Your guide to doing business in Bulgaria
Bulgaria is a growing economy and the government has taken steps to present Bulgaria as an investor friendly destination. As well as the 10% flat corporate tax rate, the government offers reduced corporate tax for investors that are investing in backward regions (less industrialized) or regions that have high unemployment.
Companies must have a legal entity before processing payroll.
Companies must be registered with the Trade Register at the Recording Agency. The Trade Registry Act allows a two-day term to complete the registration procedure, counted from the moment of filing the application for registration together with the respective documents at the Trade Register.
All employees and labor agreements must be registered with the Tax Office within 1 day of starting work.
It is not mandatory to pay the authorities or employees from an in country bank account, however it is mandatory that they are paid from an account held by the employer.
The working week in Bulgaria is Monday to Friday, with the weekend usually being Saturday and Sunday. In Bulgaria, Sunday is a mandatory day off.
Full Name: The Republic of Bulgaria
Population: 6.982 million (Eurostat, 2019)
Major Language: Bulgarian
Major Religion: Christianity
Monetary Unit: Lev
International Dialling Code: +359
Hello Здравей/Zdravei - if greeting one person
Здравейте/Zdraveite - polite form, and if greeting more than 1 persons
Good morning Добро утро/Dobro utro
Good evening Добър вечер/Dobar vecher
Do you speak English? Говорите ли английски?/Govorite li angliiski?
Good bye Довиждане/Dovizhdane
Thank you Благодаря/Blagodaria or Мерси/Mersi
See you later До скоро/Do skoro
The tax year in Bulgaria runs from the 1st January to 31st December each year.
Income tax is payable in Bulgaria, regardless of whether or not they are a local or foreign employee. Those who have a permanent residence in Bulgaria, spends more than 183 days in Bulgaria over 1 fiscal year from 1 January to 31 December, who resides abroad on assignment of the Bulgarian State and who has his/her center of vital interests in Bulgaria are liable to pay income tax.
Local natural employees have an obligation to pay taxes on income originating from sources located either within the Republic of Bulgaria or abroad. Foreign employees shall have an obligation to pay taxes on income originating from sources located within the Republic of Bulgaria.
There are tax reliefs in place (there will be a reduced tax rate). Examples include young families, income not exceeding the minimum salary and for persons with reduced capacity for work.
All income earned in Bulgaria is taxed at a flat rate of 10%.
Taxes must be submitted by the 25th date of the month for the previous month. Late submission can result in a penalty of €250.00 - €500.00 and interest on the amount owed.
The entities liable to pay corporate tax are:
Corporate tax is not paid by entities liable to alternative taxes. These are the enterprises funded by the budget, the organizers of the gambling games, and the entities engaged in ships’ operation activities.
The tax rate for the corporate tax is 10%.
The returns must be submitted and paid (if there are no advance returns) by 31st March of the next calendar year. The return must be submitted to the Office of National Revenue Agency (NRA) where the taxable entity is registered via post or the internet. The return is paid via the bank using a payment order, internet or postal order.
Advanced returns are applicable under the following circumstances;
The deadlines for advanced returns are as follows;
Social Security is applicable in Bulgaria. It is a form of protection for employed persons in the case of loss of income. The National Social Security Institute (NSSI) is the public institution that manages the state social security in Republic of Bulgaria.
Persons subject to state social insurance are insured in:
Contributions must be made by the 25th of the following month. The maximum social security income is BGN 3,000 (EUR 1,530) per month.
For more information can be found here; http://www.noi.bg/en/
There is a monthly submission of Declaration 1. This is information for the social contributions of the employee. It is submitted electronically to Tax Office (NAP) and a Proxy can do this. The deadline is the 25th of the following month.
There is a monthly submission of Declaration 6. This is information for the contributions which the employer is obliged to pay electronically to the Tax Office. Again, a Proxy can do this. The deadline is the 25th of the following month.
There is no yearly reporting from the side of the employer except for when the employee has other incomes and they have an obligation to declare it to the authorities. The employee needs a certificate of income employment for the previous year. The certificates need to be issued by the employer.
Once the Labor Agreement has been finalized with the employee, there is a three-day term for the Agreement to be registered with the National Revenue Agency. Failure to register the Agreement can result in severe penalties for the employer.
Regardless of the three-day term, the agreement should be registered prior to the employee starting of work. For example, if an agreement is concluded on January 3rd, 2019 and the employee is to start performing his/her functions under the agreement on this same date, the labor agreement must be registered with the National Revenue Agency first and only after that the employee may start legally to follow his/her obligations under the agreement.
When there is a leaver, payment must be paid no more than seven days after the termination.
It is legally acceptable to provide employees with online payslips in Bulgaria provided that they confirm that they received the payslip. Usually payslips are provided on paper and the employee would sign the payslip.
Payroll reports must be kept for 50 years. If the company goes into liquidation, the payroll reports must be archived with the National Social Security Institute.