Boundless Logo
Country Guide

Bulgaria

Hiring employees in Bulgaria at a Glance

CURRENCY
Bulgarian lev BGN
WORKING HOURS
40 hours
PUBLIC/BANK HOLIDAYS
11 days
CAPITAL
Sofia
LANGUAGE
Bulgarian
REMOTE WORKERS
1.2% of the population
MINIMUM monthly SALARY
BGN 933
TAX YEAR
1st Jan - 31st Dec
DATE FORMAT
DD/MM/YYYY
MISCLASSIFICATION PENALTIES
Fines of BGN 100 (around EUR 51) to BGN 20 000 (around EUR 10 226) for non-compliance with Labour laws. Employees working without an employment agreement can be fined triple the amount due for the mandatory social and health insurance contributions.
FUN FACT
Bulgaria has an official day of the alphabet, celebrated on May 24th.

Employer tax: 

18.92% - 19.62%

Social insurance:  18.92% - 19.62%, which includes 8.22% pension contribution and 4.8% health insurance

Employee tax: 

23.78%

Social security: 13.78%

Income tax: a flat 10% tax

Bulgaria Employment Cost Calculator

Use our handy calculator to understand what are all the employment costs you have to consider in Bulgaria.

Provide us with some extra details and we will send you a full breakdown of the salary costs.

Employer of Record Bulgaria

Read more
Usually, an Employer of Record is the legal employer in a country where the company isn't registered as an employer. However, in Bulgaria, the employment model requires a temp agency licence. The temp agency handles all Bulgarian compliance aspects of employment, including local laws, payroll, taxes, statutory benefits, employment contracts and more.

We are responsible for:

Ensuring their employment is compliant with local employment laws
Processing local payroll
Filing employment related taxes and returns
Issuing payslips to the employee
Distributing salary payments

The employment model in a nutshell

COMPANY

Maintains a direct relationship with the employee, allocates them work tasks, and manages their performance.

BOUNDLESS

Takes care of payroll, taxes, benefits, ensuring the employee and the company are compliant with all legal regulations.

EMPLOYEE

Signs an employment contract with Boundless and fulfils all of their obligations as a worker for the company.

Statutory Benefits in Bulgaria

Read more

Medical examination

Many employees are subject to preliminary medical examination, which take place when they are first hired and then in a certain cadence depending on age

Occupational safety & health training

The employer must conduct health and safety training at work and each employee should undergo it. This is done during work hours and at the expense of the employer.

Common Non-mandatory Benefits in Bulgaria

Read more
Company social and other benefits
Additional pension contributions
Additional days off
Transport
Life assurance
Supplementary health insurance
Cash bonus
Flexibility
Multisport cards

Employee Rights and Protections in Bulgaria

Read more
Employment contract
Protection of personal information
Union membership
Protection from harassment
Protection from discrimination
Preservation of the employment in the event of employer change
Protection from dismissal
Equal treatment
Medical examination
Paid time off: 20 days + bank holidays

Paid paternity: 10 days

Sick leave: Unlimited. Employers cover the first two days of sick pay at 70%. After that, the leave is paid by the National Social Security Institute

Paid parental leave: Unlimited until the child turns two

Paid maternity leave: 410 days

Probationary period

Read more
The probation period is agreed upon between the employer and the employee but cannot be more than six months. An employment contract with a probation period may be concluded only once regarding the same employee in the same company for the same position.

Payment Frequency

Most companies pay employees monthly, but it is legal to pay employees daily and weekly in Bulgaria.

End of Employment

Read more
There are four ways of terminating employment:

1. With the agreement of the parties (at any time).

2. At the employer or the employee initiative and fulfilment of the notice period, which according to the Bulgarian labour code requires a specific, justified reason in writing

3. At the employer or the employee initiative without fulfilling the notice period.

4. At the expiry of the contract term (for fixed-term contracts).

Under Bulgarian labour law, selected employee categories are protected against their employment being terminated with notice.

Employees for whom social insurance contributions have been paid or are due with the Unemployment Fund for at least 12 months during the last 18 months preceding the employee termination are entitled to receive unemployment compensation.

Employees are entitled to severance pay for their unused annual paid leave, as well as either the notice period or up to one month's pay in certain employee termination cases.

Frequently Asked Questions

What are my options if I want to hire a worker in Bulgaria?

While there are generally four ways of employing people across borders, not all are legal or sensible. Here is an overview of each way to employ a worker in Bulgaria, outlining the potential cons.

 

HQ country employment & payroll

While the person is in Bulgaria, they are employed and payrolled directly by the company’s HQ entity.
Cons: This may appear attractive, but it generally isn't legal in the long term. Paying the employee's salary won't be possible if the person is not a tax resident in the HQ country

 

Independent contractor agreements

People are locally registered as sole traders or limited liability company owners in Bulgaria and invoice for their work. There is no direct employment relationship.
Cons: In Bulgaria, this is not a compliant or legal way to engage full-time workers who work solely for your company. There will be challenges in attracting and retaining talent.
 
Direct local employer setup
 
The company sets up as a fully-compliant local employer. This often involves setting up a local entity and local tax registration.
Cons: Expensive, time-consuming, high-level of complexity. Unknowns around how obligations and costs will evolve over time. There will be a need to stay on top of changes in regulations.

 

Partnering with a temp agency licence holder in Bulgaria

Employment is handled by a platform that specialises in employing people on behalf of customer companies. The temp agency licence holder helps to hire and pay employees.
Cons: For some countries, the ongoing costs may be higher than direct employment. Some education is needed to inform employees about how the employment relationship will work. In Bulgaria, there are limitations to the length that this model is allowed.

How long does it take to set up a company in Bulgaria?

Setting up a local company in Bulgaria is relatively straightforward. However, the difficult part comes after the initial setup when payroll needs to be calculated and run every month, taxes filed, benefits extended, change of rules and regulations followed. Here is an overview of everything you will find yourself needing to do.

Can I employ people as independent contractors in Bulgaria?

While many employers practice employing remote workers as independent contractors, it's a bad practice. If an individual is giving their full and undivided attention to your company in Bulgaria, treating them as an independent contractor is a likely breach of Bulgarian employment laws and of those in your country.
 
Your company could be liable for fines on owed holiday pay, sick pay, social welfare payments, paternity benefit, maternity benefit, or other legal measures. Since the individuals you are working with do not receive the benefit of local employment laws and protections that are often afforded to people working full-time hours.
 

What does HR compliance mean in Bulgaria, and why does it matter?

When you hire employees in Bulgaria, you have certain obligations as an employer. HR compliance is about ensuring your policies and procedures respect all applicable laws and regulations regarding employment and work practices. Complying with Bulgarian labor law is fundamental for the correct running of your business - not only because these laws are in place to protect employees and guarantee their rights are safeguarded, but to minimise your risk of liabilities as an employer. Being compliant means respecting and following all local labour laws, sick leave and illness benefits, annual leave, minimum wage, tax credits, working hours regulations.

How much does it cost to employ someone in Bulgaria?

As with every other country, there are certain costs associated with employing a worker in Bulgaria that come on top of the gross salary you are offering. A Bulgarian employer must contribute to the national social security institute, which covers pension contributions to the Mandatory state pension fund, and health insurance contributions to the national health insurance fund, among others. To view the exact percentages and amounts given the salary you are planning to offer, you can use our handy calculator tool.

Is Employer of Record possible in Bulgaria?

In Bulgaria, an employer of record is not possible as a model and instead a temp agency licence is required from the employing company. With such a licence, Boundless is the legal employer of the individual, as far as the Bulgarian government, tax, and employment authorities are concerned. We are responsible for:
  • informing you about any pre-employment requirements
  • ensuring their employment is compliant with Bulgarian labour law
  • informing you about the length of the maternity leave, paternity leave, public holidays, sick leave, medical benefits
  • providing a locally compliant employment contract
  • processing local payroll
  • filing employment-related tax returns
  • issuing payslips to the employee
  • distributing salary payments
  • payments to the local tax authorities
Customers that work with a temp agency in Bulgaria are responsible for:
  • sourcing and recruiting their own workers
  • managing the employee’s day-to-day work load
  • contributing to the personal / professional development of the employee through their work
  • following any guidance we give on employment and HR best practices or legal obligations in Bulgaria, such as the employment contract, public holidays, annual leave, sick leave, maternity and paternity benefits, probationary periods, overtime pay, statutory redundancy payments, liability insurance and many others
  • ensuring that payroll bills relating to their team are paid to Boundless before the cut-off point in each pay cycle

Who is responsible for filing and paying employees' taxes and social insurance contributions in Bulgaria if employing through a temp agency?

Boundless as the legal employer through our temp agency licence files all pertinent taxes and social security contributions as they relate to the compliant employment of an individual in Bulgaria.

How does Boundless ensure HR compliance in Bulgaria?

We carefully choose employment lawyers or advisories to partner with in each country we operate in, including Bulgaria. They ensure the Bulgarian employment contracts, and any other relevant documents required for new employees comply with the local jurisdiction. We have thorough discussions on specific norms such as payroll services, social protection, data protection, notice period or work-from-home regulations. Whenever a potentially sensitive issue arises in Bulgaria, our internal team contacts the relevant firm to ensure all steps are taken to resolve it promptly.

What are the legal responsibilities of a company when they use the services of a temp agency like Boundless in Bulgaria?

The company remains responsible and informs employees of the day-to-day management of the people and teams that are employed through Boundless, including any disciplinary or performance issues.
 
Boundless ensures compliance with Bulgarian-specific procedures, practices and labour laws while employing people and teams on behalf of the company.

Do employees get all their rights and benefits when employed through a temp agency in Bulgaria?

Any new employee that is locally employed through a temp agency licence holder such as Boundless gets full employment rights and benefits as specified in Bulgarian labour law. They get a locally compliant employment contract, statutory maternity leave, annual leave, sick leave entitlements, any relevant tax credit, and many more. 

What taxes do I need to pay in Bulgaria?

Both Bulgaria employers and Bulgaria employees have to pay taxes. For employers, it's contributions to the national social security institute, which covers pension contributions to the Mandatory state pension fund, and health insurance contributions to the national health insurance fund, among others. For employees, these are social security contributions, as well as income tax. To get a clear overview of both employee and employer taxes, use our salary breakdown calculator, submitting any additional data needed and get a downloadable pdf like this one.

Choose Boundless as your employment partner in Bulgaria
Talk to us
© 2020 - 2024 Boundless Technologies Limited.
info@boundlessHQ.com
The Greenway, 112-114 St. Stephen's Green, Dublin, Ireland.
cross