Bulgaria

Registrations and Establishing an Entity

To operate legally in Bulgaria and process payroll, companies must register with the Trade Register at the Registry Agency. Registration is typically completed within 2 business days. Employers must also:

• Notify the National Revenue Agency (NRA)
• Register employment contracts within 3 days of signing
• Submit social and health insurance details

Businesses must register for corporate income tax, VAT (if applicable), and payroll tax obligations. Failure to register employment contracts prior to the start date is subject to penalties.

Banking

Although it is not mandatory to use a Bulgarian bank account for salary or tax payments, payments must be made from an account held by the employer. Most banks operate Monday to Friday, 08:30 to 17:00.

Working Week

The typical Bulgarian workweek runs Monday to Friday, with 40 hours per week. Daily hours usually span from 09:00 to 17:30, with a one-hour lunch break. Overtime is limited by law and must be compensated at a premium rate or granted as time off.

Employment Law

Holiday Accrual

Employees are entitled to a minimum of 20 paid annual leave days after completing four months of employment. Public holidays are not counted against this entitlement.

Maternity Leave

Female employees are entitled to 410 calendar days of paid maternity leave, starting 45 days before childbirth. Payments are made through the National Social Security Institute (NSSI) at 90% of the employee's average salary over the previous 24 months, provided contributions have been made for at least 12 months.

Paternity Leave

Fathers are entitled to 15 days of paid leave after the child’s birth. After six months, the father may take over the remainder of unused maternity leave with the mother’s consent.

Sick Leave

Employees must have at least 6 months of social security contributions to claim sick pay. The first 2 days are paid by the employer at 70%, and the remainder by the NSSI at 80% of the average wage, based on the previous 18 months.

National Service

Bulgaria does not have mandatory national service. Military and civil service are not required for payroll purposes.

Tax & Social Security

Bulgaria operates on a calendar tax year. Employees and employers are subject to flat income tax and social security contributions.

Income Tax

• Flat personal income tax rate: 10% on all earned income
• Employees are taxed through payroll withholding
• Tax returns are due annually by 30 April, but most employees are covered entirely through employer withholding

Social Security

Social security covers pensions, unemployment, health, maternity, and accident insurance. Contributions are shared:

The maximum monthly insurable income is BGN 3,750 (approx. EUR 1,918). Social contributions must be paid by the 25th of the following month.

Payroll

Payroll must include gross salary, tax and social security deductions, and net salary. Employers are responsible for calculating, withholding, and remitting all taxes and contributions. The typical pay cycle is monthly, and wages are generally paid by the end of each month.

Payslip Example

Payslips must be issued and signed by the employee. Paper or electronic formats are permitted, provided employees acknowledge receipt. 

Reports

Employers must retain payroll records for 50 years. If a company is liquidated, these records must be transferred to the National Social Security Institute (NSSI).

Reporting

Monthly declarations include:

• Declaration 1: Employee insurance data
• Declaration 6: Employer contribution payment details

Both must be submitted electronically to the NRA by the 25th of the following month. Yearly income data under Article 73 must be filed by the end of February.

New Employees

Once a contract is signed, it must be registered with the National Revenue Agency within 3 days, and before the employee begins work. Required data includes:

• Name and ID
• Position and salary
• Working hours
• Start date

Failure to register can result in significant fines and the contract being deemed invalid.

Leavers

Employers must notify the NRA of contract termination within 7 days. Final pay must include outstanding salary, unused leave, and severance where applicable. Employers must provide a certificate of income and deregister the employee from social and health insurance.

Employee Benefits

In addition to statutory leave and insurance, employers may offer:

• Food vouchers (tax-free up to BGN 200/month)
• Transport allowances
• Private health insurance
• Bonuses (performance or holiday-related)

An experience bonus of 0.6% per year of service is mandated for all employees and must be included in the gross salary.

Expenses

Travel expenses to and from work are tax-free when reimbursed. If paid as an allowance, they are subject to tax and social contributions. Company car expenses are taxable when used for personal or management purposes.

Visas

There are three main types of visas:

• Visa A: Airport transit
• Visa C: Short stays or business
• Visa D: Long-term stays (required for work permit application)

Applicants must provide identification, insurance, proof of purpose, and accommodation details. Visas must be applied for in advance.

Work Permits

Foreign nationals require a residence permit and work authorisation. Applications are processed through the Ministry of Interior’s Migration Directorate. There are three residence types:

• Extended: Up to 1 year
• Long-term EU residence: 5-year validity
• Permanent residence: Indefinite

Employers must prove no local worker can fill the role, and provide documentation such as a signed contract, company registration, and financial justification.

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.