Taxes and payrolls: the peculiarities of the Bulgarian labour market
Each labour market has some peculiarities. It may be tricky for foreigners to understand fully the payment methods, the taxes and other benefits related. In TalentUp we are starting a series of different blog articles, one for each country. This article analyses the Bulgarian labour market.
Even if the national currency is the Bulgarian Lev (BGN), the whole article is in EUR to compare easily across countries and exchange rates
General data about the Bulgarian labour market
|Payment||Made on the last working day|
|Maximum working hours a week||40 hours|
|Maximum overtime hours a day||3 hours per day (across two consecutive days)|
|Maximum overtime hours a week||6 hours|
|Maximum overtime hours a year||150 hours|
|Working hours compensation||Paid at 150% of the standard salary rate for working day hours, 175% for weekend hours overtime, and 200% for working on public holidays.|
Payroll taxes in Bulgaria
Social security contributions are made by the employer and the employee and are used for funding unemployment, pension, maternity/paternity leave, and sickness or injury.
|Contingencies||Employer %||Employee %|
|Social security (maximum is 1738,34€)||13.72%||10.58%|
|Accident at Work & Occupational Illness Fund||0.4% – 1.1%|
|Total||18.92% – 19.62%||13.78%|
Once contributions are paid, employees need to pay an income tax at a flat rate of 10%.
Contingencies from self-employees
The social security contributions of self-insured persons are as follows:
|State Social Security Funds||14.8 – 18.3%|
|Pension insurance fund within the Universal Pension Fund||5%|
|Total||27.8 – 31.3%|
Example of a net salary in Bulgaria
As a reference, we use the average salary of a software engineer. In Bulgaria, on average, software engineers earn annually 27,700€.
|Gross salary (annually)||27,700€|
|Accident at Work & Occupational Illness Fund||0.4% – 1.1%||110.8 – 304.7€|
|Total||18.92% – 19.62%||5,240.84 – 5434.74€||13.78%||3,817.06€|
|Net salary (annually)||21,494.65€|
The employer contributes 5,240.84 to 5,434.74€ to social security and the employee 3,817.06€.
After paying the income tax, the employee has a net salary of 21.494.65€ coming from a gross salary of 27,700€.
Unemployment regulation in Bulgaria
Officially, the minimum notice period in Bulgaria is 30 days. However, it is common practice to give a margin of 90 days.
The severance payment is usually no less than four months’ gross salary and is paid within the first week after the termination.
The probationary period is 6 months as a maximum.
Different kinds of leaves in Bulgaria
Paid leave is a minimum of 20 days a year, for employees who have worked for over four months. There are 15 public holidays in Bulgaria.
Sick leave can last for 18 months. The first three days are paid at a rate of 70% of the regular salary by the employer. From day four, the National Social Security Fund pays at 80% of the regular salary rate. There is a 90% rate for work-related sick leave or injury. Social Security only pays leave for employees who have completed at least six months of service or social security payments.
Two days of paid leave are available for the employee’s marriage or for the funerals of family members.
Paid parental leave
Maternity leave lasts for 410 days, starting 45 days before the due date. The minimum is 135 days. The NHIF pays this leave at 90% of the regular salary rate. It is applied to mothers in all conditions.
Fathers have 15 days of mandatory leave at 90% pay rate. This is only for fathers that have worked for at least a year.
The remaining maternity leave once the child is six months old, can be shared between the mother and the father with the mother’s consent.
Parental leave is available until the child is two for mothers, fathers or grandparents.
Other common Bulgarian benefits
|Benefit||% of companies with this benefit|
|Casual dress code||96%|
How to employ a Bulgarian worker
To hire in Bulgaria, any business needs an entity. That means:
- a local office,
- an address registered as a subsidiary,
- and an account with a local bank.
Bulgaria also treats contractors differently than full-time employees, so misclassifying a contractor could lead to fines.
Some platforms (Papaya Global among them) offer the Employer of Record (EoR) service helping companies hire in countries where they do not have any office.
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