Definitive Guide to Hiring in Bulgaria

Hiring Employees in Bulgaria

For companies that want to hire employees and run payroll in Bulgaria without first establishing a business entity or subsidiary, Global Expansion provides Employer of Record services (EOR Bulgaria).

Our EOR services streamline and simplify the global hiring process. We handle the core global HR tasks - compliance, contracts, payroll, global benefits, and more - so that you forgo hours of ongoing admin, human error, and risky compliance.

In Bulgaria, companies would historically establish a subsidiary or branch office to legally hire in that country. With Global Expansion this step is no longer necessary. We have subsidiaries all over the world and therefore can legally hire on your behalf. The employees are ours only on paper and report directly to managers within your company.

Labor Laws in Bulgaria

Employment laws in Bulgaria are uniquely suited to the country’s way of life, and crucial to understand if you want to employ local talent in this country. Get the details on Bulgaria employment laws and Bulgaria policies here.

Bulgaria's employment standards entitle employees to periods of rest every working day and within working days.

Bulgarian jobs typically have work breaks during the day, with lunch breaks being at least 30 minutes.

The daily rest period should not be shorter than 12 hours. Weekly rest periods consist of 2 successive days (or 48 hours) in a 5 day work week.

If an employee has worked overtime during the weekly period of rest, the employee can take a period of rest of at least 24 hours.

Legal holidays can also be periods of rest:

• Political and calendar holidays
• Religious holidays (e.g., Easter and Christmas)

Employment Contracts

1. Employment contracts with a trial period

   This contract checks the employee's skills within a specific period to see if the work is suitable from the employer's perspective. The probationary period should not exceed six (6) months.

2. Employment contracts for internships

   The Bulgaria employment contract for internships states that the employer agrees to train the employee during the time specified.

3. Main employment contracts

   If an employee concluded 2 or more employment contracts, the first one concluded or the contract that requires more working hours is treated as the main employment contract.

4. Additional employment contracts

   These employment contracts have been concluded despite the existence of the main contract.

   • They must contain the duration of the work and the allocation of working time in days, weeks, etc.

   The employee may conclude this type of contract with the main or new employer. They may also conclude these additional employment contracts:

   • Additional employment contracts with the same employer
     • The job is done outside the specified working time
     • The extra work was not for the same employment function as the main contract.
     • The working time is not considered when calculating seniority.
     • Additional employment contract with a different employer.

   The working time is not considered when calculating seniority.

Employee Probation Period

The probation may not exceed a time period of 6 months. Additionally, the contract must indicate in whose favor the probation is agreed. If the employment contract does not contain this agreement, it is assumed that the time period is in favor of both parties.

Annual Leave in Bulgaria

An employee is entitled to at least 21 consecutive days of paid annual leave. National and religious holidays are not included. The employees should use their annual leave entitlement during the year earned.

The minor workers are also entitled to basic paid annual leave of at least 26 working days including the calendar year when they attain the age of 18 years.

Holidays in Bulgaria

Employees are entitled to 12 public holidays. Here is the full list of public holidays in Bulgaria.

Bulgaria Maternity Leave

Maternity leave in Bulgaria is 410 days, 45 of which are used before the birth. With the mother's consent, when the child reaches six months, the leave can be transferred to the father for the rest of the period.

During the term of parental leave, no wages are paid. Rather, a monthly benefit at a flat rate is generally paid for parental leave.

However, if parental leave is considered part of maternity leave (of 410 days), workers are paid 90% of their wages for at least 183 days of parental leave (after a child is six months of age).

Paternity Leave Bulgaria

Fathers are entitled to 15 days paid paternity leave following the birth of the baby. During the term of parental leave, no wages are paid. The wages are paid through State Public Insurance. As of 2022 the amount is BGN 650.

The mother, father, or guardian of the child is entitled to this benefit, depending on who cares for the child.

Sick Leave in Bulgaria

For the first three days of sick leave, the employer must cover 70% of the employee’s wages. The National Social Security Institute must cover the rest of the sick leave after the employee provides the necessary documentation. Employees must be working for the company for at least six consecutive months to claim these benefits.

For the following days, the daily general sickness benefits in cash for temporary inability to work amount to 80%, or 90% of your average daily gross labor remuneration or average daily insurable income on which social security contributions have been paid for the last 18 months before the incapacity to work occurs.

Working Hours in Bulgaria

According to the Bulgarian Labor Law, a typical work week in Bulgaria has 8 hours per day, 5 days per week. Therefore, the fixed working week is 40 hours (Article 136 (1) – (3) of the Labour Code).

The schedule of 8 am to 5 pm is more typical in the industry sector, while the schedule 9 am to 6 pm is typical for public sectors and services.

The extension of working time can’t be more than 10 hours per day. For employees with reduced working time, this can be up to an hour more per day. In such cases, the working week duration cannot be more than 48 hours; for employees with reduced working time this is 40 hours.

• The employer is obliged to record extended, reduced and compensated working time in a special record book.
• The extension of the working time can take place for up to 60 working days in one calendar year, but no more than 20 working days in a row.

Overtime in Bulgaria

In Bulgaria, the employee is not obligated to work overtime (unless otherwise agreed). Overtime must be performed outside the regular working time (e.g. before the beginning/after the end of the working day, during the lunch break).

Within one calendar year, overtime may not exceed 150 hours (Article 146 (1) of the Labor Code); within one working week it may not exceed 6 hours of day work and 4 hours of night work; within one working month it may not exceed 30 hours’ day work and 20 hours’ night work.

Night work and overtime work is prohibited for workers under 18 years of age.

According to Article 150 in relation to Article 262 of the Labor Code, the performed overtime work is remunerated with respectively higher supplements agreed between the parties of the employment contract.

The minimum supplements are as follows:

• 50% for work on work days.
• 75% for work on holidays.
• 100% for work on public holidays.
• 50% for work at working time calculated on a weekly or longer basis.

Termination of Employment in Bulgaria

The Bulgarian labor law provides several reasons for termination by the employer that, if they are present, allow the employer to terminate the employment contract with a written letter of notice according to the time limits of Article 326 (2) of the Labor Code:

• Closing down the enterprise;
• Partial closing down or personnel reduction;
• Reduction of the volume of work;
• If an employee that had been dismissed unlawfully must be reinstated to his old position;
• Upon reaching 65 years of age for professors, lecturers and doctors;
• If the employment relationship has been founded after the employee acquired and exercised the right on pension for retirement age;
• If the requirements of the work amended to a level that the employee cannot fulfill due to lacking qualification;
• In case of objective impossibility to fulfill the employment contract.
• Work stoppage for more than 15 working days.

Other examples include when an employee lacks the qualities for efficient work performance, along with when an employee does not have the necessary education or vocational training for the assigned work.

Termination can also occur when an employee refuses to follow an enterprise or a division thereof, in which he is employed, when it is relocated to another community or locality.

Notice Period in Bulgaria

Labor Code Article 326 (2) defines that the notice period for termination of a permanent contract is 30 days, unless the parties have agreed on a longer period, but not more than 3 months.

The notice period for termination of fixed-term contracts is 3 months but not more than the remaining term of the contract.

Severance in Bulgaria

While there is no general provision on statutory severance pay in place, workers are entitled to redundancy pay equal to one month's salary in the case of individual or collective dismissal on economic grounds.

With a decision of the Council of Ministers, or on the basis of collective labor agreements or employment contracts, compensations for a longer period could be defined.

If within this period the employee started the work with lower salary, he/she is entitled to receive the difference in remuneration for the affected time period

• If an employment contract is terminated by reason of illness, the worker is entitled to severance pay equal to two months' wages provided that the worker has worked at least five years with the employer and has not received compensation on the same grounds during the last five years of employment service.

A worker is entitled to two months' wages as severance pay if his employment is terminated on acquiring the right to pension. The severance pay in this case is 6 months' wages for a job tenure of 10 years.

Bulgaria Salary and Wages

Bulgaria Salary Ranges

The average salary in Bulgaria ranges from BGN 840 or USD 428 on the low end to BGN 14,700 or USD 7,489.26 at the high end.

Bulgaria minimum wage

The minimum salary in Bulgaria is at BGN 710 or USD 362 per month as of January 2022, which is an increase from BGN 650 in 2021.

Average salary in Bulgaria

The average hourly wage in Bulgaria is BGN 19  or USD 9.68). On a monthly basis, a Bulgarian employee earns an average of BGN 3,300 or USD 1,775.

The median monthly salary in Bulgaria is pretty close to the average: BGN 3,370 or $1,813.30.

Bulgaria Salary Comparison

There is a 6% gender wage gap among Bulgarians, with males earning more than their female counterparts in most industries. Males earn about BGN 3,390, while females are at BGN 3,190.

Bulgarian employees experience a 7% average salary increase every 20 months. Other employee benefits vary and are under the companies' discretion.

13th Month Salary in Bulgaria

There is no mandatory required to pay a 13th month salary in Bulgaria.

Additionally, it is not customary for employers to pay bonuses monetarily. They are instead awarded through different types of insurance.

The aim of the social security system is to guarantee a stable standard of living to everyone. The Bulgarian social security system covers the following risks:

• General disease,
• Work-related accidents,
• Occupational disease,
• Maternity,
• Unemployment,
• Old-age,
• Death.

The employer is obligated to report the conclusion of an employment contract within a time period of three days to the National Revenue Agency. They must pay the social security contributions by the 25th of the following month (Article 7 (1) of the Social Security Code (SSC)

National insurance contributions include social security and health insurance contributions.

Deductible Expenses in Bulgaria

Personal Deductions

Donations to certain organizations are deductible up to the defined limits (i.e. the total amount of donations may not exceed 65% of the total annual taxable base of the individual).

Mandatory social security contributions in Bulgaria or another EU/EEA country borne by individuals are tax deductible in full (in the presence of supporting documentation).

Voluntary pension and unemployment contributions, as well as certain health insurance and life insurance contributions, are deductible up to certain limits.

Young married couples (including foreign individual tax residents of an EU/EEA member state) may deduct from their annual taxable income the interest on mortgage loans for the first BGN 100,000 of the loan, under certain conditions.

Tax Incentives

Tax incentives have been introduced for people with children, which can benefit both local and EU/EEA established individuals. The tax incentives for children provide for reduction of the total annual tax base calculated under the PITA of the parent in the following amounts:

• BGN 6.000 in case of one child.
• BGN 12,000 in case of two children.
• BGN 18,000 in case of three and more children.

The conditions for this tax relief require that the child is underage, not placed in a specialized care institution by December 31st of the fiscal year, and is a resident of an EU/EEA member state as at the same date. This relief can be used by a parent who is not deprived of parental rights, a guardian, a family member or close relative where the child is placed, or a foster parent.

Only one parent (or foster parent or close relative) may benefit from this new tax relief. If a double benefit is determined after review, the amount of the relief has to be returned to the authorities.

Tax incentives of BGN 12,000 are also introduced for disabled children and are applicable under certain specific conditions.

Tax Relief for Non-Cash Methods of Payment

The requirements for tax relief for individuals who use non-cash payment methods of their expenses are the following:

• If the individual has received taxable income during the tax year, 100% of the taxable income to be received will be by bank transfers, and at least 80% of the expenses of the individual are to be paid by non-cash methods, and the individual must have no outstanding public liabilities at the date of filing of the annual tax return.
• The tax relief is 1% from the total tax liability in Bulgaria for the tax year, but capped to BGN 500.

All tax reliefs above may be used only in case the individual has no outstanding public liabilities at the date of filing of the annual tax return.

Immigration Bulgaria

Learn about Bulgaria immigration requirements, migration in Bulgaria, Bulgaria work visa requirements, work permits and more.

Employment Promotion Act

The Employment Promotion Act is the main legal framework regulating the employment of foreign citizens in Bulgaria. However, not all foreign citizens are required to apply for a work permit when coming to work in Bulgaria.

EU and Swiss citizens are not required to obtain Bulgarian labor permits; they must only register with the local Employment Office of the region they live in.

Non-EU citizens must first apply for a Bulgaria work permit with the National Employment Agency before beginning work at a Bulgarian company. The employer must apply for the foreign employee’s Bulgarian labor permit.

Visa requirements Bulgaria Overview

Learn about the Bulgarian visa, including the visa policy in Bulgaria and all the ways to obtain a regular or a work visa for Bulgaria.

Value Added Tax (VAT) in Bulgaria

The standard VAT rate is 20%. A reduced VAT rate of 9% applies to certain tourist services.

Temporarily, until December 31st 2022, the scope of the 9% reduced rate is expanded to include restaurant and catering services (except for supplies of alcoholic beverages), certain baby food, books (as defined in the legislation), and use of sports facilities.

The Bulgaria VAT rate for natural gas and central heating is also temporarily reduced to 9% (from the standard 20% rate) until July 1st 2023.

The reduced rate of VAT applies to:

• Books
• Restaurant and catering services (including takeaway food and napkins but excluding alcoholic drinks)
• Food for babies and infants
• Tourist services
• Sport facility-use services

Some activities are zero-rated, including intra-Community supplies, exports of goods to countries outside the European Union (EU), international transport of goods (i.e. transport to or from countries outside of the European Union), and supplies of goods and services related to aircraft and vessels, subject to statutory limitations.

Some supplies are VAT exempt without the right to a VAT credit, including (but not limited to) certain land transactions; leasing of residential property to individuals; financial, insurance, gambling, educational, and health services; and provision of food products to a food bank free of charge, subject to certain statutory conditions.

Options to charge VAT exist for certain land transactions, leasing of residential property to individuals, and finance lease contracts.

Withholding Tax in Bulgaria

Dividends and Liquidation proceeds payable to a nonresident are subject to a 5% withholding tax, unless a lower rate applies under a tax treaty. Dividends and liquidations proceeds payable to a legal entity that is tax resident in an EU/EEA member state are exempt from withholding tax.

Interest paid to a nonresident is subject to a 10% WHT, unless the rate is reduced under a tax treaty or the EU interest and royalties’ directive applies Royalties paid to a nonresident are subject to a 10% withholding tax, unless the rate is reduced under a tax treaty or the EU interest and royalties’ directive applies.

A technical service fee paid to a nonresident can be subject to a 10% WHT, unless the rate is reduced under a tax treaty.

Mandatory Benefits in Bulgaria

It’s important to understand the legal requirements of hiring employees in Bulgaria (whether it’s remote or in-office) so that your business remains compliant. As part of Global Expansion’s International PEO and Employer of Record (EOR) solution, we guarantee employees are registered with the appropriate government agency, and that they receive mandatory benefits.

Mandatory benefits also include social security benefits, which cover the following risks in Bulgaria:

• General disease
• Work-related accidents
• Occupational disease
• Maternity
• Unemployment
• Old-age
• Death

Payroll In Bulgaria

The tax year in Bulgaria is, without exception, the calendar year. In general, taxpayers have to submit annual tax returns.

Employees who work on the basis of an employment contract with a local employer are not obligated to submit tax returns if they have employment income only, the entire income has been taxed during the year via the employer’s monthly payroll withholding, and at December 31st of the tax year they have only one employer who makes an annual reconciliation of the due tax by January 31st of the following year.

In all other cases, individuals, including those who receive income under employment contracts with non-resident employers, are obligated to file an annual tax return. The deadline for submission of tax returns is April 30th of the following year.

A reduction of 5% of the outstanding income tax is applicable if the annual tax return is filed electronically by March 31st of the following year, the individual has no outstanding public liabilities, and the tax is paid by March 31st of the following year. The discount of 5% is capped at BGN 500.

Tax return filing requirements do not apply to individuals who receive only employment income during the year if they have no outstanding tax liabilities and do not use tax relief. Certain types of income are subject to quarterly tax payment and reporting by both residents and nonresidents.

Payroll Accrual in Bulgaria

Country Accruals Additional Information

Social security is mandatorily paid on employees’ gross income and starts from 32.7% in Bulgaria. Contributions are shared between employee and employer. The maximum threshold for social security payments is 3000 BGN while the minimum insurance income depends on the group of economic activities and professions.

Payroll Accruals Additional Information

Accrued Benefits in Bulgaria

Why use Global Expansion to hire in Bulgaria

Establishing a branch office or subsidiary in Bulgaria can be time-consuming, expensive and complex. With such a robust labor market in place, one must pay great attention to detail when structuring employment because Bulgarian labor laws are complex.

The company also has a responsibility to comply with specific employment practices dictated by Bulgarian law to maintain its good standing as an equal opportunity employer.

Global Expansion makes it easy for you to expand into Bulgaria. We'll help you hire your candidate of choice, handle HR matters and payroll, and ensure that you comply with local laws without the burden of setting up a foreign branch office or subsidiary. In addition, you'll have complete control and direction over your employees.

We enable you to stay in control of everything. Our Bulgarian Global Professional Employer Organization (PEO) and Employer of Record (EOR) solution provides you with peace of mind to focus on running your company and the security to enter new markets.