Planning an expansion to Bulgaria comes with many opportunities — you can hire talented new employees, form important business relationships, and grow your company across borders. However, you also need to focus on the more difficult aspects, such as setting up your Bulgaria payroll, following employment compliance laws, and running a new company location.
Fortunately, G-P can take on the complexities of expansion for you. As an Employer of Record (EOR), we handle all aspects of global employment, including the Bulgaria payroll setup and management processes, so you can focus on growing your company without the stress of compliance.
Taxation rules in Bulgaria
Employees and employers must make contributions to the National Social Security Fund. All employees get indemnity payments from the fund, and the Social Security Budget Act determines the amount each person receives.
Contributions to social security include:
- 24.7% to 25.4% of gross salary for basic social security
- 5% of gross salary for pension insurance
- 8% of gross salary for health insurance
Employers pay 60% of the percentages above, and employees cover the remaining 40%. Employers are also responsible for paying 0.4% to 1.1% of gross salaries for accident insurance.
The tax rate paid by employees is 10%. Employers must pay the tax withheld for each employee to the competent National Revenue Agency (NRA) directorate.
Bulgaria payroll options for companies
Companies have several different Bulgaria payroll options, including:
- Internal: If you plan to operate long-term in Bulgaria, you may want to set up an internal payroll. This option is typically for large companies with large budgets since you’ll need a full HR team.
- Bulgaria payroll processing company: If you would rather outsource your payroll, you can work with a local Bulgaria payroll processing company. While this option will take payroll off your plate, you’ll still be responsible for compliance.
- Employer of Record (EOR): A global EOR like G-P can streamline each step of the payroll setup and management process, so you can rest assured you’re in compliance with local laws and allocate your time and resources to building your global teams.
How to set up a payroll in Bulgaria
If you would rather set up your Bulgaria payroll on your own, you’ll have to establish a subsidiary first. The subsidiary setup process can take weeks or months depending on where you are in Bulgaria and which entity you incorporate as.
Entitlement/termination terms
We recommend adding entitlement and termination terms to an employment contract before hiring employees. Bulgaria allows probationary periods for up to 6 months, and employers can terminate an employment contract with or without notice depending on the circumstances, or mutual consent.
A permanent employment contract can be terminated unilaterally by the employer only on certain grounds listed in the Bulgarian Labour Code and following a specific procedure. The procedure and grounds for termination are not freely negotiable between the parties.
The procedures may differ depending on the chosen termination grounds. Severance pay is not required by law, but employees are entitled to 1 month’s salary of redundancy pay for individual or collective dismissal on economic grounds, or 2 months’ salary if the termination is due to illness or after the employee becomes entitled to a pension.
Streamline global payroll management with G-P.
G-P streamlines each step of the payroll management process with our market-leading global employment platform. Pay your team with confidence anywhere in the world in 150 currencies with our 99% on-time automated payroll system — all with just a few clicks. Our products also integrate with leading HCM solutions, syncing employee payroll data across platforms automatically to create one reliable, convenient source of truth for HR teams.
Contact us to learn more about how we can support you.