Our guide to Payroll in Bulgaria

Doing Business in Bulgaria

Investing 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.

Basic Facts about Bulgaria

Full Name: The Republic of Bulgaria

Population: 6.927 million (World Bank, 2020)

Capital: Sophia

Major Language:> Bulgarian

Major Religion: Christianity

Monetary Unit: EUR

International Dialling Code: +359

How to say:

Hello: Здравей/Zdravei - if greeting someone Здравейте/Zdraveite - polite form, and if greeting more than 1 person>

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

Registrations and Establishing an Entity

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.

Banking

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.

Working Week

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.

Employment Law

Holiday Accrual / Calculations

Every employee is entitled to 20 days holiday once they have been in employment for 4 months (irrespective of the employer).

The employee can use their annual leave entitlement either in parts or all at once within the relevant calendar year.

Public holidays are not included in the calculation of annual paid leave.

Maternity Leave

Pregnant employees are entitled to 45 calendar days paid leave before delivery and a total of 135 days after delivery. The maternity leave of 410 calendar days for each child (who is not sent for adoption or to a specialized institution of raising at the expense of the State) starts after 135 days pregnancy period.

After paid leave maternity for 410 calendar days, the mother is entitled to use additional paid leave until the child becomes two years old. This leave is paid from NSSI. The amount of this paid leave is determined annually according to the law on state social insurance (for 2026 it is 550.67 EUR).

Employees that are on maternity leave receive indemnity payments from the National Social Security Fund, if they have 12-months working experience recognized for social security purposes and have paid social security contributions covering this social security risk.

Maternity leave payments amount to 90% of the employee's average wage on which social security contributions have been calculated and paid for the period of 24 months preceding the maternity leave.

Paternity Leave

The father is entitled to paid leave of 15 calendar days after the discharge of the child from the hospital, if he has acquired 12 months' working experience.

The leave is paid by the National Social Security Institute in an amount determined in the same manner as applicable for indemnification for maternity leave.

Once the child has reached six months, the father can use the remaining maternity leave, with the mother's consent. In this case, the father is entitled to the same benefits as the mother if she had used her maternity leave.

Sickness

The employee must have been registered with Social Security for 6 months before claiming any sick leave.

The first 2 days of sick leave are paid by the employer at the rate of 70% of the gross salary. The Authorities pay the rest at a rate of 80% of the average daily gross salary. An average is taken from the last 18 months.

For example, there is a total of 6 days sick leave. The employee’s gross salary is 1000 EUR for the last 21 working days and the average gross salary for the last 18 months is 18500 EUR. For the first 2 days the employee receives 1000/21*3*70%=100 EUR from Employer and for the remaining 4 days the employee is paid 18500/376*3*80%=118.09 EUR from the Authorities.

National Service

There is no National Service in Bulgaria.

Tax & Social Security

The tax year in Bulgaria runs from the 1^st January to 31^st December each year.

Income Tax

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.

Corporate Income Tax

The entities liable to pay corporate tax are:

• The local legal entities –trade companies;

• The local legal entities that are not traders;

• The local unincorporated entities and the insurance funds established

• The foreign legal entities that carry out economic activity in Bulgaria from a permanent establishment;

• The foreign unincorporated entities that carry out economic activity in Bulgaria from a permanent establishment.

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 31^st 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;

• Monthly advance payments – they are made by taxable entities whose net sales income for the previous year exceeds BGN 3 000 000.

• Quarterly advance payments – are made by taxable entities that have no obligation to make monthly advance payments. Notably, these are the taxpayers whose net sales income for the previous year is in the range between BGN 300 000,01 and BGN 3 000 000 inclusively. Quarterly advance payments can be also made by taxpayers that are released from paying in advance.

• The deadlines for advanced returns are as follows;

• Monthly advance payments: for January, February and March – paid by April 15th, and for the months from April to December – paid by the 15^th day of the current month;

• Quarterly advance payments: for the first and second quarter - paid by 15th day of the month following the quarter, and for the third quarter – until December 15^th. No quarterly advance payment is made for the fourth quarter.

Social Security

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:

• "General (Non-occupational) Disease and Maternity" fund for common diseases and maternity, which includes insurance for temporary incapacity for work, temporary reduced working capacity and maternity;

• "Pensions" fund for disability due to general (non-occupational) disease, old age and death;

• "Labor Accidents and Occupational Diseases” fund for labor accidents and occupational diseases, which includes disability, death, temporary incapacity for work and temporary reduced working capacity due to labor accident or occupational disease;

• "Unemployment" fund for unemployment.

• Contributions must be made by the 25th of the next month. The maximum social security income is EUR 2,111.64 per month.

More information can be found here.

The contribution rates are as follows;

Calculation Example

Gross Salary: 1000 EURSocial Security Base: 1000 EUR

Contributions Employer: 189.20EUR = 1000*18.92%

Contributions Employee: 137.80 EUR = 1000*13.78%

Tax: 86.22 EUR = (1000-137.80) *10%

Net Salary: 775.98EUR = (100-137.80-86.22)

Reporting

Monthly

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 25^th 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.

Yearly

There is a yearly submission of Information under Art. 73, para. 6 of the Personal Income Tax Act for the incomes paid during the year under labor legal relations. The deadline is the end of February of the following year.

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.

Payroll

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.

Reports

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.

Payslip Example

Payslip example in English:

Local language example:

New Employees

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 5^th, 2026 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.

Leavers

When there is a leaver, there is a seven-day term to send notification for the termination to the National Revenue Agency.

Employee Benefits

Expenses

In Bulgaria, employees receive 0.6% remuneration on their main salary for each year of professional experience. For example, an employee has 7 years’ experience and the main salary is 1000 EUR then the benefit would be 7 x 0.6% = 4.2% or 1000 x 4.2% = 42 EUR. This benefit is mandatory.

Some general expenses include;

• Food Vouchers for up to 102.26 EUR per employee
• Travelling from home to work with public transport is tax-free. Social Security must be paid on travel expenses. The expenses can be added to the employee’s salary however, it would be taxable and subject to social security contributions.

Expenses for company cars aren’t taxable, except when the car is used for management purposes (from manager) or for personal needs from managers and employees. If the company only pay for gasoline for the car mileage when car’s employee is used for official activities (not personally needs) then there is no integrated sum into a payroll.

Visas & Work Permits

Visas

There are 3 types of visa in Bulgaria, these are

• Visa A – for airport transit
• Visa C – for a short stay, transit or planned stay
• Visa D – for a long stay

Visa applications forms are submitted no earlier than 3 months before the date of the intended travel, personally or through an authorized agent, with the exception of humanitarian cases.

Documents to be submitted with the visa application:

• A photocopy of the first page of the foreign travel document;
• A photocopy of the last Bulgarian and Schengen visas or visas for the UK and the US, if any
• A colorful photograph 3,5 cm х 4,5 cm against light-colored background (the same holds for a child entered in the passport) – a full-face photo with clear, large enough face which takes up 70-80% of the photo; eyes must be red; the following is ineligible: photos with dark glasses; non-professional photos or cut out of amateur photos
• A medical insurance valid for the EU member states for the whole period of the trip, covering all costs for repatriation and for urgent medical care and emergency hospital treatment for the period of the stay indicated in the visa. The insurance amount cannot be less than €30,000.00
• Tickets (original and copy) or ticket booking conformation or financial means
• Copy of the technical passport of the car of the trip

For under-aged children travelling without their parents or trustees the following documents shall be submitted:

• a copy of the birth certificate
• original and photocopy of a power of attorney notary certified by both parents/ trustees or by one parent trustee that they agree their child to travel unaccompanied by them.

The following persons are exempt from presenting proof for subsistence, accommodation and transportation:

• Members of the families or the households of European Union, European Economic Area and the Swiss Confederation citizens;

• Persons applying for a visa for a long stay in view of gathering their families, in relation to a refugee status acquired or asylum in the Republic of Bulgaria – pursuant to a written decision of the State Agency for Refugees with the Council of Ministers

• Holders of service and diplomatic passports

Residence Permits

Foreigners who wish to reside in Bulgaria on a long-term basis (more than three months within each six-month period) should apply for and obtain a residence permit.

Family members of European citizens, who are not European citizens themselves, who wish to reside in Bulgaria for a period longer than three months, should be granted residence permits and should obtain residence cards.

Residence permits for Foreigners, the certificates for European citizens and the residence cards for European citizens’ family members who are not European citizens themselves, are issued by the Migration Directorate at the Ministry of Internal Affairs.

There are 3 types of residence permits available;

• Extended residence permit – with a term of validity of up to one year
• Long-term EU residence permit – for initial period of five years and option for renewal, and
• Permanent residence permit – for an indefinite period.

Once the Foreigner is granted an extended residence permit, they may live, reside and travel in Bulgaria while the permit is valid. The Foreigner may freely choose and change their place of residence, or leave the country and enter it again.

Foreigners who have obtained an extended residence permit have all the rights and obligations granted to or imposed on the Bulgarian citizens, with the exception of such rights and obligations for which Bulgarian citizenship is required. For example, Bulgarian employers can employ them, receive social security compensations, health care insurance, etc.

Residence Certificates

European citizens who intend to stay in Bulgaria longer than three months are issued residence certificates.

European citizens are issued two types of residence certificates:

• Long-term residence certificate – with a term of validity of up to five years, and
• Permanent residence certificate – for an indefinite period of time.

The grounds for issuance of long-term residence certificates are:

• The European citizen is employed or self-employed in the Republic of Bulgaria
• The European citizen has medical insurance and sufficient financial resources to cover the expenses for their residence and that of the family members without being a burden to the Bulgarian social security system, and
• The European citizen has enrolled in a school/college/university in Bulgaria for study, including professional training, and has medical insurance and sufficient financial resources to cover their expenses and that of the family members without being a burden to the Bulgarian social security system.

In order to apply for a long-term residence certificate, the European citizen should submit an application to the Migration Directorate at the Ministry of Internal Affairs within three months after their first entry in the Republic of Bulgaria.

Location specific considerations

• Employers must comply with Declaration 1 and 6 filing monthly
• Employee contracts must be registered before the start of work
  
• Payroll records must be stored for 50 years, longer than most EU countries
• Flat income tax (10%) is among the lowest in Europe
• Food vouchers are widely used as a non-taxable employee benefit
  
• Work injury insurance varies by activity type and must be factored into employer contributions
  
  

Further Information

For more information, or assistance with Bulgaria Tax enquiries please contact: gi@activpayroll.com

About This Payroll and Tax Overview

Please note that this document gives general guidance only and should not be regarded as an authoritative or complete statement of the law, regulations or tax position in any country. You should always seek specific advice for each specific situation. This document should not be relied upon as professional advice and activpayroll accepts no liability for reliance on its contents.