Employ Candidates Compliantly in Bulgaria

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  1. Overview: Bulgaria
  2. Global HR Compliance
  3. Global PEO and payroll
  4. Work permit for hiring expats via PEO
  5. Expand without a company set up
  6. Contractor vs. employee: which is better?
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Global PEO and Payroll in Bulgaria

Getting your business up-and-running in Bulgaria can be challenging, especially if you do not speak the native language. Establishing your own business entity in Bulgaria is an option to be considered as you expand abroad. But before you invest valuable resources in setting up business in Bulgaria, you should be fully aware of the risks involved.

Acumen’s Global PEO and Payroll solution was designed especially for companies like yours, to smooth the way for quick, easy and risk-free business operations in Bulgaria, without having to establish a legal business entity.

Acumen International – Your Professional Employer Organization in Bulgaria

Navigating the Bulgarian legal system and adhering to regulations governing employment and taxation can be challenging for businesses, especially if you are not a native Bulgarian speaker. Partnering with Acumen International as a global Professional Employer organization (PEO) provides you with the local knowledge and support you need to conduct business in Bulgaria without concern for legal and compliance risks.

Whether you represent international client companies or you are taking your own business operations abroad, Acumen International’s Global PEO and payroll service allows you to hire and payroll local and expat employees in Bulgaria. With Acumen in your corner, you can quickly and easily onboard and compensate your employees without risk of legal repercussions.

International Global Payroll and Taxation in Bulgaria

Personal income tax (PIT)

Employee taxation

  • 10.58% – Social Security
  • 9.76% – Pension Fund
  • 10% – Flat rate

Foreign nationals. Income earned by an employee from their work activities on the territory of Bulgaria is deemed Bulgarian source income and is taxable in Bulgaria. The taxable income from employment activities comprises the employee’s salary and other additional benefits (in cash or in-kind) provided to the individual in relation to their assignment. The taxable base is formed after deducting from the taxable income the amount of the social security and health contributions that are at the expense of the employee.

Rate of taxation on employment income. Employment income is taxed at a flat rate. On payment of the salary, the employer must withhold the due personal income tax and remit it to the National Revenue Agency on behalf of the employee.

Social security contributions. The social security contributions are split between the employer and employee. The most common aggregate social security rate, distributed between the employer and the employee in a proportion of 60:40. The social security contributions due by the employee are withheld by the employer from the employee’s remuneration and remitted to the National Revenue Agency.

Payroll Cycle in Country

Salaries are paid on a monthly basis. Payday is agreed upon between the employer and employee.

Non-payroll taxes in Country

Value-added tax (VAT). The standard VAT rate is 20%. A reduced VAT rate of 9% applies to certain tourist services. Temporarily, from 1 July 2020 until 31 December 2021, the scope of the 9% reduced rate is expanded to include restaurant and catering services (except for supplies of alcoholic beverages), certain baby and children food and certain products for baby hygiene, as well as books (as defined in the legislation).

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.

Input VAT shall be deducted proportionately depending on the percentage of the use of the goods or the immovable property for business purposes.

The VAT Act provides for mandatory VAT registration upon certain conditions (e.g., for all companies upon reaching a statutory threshold of 50,000 Bulgarian lev (BGN) taxable turnover in Bulgaria for a period not longer than two consecutive months, including the current month).

Foreign taxable persons, not established in Bulgaria and planning to perform taxable supplies in the country for which VAT is due by the supplier, are subject to mandatory VAT registration (irrespective of their taxable turnover in Bulgaria), subject to certain exceptions

Voluntary VAT registration is also available. The Bulgarian legislation does not provide for retroactive VAT registration.

The following mechanism for VAT recovery applies to VAT-registered companies: the positive or negative difference between the output VAT charged by the company and the input VAT for the respective month results, respectively, in a VAT payable or a VAT refundable position. The VAT payable should be remitted to the state budget not later than the 14th day of the month following the respective month. VAT refundable is offset against any VAT payable in the following two months, and any remainder is effectively recovered within 30 days thereafter.

The following statutory periods for VAT refunds apply:

  • 30 days for persons that have performed supplies subject to zero-rate (e.g., exports) within the last 12 months exceeding 30% of the total value of all taxable supplies performed by them in the same period, as well as by large investors meeting certain specific conditions.
  • Two months and 30 days in all other cases.

It is possible to claim a refund for VAT paid with respect to assets acquired not earlier than five years prior to the VAT registration, under certain conditions. In the case of real estate, the term is 20 years.

The cash accounting regime may be applied by persons with a taxable turnover below 500,000 euros (EUR) for a period of 12 months and a number of other requirements. Taxpayers authorized to apply this regime remit VAT upon receiving a payment from their counterparts and are entitled to VAT credit when they make a payment to their suppliers. Under this regime, a person who has received an invoice from a supplier that is using the cash accounting regime will be entitled to VAT credit upon payment of the invoiced amount.

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How Acumen’s International PEO and Payroll Service can Benefit Your Business in Bulgaria

Compensating your local and expat workforce in Bulgaria and closely adhering to Bulgarian taxation requirements can divert your attention and resources from activities that help your business grow. A reliable global employment solution like Acumen’s Global PEO and Payroll service can take a substantial burden off your shoulders so you can focus on running your company.

Outsourcing the administrative and compliance tasks involved in employee payroll is one approach, but we have a better solution. Acumen International offers a global PEO and payroll solution that goes beyond outsourcing. We hire and compensate your global workforce on your behalf, and take care of all the details of payroll while ensuring full compliance with Bulgarian labor and taxation laws.

It is important to note that Acumen does not provide international global payroll services as a standalone solution, but only as a part of our global PEO and Payroll solution.

Our comprehensive global PEO and payroll services are just some of the benefits of partnering with Acumen International. We make it easy for you to achieve your business goals in Bulgaria by officially employing and compensating your best selected global talent – both locals and expats – without concerns for legal and compliance risks faced by global employers.

Disclaimer: Any of the above information is subject to changes imposed by Bulgarian laws. To get the latest updates on taxation in Bulgaria and in 190 countries worldwide, contact Acumen’s team of global employment experts.

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