further Law on Fuels or the Law) is promulgated.

Purpose and scope of the Law


The purpose of the Law is to regulate the registration and the contrоl on the persons performing activities with fuels. The activities that are subject to regulation include:

  • Wholesale and retail trade in fuels;
  • Storage of fuels other than storage in tax warehouses or warehouses of registered consignees in the meaning of the Excise Duties and Tax Warehouses Law (EDTWL). „Storage of fuels” means receiving, reloading, physical storage and delivery of fuels in petroleum bases, customs warehouses and other containers, which are not registered as tax warehouses, as well as tanks and other containers, with the exception of those belonging to final industrial consumers  or  intended for household  The Law does not provide definition of „final industrial consumers”;
  • Transportation of fuels;
  • Filling in of containers with LPG outside of tax warehouses;
  • Distribution of containers with LPG;
  • Temporary storage or fueling by farmers of own machines outside of tax warehouses or of warehouses of registered consignees.


Any person performing the above activities is liable to register under the Law on Fuels. The registration is a precondition for performing the activity. Separate registration shall be made for each activity. In case the activity is performed without registration, the official of the Ministry of Finance and Ministry of Interior could issue an order for activity termination and locking off of the enterprise or the respective site. Besides the measures of compulsion, a fine/penalty could be imposed to the person amounting between BGN 25 thousand and BGN 250 thousand.  

Specific requirement for obtaining registration


Besides the general conditions, which shall be met by the persons in order to be registered for carrying out activities with fuels (to have commercial registration, not to be in liquidation or insolvency proceedings, their VAT registration not to be canceled on the grounds of Art. 176 VATA, not to have unsettled liabilities for tax and social security contributions, etc.), for some of the activities specific requirements are imposed regarding:

  • Amount of registered share capital or amount of assets. For example, in order to perform wholesale or storage of fuels the entity shall have a registered share capital of at least BGN 1 million.
  • The sites wherefrom the activity will be performed. Such requirements are provided for with regards to the retail trade and storage of fuels. Concerning the storage of fuels requirements have been imposed for own or rented premises and containers, volume of the containers, installed measurement and control devices, which provide online access of the bodies of Customs Agency and the NRA, physical security or security signaling system, etc.;
  • Provision of collateral (except for activities on transportation of fuels and temporary storage and / or loading by farmers) in the form of a cash deposit or bank guarantee where the amount of the collateral depends on the activity performed. For example, for the wholesale and storage of fuels the amount of the collateral is BGN 500 thousand. The collateral could be used for covering of liabilities under the Law, the EDTWA, VATA, the Purity of Atmospheric Air Law, etc. and shall be released at termination of activity.




Obtaining of registration


Registration shall be performed with the Ministry of Economics and a certificate shall be issued. Copy of the certificate shall be put in a visible place in each of the sites where activity is performed or be provided to the drivers of the vehicles by means of which transportation of fuel is performed. The persons are entered into a public electronic register kept by the Ministry of Economics. The rights obtained as a result of the registration cannot be ceded or transferred unless in case of transformation under the Commercial Law.
The registration can be terminated upon request by the person or in case of violation of any of the conditions for performing the activity.

Specific prohibitions


 Art. 24 and 25 of the Law expressly prohibit:

  • Fueling of road vehicles and off-road machinery of third parties by internal sites;
  • Fueling of road vehicles and off-road machinery by mobile fuel stations, other road vehicles, movables objects and facilities, with the exception of fueling by farmers through internal site[1] for own purposes and fueling for own consumption of up to 80 l.

The violation of these prohibitions is subject to a fine/penalty amounting between BGN 20 thousand and BGN 250 thousand, and the fuels subject to the violation shall be confiscated in favor of the state.  In case of a second violation the registration under the Law is terminated.

 

[1] „Internal site” is an object permanently affixed to a real property, which is intended for fueling of road vehicles, off-road machinery and machines, used for own purposes.



Control and penalties


The control on compliance with the requirements of the Law is assigned to several government agency depending of their competency: the Ministry of Economics, the NRA, the Customs Agency, the State Agency on Metrological and Technical Surveillance, etc.
We draw attention that the amount of the penalties is significant where the maximum penalty (for performing activity without registration, in violation of the scope of registration or not complying with any of the conditions for its performance) amounts to BGN 250 thousand, and in case of a second violation – to BGN 500 thousand.

It is envisaged the Regulations of the Ministry of Economics shall be respectively amended and the minister of economics shall issue ordinance regarding the registration procedure and for the maintaining of the public register.   

The Law, except for few provisions, enters into force within 6 months after promulgation (i.e. on 28 January 2019).  

The material herein is not exhaustive, is only of general nature and does not represent a specific advice or consultation. Should any additional questions arise please do not hesitate to contact us at tel.: 02/943 37 00, fax: 02/943 37 07, е-mail: office@afa.bg or at: 38, Oborishte Str., Sofia 1504.

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