Payroll taxes in Bulgaria that are of key importance to employers include social security contributions, income tax and health insurance payments. Learn more about the processes for setting up payroll, calculating taxes, submitting payments compliantly, and adhering to due dates in Bulgaria.
Capital City
Sofia
Currency
Bulgarian Lev
(
лв
)
Timezone
EET
(
GMT +2
)
Payroll
Monthly
Employment Cost
19.32% – 20.02%
Managing payroll taxes in Bulgaria requires understanding a comprehensive system of contributions that affects both employers and employees. Bulgarian businesses must navigate income tax withholding, social security contributions, and health insurance payments, all governed by specific regulations and thresholds. For businesses operating in Bulgaria, compliance with these tax obligations is essential to avoid penalties and maintain good standing with authorities. The Bulgarian payroll tax system features a flat income tax rate alongside various mandatory social contributions that vary based on employee income levels.
This article aims to guide both small businesses and larger enterprises through the key aspects of Bulgarian payroll taxes, including calculations, deadlines, and filing procedures, helping you establish compliant and efficient payroll processes.
1 January - 31 December is the 12-month accounting period that businesses in Bulgaria use for financial and tax reporting purposes.
The payroll cycle in Bulgaria is usually monthly, with employees being paid by the last working day of the month.
As of January 1, 2025, Bulgaria's minimum wage is BGN 1,077 per month. This represents a 15.4% increase from the previous rate of BGN 933, marking a significant adjustment to address inflation and improve workers' purchasing power.
Minimum wage details:
This increase is part of Bulgaria's broader strategy to enhance wage levels in line with economic growth and EU directives on adequate minimum wages.
There is no law in Bulgaria that requires 13-month salaries.
Payroll calculation in Bulgaria involves several components that affect employee salaries. The process begins with determining the gross salary, which serves as the base for all tax and contribution calculations. From this gross amount, employers must deduct the employee's portion of social security contributions (13.78%) and the flat income tax rate of 10% (calculated after social security deductions).
The social security contributions are subject to minimum and maximum thresholds - as of 2025, the minimum monthly insurable income is BGN 1,077, while the maximum is capped at BGN 4,130. This means that regardless of how high an employee's salary is, social security contributions are only calculated on amounts up to BGN 4,130.
Employers must also account for their own contributions to social security (18.92-19.62% of gross salary), which include pension, health insurance, unemployment, and occupational accident funds. After all deductions, the net salary is calculated and paid to the employee, typically on a monthly basis.
Bulgaria's payroll tax system consists of several distinct components, each with specific regulations that employers must follow. These include income tax, social security contributions, and health insurance payments. Each tax type serves a different purpose within Bulgaria's social welfare system and has its own calculation method and compliance requirements.
Income tax in Bulgaria is straightforward with a flat 10% rate applied to all personal income. This tax is calculated on the gross salary after deducting the employee's mandatory social security contributions.
Employers are responsible for withholding this tax from employee salaries monthly and remitting it to the National Revenue Agency by the 25th day of the following month. Non-compliance can result in penalties ranging from BGN 500 to BGN 10,000, depending on the severity and frequency of violations. The income tax system offers several potential deductions, including child-related tax relief, donations, and voluntary insurance contributions.
Social security in Bulgaria encompasses several funds, with contributions split between employers and employees. The employee portion totals 13.78% of gross salary, covering pension funds (8.78%), general illness and maternity (1.4%), unemployment (0.4%), and health insurance (3.2%). Employers contribute an additional 18.92-19.62%, with the exact percentage depending on the industry risk category.
These contributions must be paid monthly by the 25th of the following month. The system has both minimum and maximum thresholds - contributions are calculated on income between BGN 1,077 and BGN 4,130 monthly. Late payments incur interest penalties of 0.1% per day, with potential additional fines for systematic non-compliance.
Health insurance in Bulgaria is mandatory and operates through the National Health Insurance Fund. The total contribution rate is 8% of gross salary, with employees paying 3.2% and employers contributing 4.8%. This insurance covers basic medical care and services for all insured individuals. Like other social contributions, health insurance payments are due by the 25th of the month following the salary payment.
The system applies the same income thresholds as other social security contributions. Failure to make timely payments can result in limited healthcare access for employees and financial penalties for employers, starting at BGN 500 for first-time violations.
Setting up payroll in Bulgaria requires registration with several government bodies. First, businesses must register with the National Revenue Agency (NRA), which oversees tax collection and compliance. This registration provides a unique tax identification number essential for all tax-related activities. Next, employers must register with the National Social Security Institute (NSSI) to manage social security contributions. For companies with employees, registration as an insurer with the health insurance fund is also mandatory. These registrations typically require submission of company documents, including registration certificates, management details, and information about business activities. Most registrations can be completed online through the respective authority portals, though some may require in-person visits to local offices.
Selecting the right payroll system is crucial for efficient operations in Bulgaria. Businesses can choose between:
Playroll offers a comprehensive solution specifically designed for Bulgarian payroll requirements, featuring automatic tax calculations, compliance updates, and multi-currency support. Other options include local Bulgarian providers like Omeks and Zaplata, or international systems with Bulgarian localization such as ADP and Sage. When selecting a system, consider factors like scalability, Bulgarian language support, compliance updates, and integration capabilities with existing HR systems.
Proper employee onboarding is essential for accurate payroll processing in Bulgaria. Employers must collect several mandatory documents from each new hire, including a personal ID card copy, completed tax declaration forms, bank account details for salary transfers, and relevant qualification certificates. For foreign employees, additional documentation such as work permits or EU registration certificates may be required. All employees must be registered with the National Revenue Agency within 3 days of starting employment through the submission of a notification form.
The employer must also establish individual payroll records containing personal information, position details, salary information, and tax codes. Maintaining accurate and up-to-date employee records is crucial for compliance with Bulgarian labor and tax regulations.
Accurate timesheet and attendance tracking forms the foundation of compliant payroll processing in Bulgaria. Bulgarian labor law requires employers to maintain detailed records of working hours, including regular hours, overtime, night work, and holidays. Most companies use electronic time tracking systems that integrate with payroll software, though smaller businesses may use manual timesheets.
Employers must track standard working hours (typically 8 hours per day, 40 hours per week), overtime (which must be compensated at 150% of regular pay), and absences (including sick leave, annual leave, and unpaid leave). Bulgarian regulations require these records to be maintained for at least 50 years, and they must be available for inspection by labor authorities upon request.
Salary calculation in Bulgaria follows a structured process beginning with the gross salary as defined in the employment contract. From this amount, mandatory employee contributions totaling 13.78% are deducted (pension, health insurance, unemployment, and general illness funds). The 10% flat income tax is then calculated on the remaining amount after social security deductions. Additional deductions may include voluntary pension or health insurance contributions, union fees, or court-ordered payments.
Employers must also calculate their own contributions (approximately 18.92-19.62%) separately, as these don't affect the employee's net salary but are part of the total employment cost. All calculations must respect the minimum wage (BGN 1,077 as of 2025) and the maximum social security threshold (BGN 4,130 monthly).
Bulgarian employers are legally required to provide detailed payslips to employees each pay period. These payslips must include specific information: gross salary amount, itemized deductions (social security contributions and income tax), any additional payments (bonuses, overtime), and the resulting net amount. Most companies distribute payslips electronically through secure HR portals or email systems, though physical copies may be provided upon request.
Payslips must be available to employees by the payment date, and employers must ensure data privacy and security in their distribution methods. The payslip format must comply with Bulgarian accounting standards and should be retained in company records for at least 50 years according to labor regulations.
Bulgarian employers must submit several monthly declarations to government authorities. The primary submission is Declaration Form #1, which details employee income and social security contributions, due to the National Revenue Agency by the 25th of the following month.
This can be submitted electronically through the NRA portal or in person at local offices. Additionally, employers must submit monthly statistical reports to the National Statistical Institute when requested. For companies with foreign employees, additional reporting may be required to the Employment Agency. All submissions must be accurate and timely, as late or incorrect filings can result in penalties starting at BGN 500 for first offenses and increasing for repeated violations.
Salary payments in Bulgaria typically follow a monthly schedule, with payments made by the end of the month or no later than the 10th day of the following month. Bank transfers are the most common payment method, with cash payments becoming increasingly rare and subject to stricter documentation requirements.
Employers must ensure that payment dates are consistent and clearly communicated to employees, ideally specified in employment contracts. Bulgarian law requires that salaries be paid in the national currency (BGN), though multinational companies may arrange for currency conversion services for expatriate employees. All salary payments must be properly documented in the company's accounting records, and payment confirmations should be retained for at least 50 years as part of employee records.
Bulgarian employers have several options for submitting payroll taxes and contributions:
Understanding the tax obligations for both employers and employees is crucial when operating in Bulgaria's business landscape. This section explains how taxes and statutory fees affect payroll and individual earnings in Bulgaria.
Employer payroll contributions are generally estimated at an additional 18.92% - 19.62% on top of the employee salary in Bulgaria.
In Bulgaria, the typical estimation for employee payroll contributions cost is around 13.78%.
In Bulgaria, there is a flat individual tax rate of 10%. Aside from this, employees contribute 13.78% to Social Security.
Women qualify for retirement at 61 years and 8 months with 36 years of employment, while men qualify at 64 years and 4 months with 39 years of employment. Those not meeting these conditions can retire at 66 and 8 months with at least 15 years of insured employment.
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Global employers operating in Bulgaria often encounter unique payroll challenges that can affect compliance and efficiency, like navigating evolving tax laws and managing employee data. With a need for real-time accuracy, modern organizations must develop strategies to overcome these challenges effectively. Below, we explore some of the most common payroll hurdles and provide actionable solutions to streamline payroll processes in Bulgaria.
Maintaining accurate global payroll reports is often challenging due to currency exchange complexities, data integration issues, and the need to keep employee information up-to-date – including tax information, hours worked, leave balances, and any changes in salary or job status. Generating accurate reports is easy with a comprehensive payroll automation tool that consolidates fragmented data sources, and can keep track of employee payments and deductions.
In Bulgaria, tax laws and compliance regulations can change frequently, presenting a significant challenge for global employers. Monitoring updates to federal, state, and local tax codes is crucial to avoid non-compliance and costly penalties, but requires significant time and resources. Partnering with local experts or a reputable global HR platform is an effective way to maintain compliance. These services can help employers stay compliant with evolving regulations while freeing up time for more strategic work.
Managing payroll across multiple vendors often leads to fragmented data and inefficiencies, making it difficult to consolidate analytics. These challenges can hinder decision-making, especially when trying to gain a clear view of workforce costs and trends. To address this, organizations can invest in a centralized payroll management system that unifies data from multiple vendors. A consolidated platform simplifies payroll tracking, ensures data accuracy, and provides actionable insights into payroll expenditures.
Global companies are prone to using multiple HR or payroll systems across regions, which can easily lead to fragmented payroll data, increasing the risk of delays and errors in employee compensation. To combat this, seamless integration between payroll and other systems is critical.
Payroll management systems that connect with existing HR and financial platforms can help streamline workflows by reducing manual inputs and ensuring that all departments operate with up-to-date, accurate information. In turn, this helps guarantee on-time, accurate payroll, boosting employee satisfaction.
A global payroll management platform is a software solution designed to streamline and automate the payroll processes for organizations with employees across multiple countries. It helps ensure accurate and timely payment while maintaining compliance with legal and regulatory requirements in Bulgaria.
Expanding globally is an exciting milestone for any company, but it comes coupled with complex payroll challenges. It doesn’t have to be complicated. At Playroll, our easy-to-implement global payroll management software combines automation with hands-on support to make global payroll truly simple. Here's how Playroll helps:
Disclaimer
THIS CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX ADVICE. You should always consult with and rely on your own legal and/or tax advisor(s). Playroll does not provide legal or tax advice. The information is general and not tailored to a specific company or workforce and does not reflect Playroll’s product delivery in any given jurisdiction. Playroll makes no representations or warranties concerning the accuracy, completeness, or timeliness of this information and shall have no liability arising out of or in connection with it, including any loss caused by use of, or reliance on, the information.
ABOUT THE AUTHOR
Milani Notshe
Milani is a seasoned research and content specialist at Playroll, a leading Employer Of Record (EOR) provider. Backed by a strong background in Politics, Philosophy and Economics, she specializes in identifying emerging compliance and global HR trends to keep employers up to date on the global employment landscape.
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Payroll taxes in Bulgaria are calculated using a straightforward process. First, determine the employee's gross salary. From this amount, deduct the employee's social security contributions (13.78% of gross salary, applied to income up to BGN 4,130 monthly). Then, calculate the 10% flat income tax on the remaining amount after social security deductions. For employer contributions, calculate an additional 18.92-19.62% of the employee's gross salary (up to the BGN 4,130 threshold) to cover the employer's portion of social security, health insurance, and other mandatory funds.
Employers in Bulgaria have several payroll management options. They can handle payroll in-house using specialized Bulgarian payroll software, outsource to local accounting firms with expertise in Bulgarian regulations, or use international payroll providers with Bulgarian capabilities like Playroll. Hybrid approaches are also common, where core processing is outsourced while internal HR teams maintain oversight. For multinational companies, global employment platforms offer compliant solutions for hiring and paying Bulgarian employees without establishing a local entity.
The key elements of Bulgarian payroll include: gross salary calculation based on employment contracts; mandatory social security contributions split between employers and employees; the flat 10% income tax; additional benefits like meal vouchers (up to BGN 200 monthly tax-free); accurate tracking of working hours and leave; monthly declaration and payment obligations; and proper documentation and record-keeping. Employers must also account for the national minimum wage (BGN 1,077 as of 2025), maximum social security thresholds (BGN 4,130 monthly), and specific requirements for different types of employment contracts.
In Bulgaria, employees contribute 13.78% of their gross salary to social security funds and pay a flat 10% income tax on their income after social security deductions. Employers contribute an additional 18.92-19.62% of the employee's gross salary to various mandatory funds. This brings the total payroll tax burden to approximately 42.7-43.4% of the gross salary, with roughly 23.78% paid by employees and 18.92-19.62% covered by employers. All social security contributions are subject to the monthly maximum threshold of BGN 4,130.
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