Employer of Record (EOR) Bulgaria - Hire and Pay Employees and Contractors with a Global PEO | Employer of Record (EOR)

An Employer of Record (EOR) in Bulgaria is a company that takes on the responsibility of being the legal employer for a worker. This includes managing payroll, benefits, and other employment-related tasks on behalf of the worker's actual employer.

Discover the key considerations and essential details you should be aware of before you hire your remote team in Bulgaria.

Facts About Bulgaria

Bulgaria, known as the "Silicon Valley of Southeastern Europe," boasts a highly skilled tech workforce thanks to its strong educational system. This, combined with Bulgaria's low costs and proximity to Europe, makes it a top outsourcing destination, attracting major ICT companies and leading them to move operations from locations like India.
StartupBlink ranks Sofia as the leading city for startups in Bulgaria. Varna is also listed as a notable Bulgarian startup hub.
Bulgarian software engineers consistently rank among the world's best. HackerRank, a respected developer platform, positions them at 12th globally, showcasing their proficiency in languages like Java, Python, and C++.
Bulgarian software companies are champions of social responsibility, according to the BASSCOM Barometer 2023. They contribute significantly to the nation's well-being, paying taxes and social security at a rate three times higher than the national average.
To attract foreign innovators, Bulgaria offers a Startup Visa program. This program allows non-EU citizens with promising high-tech business ideas to apply for a special government certificate. If granted, this certificate lets them obtain a long-term residence permit, giving them a one-year window to develop their business in Bulgaria.

Overview
Continent	Europe
Country	Bulgaria
Capital	Sofia
Time zone	UTC+02:00 (EET)
Total Time zones	1
Working hours per week	40
Working week	Monday–Friday
Typical hours worked	8
Personal Tax filing deadline	10 January through 30 April of the following year
Financial Year	1st January to 31st December
Date format	dd.mm.yyyy
Currency	Bulgarian Lev (BGN)
VAT	the standard rate is 20%

Employment Contracts in Bulgaria

Employment contracts in Bulgaria are governed by the Bulgarian Labour Code and play a crucial role in establishing the legal relationship between an employer and employee. Here's a breakdown of key aspects to consider:

Contract Types:

Indefinite Term: The most common type, offering ongoing employment with no predetermined end date.
Fixed-Term: Used for temporary or seasonal positions, with a maximum duration of 3 years (exceptions apply).

Mandatory Elements:

The contract must include specific information:

Place of Work: Physical location where the employee will perform their duties.
Job Title (NKPD Code): Position title following the National Classification of Professions and Positions (NKPD) system.
Nature of Work: Brief description of the employee's responsibilities and tasks.
Start Date: Date the employment relationship begins.
Term of the Contract: Whether it's an indefinite or fixed-term contract.

Remuneration:

Base Salary: Amount of regular pay before taxes and deductions.
Payment Frequency (e.g., monthly)

Paid Leave:

Annual Leave: Minimum legal entitlement to paid vacation days.
Sick Leave: Number of paid sick days per year.

Working Hours:

Daily or weekly working hours.
Overtime pay regulations (if applicable).

Termination Clause: Outlines the process for terminating the employment contract by either party, including notice periods.

Employment Contracts Software in Bulgaria

Trudovi dogovori 2.20, a software program provided by the National Revenue Agency (NRA) of Bulgaria, simplifies the process of generating employment contracts that comply with the latest Bulgarian labor code and social security requirements. This user-friendly program is a valuable tool for businesses of all sizes and HR professionals in Bulgaria.

Key Features:

Easy creation of compliant employment contracts
Verification of company and employee information with BULSTAT and EGN registers
Streamlined workflow for managing employment contracts

In order to create employment contracts, users need to enter parameters including details of the company and the authorized person (EIK, EGN, etc.). Trudovi dogovori then verifies this information with official registers to ensure accuracy and uses it to generate relevant documents.

Notification under Article 62.para.5 of the Labour Code:

This is a specific notification required by law for employers in Bulgaria. Article 62.para.5 of the Labour Code mandates employers to inform the National Revenue Agency (NRA) about any changes made to employment contracts.

Content of the Notification:

Employer Information: Company name, EIK (Unified Identification Code)
Employee Information: Employee name, EGN (Unified Civil Number)

Details of the Change:

For new or modified contracts: Specific changes made to the contract (e.g., salary increase, change in position)
For terminated contracts: Reason for termination, date of termination

Declaration: Signed by an authorized representative, confirming the accuracy of the information.

Timeframes:

3 days: After concluding or modifying an employment contract.
7 days: After terminating an employment contract.

Employment Laws in Bulgaria

Minimum Wages

As of January 1, 2024, the minimum wage in Bulgaria is BGN933.00 per month.

Working Hours

The Bulgarian Labour Code (Article 136 (1) – (3)) establishes a standard 8-hour workday and 40-hour workweek for employees.

Overtime Pay

The Bulgarian Labour Code regulates overtime work with limitations and compensation requirements. Here's a breakdown:

Maximum Overtime: Employees cannot exceed 150 hours of overtime work per calendar year (Article 146 (1)).
Weekly Limits: Overtime within a workweek is capped at 6 hours for daytime work and 4 hours for nighttime work (Article 146 (1)).
Monthly Limits: Overtime cannot surpass 30 hours for daytime work and 20 hours for nighttime work within a month (Article 146 (1)).

Compensation:

Overtime work cannot be compensated with additional breaks (Article 150). Article 150, in conjunction with Article 262 of the Labour Code, mandates that overtime work be compensated with additional pay agreed upon by the employer and employee (supplements). The minimum supplements are:

50% extra pay for work on weekdays
75% extra pay for work on holidays
100% extra pay for work on public holidays
50% extra pay for work exceeding the standard weekly or longer work schedule

Probation Period

The Bulgarian Labour Code allows for probationary periods in employment contracts. The maximum duration depends on the type of contract:

Indefinite Term Contracts: A probationary period of up to six months can be agreed upon, benefiting either the employer or both parties.
Fixed-Term Contracts (less than one year): The probationary period is limited to one month.

Notice Period

The notice period for termination of employment contracts in Bulgaria depends on the type of contract:

Indefinite Term Contracts:

The statutory minimum notice period is 30 days (Article 326 (2) of the Labour Code).
However, the contract can specify a longer notice period, up to a maximum of 3 months.

Fixed-Term Contracts:

The statutory minimum notice period is 3 months (Article 326 (2) of the Labour Code).
However, the notice period cannot be longer than the remaining term of the contract.

13th Month Salary

There is no legal requirement for a 13th-month salary in Bulgaria. Unlike some countries that mandate an additional year-end payment, Bulgarian labor laws don't obligate employers to provide this benefit.

Severance Pay

Severance pay in Bulgaria is a one-time payment an employer provides to an employee upon termination of their employment contract. The amount and eligibility for severance pay depend on the reason for termination and the type of employment contract. Here's a breakdown:

Who is Eligible?

All employees with a valid employment contract in Bulgaria are entitled to severance pay under certain circumstances.

Amount of Severance Pay:

The amount of severance pay varies depending on the situation, but here are some common scenarios:

Statutory Minimum: The minimum severance pay mandated by law is one month's salary (gross salary before taxes and deductions).
Termination by Employer (Specific Grounds): If the employer terminates the contract due to specific reasons like company closure, staff reduction, or economic downturn, the employee is entitled to two months' salary in severance pay.
Termination Due to Disability: If the employee becomes disabled and can no longer perform their job duties after at least five years of employment with the same employer, they are entitled to two months' salary in severance pay (provided they haven't received similar severance pay for disability in the past five years).
Reaching Retirement Age: Employees who reach retirement age and have a valid employment contract are entitled to two months' salary in severance pay. (Note: This applies only if they haven't already received severance pay based on another reason, like disability.)
10+ Years of Service: Employees who have been working for the same employer for at least ten years continuously are entitled to six months' salary in severance pay upon termination (applicable only once).
Mutual Agreement: If the employer and employee agree to terminate the contract by mutual consent, the severance pay amount can be negotiated freely and documented in the termination agreement.

Personal Income Tax

In Bulgaria, personal income tax for 2024 follows a flat tax rate system. Here's a breakdown of the key points:

Flat Tax Rate: Bulgaria applies a single income tax rate of 10% on all taxable income for individuals in 2024. This means regardless of your income level, you pay 10% tax on your taxable income.
Taxable Income: This refers to your gross income minus any deductible expenses allowed by law. Common deductions might include:

Mandatory social security contributions (already deducted at source)
Some types of insurance premiums
Donations to charitable organizations (up to a certain limit)

Work Permit

Employers should ensure compliance with these regulations to successfully hire and retain talent in Bulgaria.

EEA Nationals

EEA nationals and their family members have similar rights and obligations as Bulgarian citizens, except for those requiring Bulgarian citizenship (e.g., voting).
They can be employed without restrictions, only needing a long-term residence permit.
The process for obtaining this permit is straightforward and quick, requiring proof of the reason for their stay.

Non-EEA Nationals

Non-EEA nationals need both a residence and work permit to be employed.
They can be hired if:

Non-EEA employees with long-term residence permits do not exceed 20% of the workforce (35% for small/medium businesses).
Work conditions and compensation are comparable to those of Bulgarian employees.
They have the necessary qualifications and experience.

Types of Work Permits

Single Residence and Work Permit:

Requires prior approval from the Employment Agency.
Employers must justify hiring a non-EEA national over a local candidate.

EU Blue Card:

For highly qualified non-EEA nationals.
Requires a higher education degree and a salary at least 1.5 times the national average.
Not subject to workforce ratio requirements.

Specific Situations

Intra-Corporate Transfer:

For temporary relocation within the same corporate group.
Applies to managers, specialists, or interns with prior employment in the company.
Exempt from workforce ratio requirements.

Seasonal Workers:

Can obtain a continuous residence permit for 90 days to 9 months, extendable once.
For up to 90 days of work within 12 months, registration with the Employment Agency suffices.

Posted Workers:

Require both a work and residence permit.
For postings up to 3 months in 12, a one-time registration with the Employment Agency is needed.

Employee Benefits

Bulgaria offers a comprehensive system of employee benefits regulated by the Social Security Code and Health Insurance Act. Key aspects include:

Social Security Benefits

Sick Leave: Up to 6 months with 80-90% income replacement for general illness and work-related incidents. Additional allowances for caring for sick children and relatives.
Maternity Leave: 90% of average income for 410 days, followed by a fixed monthly amount for child care from 1 to 2 years.
Disability Pension: Available for 50%+ permanent disability.
Old Age Pension: Lifelong pension under the first pillar of the three-pillar system.
Death Benefit: One-time payment and survivor’s pension based on the deceased’s income.
Unemployment: 60% of average income for the last 24 months, available for 4-12 months.
Annual Paid Leave: 20 days, with additional days for sectors with heavier working conditions.

Healthcare Benefits

Contributions: Mandatory for all citizens and long-term residents, managed by the National Health Insurance Fund.
Coverage: Includes general practitioner visits, specialist referrals, limited dental care, and partial reimbursement for chronic disease medications.

Pension System

Three-Pillar Model:

First Pillar: Mandatory state pension fund providing lifelong pensions.
Second Pillar: Supplementary mandatory funds for those born after 1960, managed by private or state entities.
Third Pillar: Voluntary pension funds for additional contributions.

Additional Mandatory Benefits

Work-Related Accident Insurance: Required for high-risk sectors and specific professions.
Business Travel Insurance: Employers must cover medical expenses for employees on business trips abroad.

Contributions for social insurance, supplementary pensions, and healthcare are shared between employees and employers, with defined percentages for each. Personal income tax is levied on the net salary after these contributions.

Employing an Employer of Record (EOR) in Bulgaria can be a strategic decision for businesses looking to expand globally. By delegating tasks such as understanding local labor laws, handling payroll complexities, and ensuring compliance to the EOR, companies can establish operations smoothly without the need to set up a legal entity. This partnership allows businesses to focus on their core objectives and expansion strategies while ensuring that their workforce in Bulgaria operates in full compliance with local regulations. The EOR streamlines international employment processes and provides expert guidance in navigating Bulgarian employment laws.

Balkan Peninsula: EOR Croatia | EOR Slovenia | EOR Bulgaria | EOR Romania |

Deductions (2024):	Total	аt the expense of employee	at the expense of employer
State Social Insurance contributions: (disability, general disease, maternity, old age pension)	19.30%	8.38%	10.92%
Retirement (Supplementary Mandatory Pension Security, second pillar)	5.00%	2.20%	2.80%
Healthcare contributions (Mandatory medical insurance)	8.00%	3.20%	4.80%
Total contributions:	32.30%	13.78%	18.52%
Occupational Accident and Disease			0.4-1.1%

Employer of Record (EOR) Bulgaria - Hire and Pay Employees and Contractors with a Global PEO