Bulgaria Country Facts

We provide comprehensive information regarding, Culture, Work life, Taxation, Visa’s & immigration, Labour Law, recruiting in your country of choice and employment contracts.

Global Expansion Made Easy for You

Expanding into Bulgaria generally comes with challenges, however, partnering with us and using Employer of Record (EOR) eliminates the frustrations you could encounter.

Bulgaria is a Balkan nation with a Black Sea coastline along its eastern edge and attracts many tourists to its beautiful beaches and charming cities. A laid-back lifestyle, safe environment and welcoming population add to the attractions. With corridors to western Europe and the Middle East, Bulgaria is in a rapidly-developing region with bags of potential for go-getting entrepreneurs. It offers a favourable business climate with competitive costs, affordable real estate and a well-educated workforce. Bulgaria could be the perfect stepping stone for those looking to expand their business into Eastern Europe.

Bulgaria has been in the European Union (EU) since 2007. It is expected to become a member of the Schengen Agreement, operating the new visa waiver program, Electronic Travel Information and Authorization System (ETIAS), by the end of 2022. Many countries’ nationals can travel visa-free for a 90-day stay within 180 days. Those Third Country Nationals (TCNs) who are not visa-exempt can apply for Bulgaria’s C Short-Term Visa for tourism or business purposes. As an EU member, Bulgaria also practices the free movement of persons, services, goods and capital, which is a boon for citizens of the EU and the European Free Trade Association countries; they do not require a visa to enter the country or a work permit.

All other citizens wanting employment (Third Country Nationals – TCNs) need documentation. Many companies expanding into new territory look towards a Professional Employment Organisation (PEO) and Employer of Record (EOR), such as Bradford Jacobs, to set up their business, recruit staff and operate payroll to save time and money, including acquiring immigration and work documentation.

The different types of Visas and Work Permits for Bulgaria

As with most countries, Bulgaria protects its borders and requires documentation to enter, stay and work there. Some nationalities, such as those from the European Union and European Free Trade Association (EFTA), due to the free movement of persons, do not require a visa or work permit and can travel on their passports. They have an advantage over Third Country Nationals (TCNs), who do require both visas and permits.

However, for those TCNs who are visa-exempt, certain business activities can be undertaken within the 90-day visa waiver period. Such as:

  • Attending trade fairs, conventions, or for board meetings
  • Negotiating contracts, fact-finding, meeting interested parties
  • Purchasing goods to be sold outside the country
  • For training, job interviews, meeting colleagues
  • For leisure, to visit family and for holidays.

Travellers may still need to provide proof of health insurance to cover the duration of stay, proof of accommodation in Bulgaria, enough funds to cover the trip, return tickets, any invitations, or itineraries.

Short-Term Employment for TCNs

This is classified as 90 days in 12 months. For Tour Operators, this is extended to 180 days. Those who are visa exempt do not require a short-term C visa. Otherwise, this must be applied from the Bulgarian consulate or embassy in the home country. Reasons for employment include the following:

  • Short-term transfer to a branch office
  • Providing services to Bulgarian clients on behalf of the home company

Instead of a work permit, short-term employment needs to be registered. Applicants must satisfy certain conditions and prepare the necessary documents.

The Bulgarian company registers employment with the Employment Agency at least ten days before employment starts, and a receipt is needed. Once registered, the company informs the General Labor Inspectorate within seven days after registration where the employee will be working. The employee must keep his parent company’s contract and stays on the company’s payroll rather than the Bulgarian company.

Long-term employment requiring permits and visas

  1. If employees are transferring from a home-based company to a branch in Bulgaria.
  2. Employees who bring services from a home-based company to a Bulgarian client.
  3. Employees who have been offered a long-term contract.
  4. Freelancers or the self-employed.
  5. Researchers.

For options 1 and 2 above, transfer or providing services, workers can apply for an EU Intra-company transfer permit (EU ICT). To qualify, employees must be specialists, managers, or trainees working in Bulgaria for at least one year. These employees also apply for a National D Visa at an embassy or consulate, which allows them to stay in the country for longer than three months for employment purposes. A Residence Permit must be applied for well before the D Visa expires.

Those who do not qualify for this option can apply for a Work Permit (for posted workers).

Note: Work and Residence permits are tied to a particular job and a designated company. If the employee wants to change careers, the process must start again. However, there are changes in the pipeline from the EU Single Permit Directive recast policy 2022 (Article 14). 

The spouse, or children under 18, can apply for a D Visa to join the permit holder. This permit can take up to 14 weeks to process and is valid for the work contract for up to one year.

Typically, for option 3, most employees will be working for a Bulgarian-registered company on a contract that requires long-term work permits:

  1. EU Blue Card: it is for highly educated or skilled persons and is valid for a maximum of four years. The employee is put on a Bulgarian payroll and has an employment contract for at least 12 months with the offer of a minimum salary five times more than the national annual average gross salary of Bulgarian employees. Also, one must have a degree (three years of education) relevant to the job offer from an approved university outside Bulgaria. This can be used to obtain permanent residency, and immediate family can join the holder of this permit. The process takes around three months.
  1. A Single Permit that includes residency to a maximum of three years: This is a single process for the two permits. Applicants must have a job offer from a Bulgarian-registered company and be placed on their payroll. Salary requirements depend on those set by the authorities, which may vary each year though it cannot be less than Bulgarian employees doing the same job. Employees should have the qualifications or experience pertinent to the position they have been offered. This permit can take up to five months to process. Immediate family can join the permit holder after applying for the National D Visa.

Highly-qualified researchers of Option 5 can apply for the EU Blue Card for Researchers and a work and residence permit.

How to apply for Visas and Work Permits for Bulgaria?

The primary work documents for Third Country Nationals that could be a part of your company’s expansion into Bulgaria or companies already registered in the country are:

  • Single Permit (combined application process for work and residence permit)
  • Or EU Intra-Company Transfer Permit
  • Or EU Blue Card Permit

Plus, the National D Visa to enter the country.

Note: European Union and European Free Trade Association nationals do not require visas or permits.

Important: Check which documents (listed below) must be translated if they are not in Bulgarian. Also, if they need to be notarised or ‘legalised’ and if originals are required. Check to see if they can be signed by hand or electronically and if they need to be dated at a specific time before they are submitted.

The detailed documentation must be checked with the Bulgarian Embassy as more may be required depending on which country they are applying from or exceptional circumstances. Many of the documents online, for instance, are in Bulgarian.

General documentation typical to the Single Permit, EU Blue Card and EU ICT Permit process:

  • The completed and signed application form
  • A copy of the valid passport (data pages)
  • A coloured passport photograph – size 3.5cms x 4.5cms
  • A certificate or police report from the home country
  • A curriculum vitae
  • The signed employment contract
  • A letter from the company detailing the job description, position and salary relevant to the permit being applied for
  • If applicable, a letter confirming the employee has the relevant qualifications if the position is regulated, e.g., doctor, lawyer, engineer.
  • The list of all employees working for the company (nationals and foreigners) who, under Bulgarian Law, have the same rights and operate under the same working conditions
  • A letter of declaration that the company is complying with the Labour Code
  • A Certificate of Incorporation and other paperwork requested
  • If applying with family members – marriage certificates and birth certificates of children
  • Full health insurance coverage, including any dependents
  • A copy of the rental agreement – notarised, plus a declaration from the landlord
  • Proof of sufficient funds to support the trip to Bulgaria

Extra steps/documentation for Single Permit

  • Approval/proof of Labour Market Test by the Employment Agency
  • Qualifications relevant to the position and/or proof of experience
  • Letter from the company giving details as to why the company needs to hire this employee

Extra steps/documentation for EU Blue Card

  • Degree or diploma relevant to the position from an accredited university outside Bulgaria
  • Letter from the company giving details as to why an EU Blue Card is required for this position

Extra steps/documentation for the EU ICT Permit

  • The documents confirming relevant professional experience or knowledge in the field of expertise as a manager or specialist
  • Degree or diploma for trainee
  • The signed contract of employment with the home company
  • A signed letter from the home company with details of the assignment in Bulgaria
  • Proof of employment with the home company (or group) for at least one year (six months for trainees)
  • Documents confirming the relationship between the employee’s company and Bulgarian companies
  • Internship agreement for a future position within the company
  • Letter from the company giving details as to the need for the EU ICT permit
  • Details of foreign workers in the local company

D Visa documentation

The D Visa is applied through a Bulgarian embassy or consulate in the home country or country of residence at least three months before the planned visit. Complete the application online (typed), download and sign it and gather the paperwork for submission. An appointment should be made, and each country’s embassy will have its procedures.

Dealing with tax in Bulgaria while overseas can be tricky and pose complications that would demand expert guidance. Bulgaria has competitive rates for both personal and corporate taxation – among the attractions drawing foreign investment into the country. However, there are still challenges and pitfalls. With more than 20 years of experience in Global Expansion services, Bradford Jacobs ensures our clients comply with every variation of tax laws across the globe. Our ‘know-how’ is vital for international companies expanding into Bulgaria.

Bradford Jacobs’ dedicated specialists remove the burdens of worrying about tax complications while you focus on building your business in a new territory. From locating the brightest talent to running your payroll, our Professional Employer Organisation (PEO) and Employer of Record (EOR) specialists will guide you in every way.

Overview of Tax in Bulgaria

Personal Income Tax (PIT)

A flat rate of 10% applies to all employment remuneration, including salaries, bonuses and benefits in kind.

Social Insurance Taxes

Employers’ contribution to the social security and health insurance funds is between 18.92%-19.62%, with 13.78% withheld and remitted from employees’ salaries.

Corporate Income (Tax)

Resident companies are taxed on their worldwide income at a flat rate of 10%.

Withholding Tax (WHT)

A rate of 5% applies to dividends paid to non-EU tax-resident companies. Interest and royalties paid to non-resident entities or individuals are subject to 10%.

Value Added Tax (VAT)

Apart from the headline rate of 20% on goods and services, a rate of 9% applies to some services in tourism.

Payroll Tax

Employers withhold 10% of employees’ salaries, bonuses and any fringe benefits for remittance to the tax and social insurance authorities.

Personal Income Tax in Bulgaria

The tax year is the calendar year. Married couples must file returns independently. A flat rate of 10% applies to Personal Income Tax (PIT), with returns and any due taxes paid by April 30 of the year following the tax year. Taxable income includes all employment remuneration, bonuses and any fringe benefits. Single or married employees whose tax liability is handled entirely by their employer’s payroll system do not need to file returns unless they have income extra to their salary.

Whether or not employees are Bulgarian citizens, they are considered tax residents if they have a permanent Bulgarian address; reside in the country for 183 days in any 12-month period, or work abroad for a Bulgarian company or the state. Tax residents are liable for their worldwide income.

Individual Tax Rules in Bulgaria

  • The tax year is from January 1 until December 31, without exception.
  • Married couples file separate returns.
  • Employees do not have to file a return if their entire remuneration is taxed at source and remitted from their employer’s payroll system.
  • Employees with additional income to payroll must file by April 30 of the following year, and due tax must be paid by the same date.
  • Employees’ taxable income includes fringe benefits from the employer and bonuses and salary.
  • Individuals have deemed tax residents if they have a permanent address in Bulgaria, reside in the country for 183 days in any 12 months, or work abroad for a Bulgarian company or the state. This is regardless of citizenship.
  • Tax residents are liable for their worldwide income.
  • Personal income is taxed at 10% and withheld and remitted to the National Revenue Agency (NRA) by the employer from their payroll.
  • Freelancers are also taxed at 10%.

Employer’s Social Insurance and Statutory Contributions in Bulgaria

Employers in Bulgaria are legally required to contribute to the national insurance system via the social security and health insurance funds, by remitting a percentage of employees’ payroll to the National Social Security Institute (NSSI).

Social Security: 14.12% to 14.82%

Health Insurance: 4.8%

Total contribution: 18.92% to 19.62%

When Bulgaria is the target for Global Expansion, foreign companies planning to operate payroll for their staff must establish a legal entity as a subsidiary to deal with the National Revenue Agency (NRA) for taxation and the National Social Security Institute (NSSI) for insurance and other compulsory contributions. The most popular choice is to set up the Bulgarian equivalent of a private limited liability company (or LLC), known in Bulgaria as a drujestvo s ogranichena otgovornost (OOD), which has two or more shareholders. The subsidiary incorporates under the Bulgarian Commerce Act, which regulates legal business entities in Bulgaria.

However, establishing a company in a foreign country can be costly, both in time and money, and there is no guarantee that the effort and financial outlay will bring any success. If the move fails, companies face the extra expenditure and stress of closing the business, selling property, and paying off employees. It is easy to stumble while chasing two objectives – advancing your company at home while crossing the world into new territory, maybe thousands of miles overseas. The sensible alternative is to use a Professional Employment Organisation (PEO) and Employer of Record (EOR) such as Bradford Jacobs to locate the finest local talent and administer your payroll in Bulgaria – speedily and risk-free. Your company will be up-and-running in days rather than weeks or even months.

How to Set Up a Bulgarian Subsidiary?

The Bulgarian private limited liability company is the drujestvo s ogranichena otgovornost (OOD), which has two or more shareholders. Like local companies, the subsidiary incorporates under the Bulgarian Commerce Act, which regulates the types of business entities allowed in Bulgaria. Registration requirements for limited liability companies include the following:

  • Obtaining the nine-digit Tax Identification Number (TIN) from the Registry Agency, which manages the BULSTAT Register (Commercial Register).
  • Receiving the Unified Identification Code (UIC) or BULSTAT Code. The BULSTAT UIC must be used on all business documents.
  • Verifying a unique name for the company and compiling incorporation documents for the Registry Agency.
  • Providing notarised IDs for all founders of the subsidiary.
  • Lodging Articles of Association of the foreign parent company and their resolution to open a subsidiary in Bulgaria with the Commercial Register.
  • Registering with the National Revenue Agency (NRA) and the NSSI to withhold and remit payroll taxes and social insurance contributions.
  • The NRA automatically registers the company for Value Added Tax once entered in the Commercial Register, and providing the VAT number, prefixed BG.
  • Opening a bank account for depositing initial share capital, which cannot be less than two Bulgarian leva (BGN), €1 or US$1. A business bank account subsequently replaces this.

Further procedures must be followed to then operate payroll for staff in the country, including:

  • Registering employees with the relevant NRA office in the appropriate district centre to obtain their Tax Identification Number (TIN).
  • Registering foreign employees with the NRA, whether they are long-term or permanent residents or in Bulgaria, solely for tax purposes.
  • Ensuring Bulgarian employees have their Unified Civil Number (UCN), which acts as their TIN. Bulgarian citizens receive this at birth, and it is assigned to other individuals when they receive Bulgarian ID documentation.
  • Registering with the relevant office of the NSSI – is mandatory to make social insurance contributions.
  • Remitting payroll taxes and deductions to the NRA and social security contributions to the NSSI.
  • Drawing up employee contracts according to the Bulgarian Labour Code and the Obligations and Contracts Act. Within three days of signing, the contract must be filed with the NRA no later than the day the employee is due to begin work.

Benefits of Setting Up a Bulgarian Subsidiary

International companies opening a private limited liability company in Bulgaria operate under the Commerce Act. They can benefit from among the lowest personal and corporate tax rates in the European Union. The subsidiary has a separate legal identity from the parent company and is treated the same as a local company. Generally, the parent company’s liability is restricted to the share capital invested in the subsidiary; neither is it responsible for any subsidiary debts.

The subsidiary provides the parent company with the potential for further expansion throughout the ‘free market’ of the European Union and a stepping stone into other central and eastern European economies. Additionally, the subsidiary can ‘test the market’ by following its business ideas and entering into different areas of operation with the parent company. The subsidiary can also draw up its contracts and agreements with clients. Other benefits for a subsidiary include the following:

  • Easier to obtain potential benefits and incentives and enter into contracts with other Bulgarian or EU companies.
  • More impact with clients and suppliers, as subsidiaries imply more permanency than branches.
  • Employees feel there is more stability and job security than from being with a branch.

In the broader commercial sense, opening a subsidiary makes a statement of a company’s commitment to expanding into foreign markets, in this case, the opportunities offered by European economies. However, there is a more straightforward option to the risks and costs of setting up a subsidiary in Bulgaria by working with Bradford Jacobs. Using a global PEO such as Bradford Jacobs means staff can be sourced, placed in their roles and be up and running within days rather than months. All the payroll, taxation and compliance difficulties are under control thanks to our EOR services.

Subsidiary Laws in Bulgaria

Foreign business entities in Bulgaria operate under the Commerce Act, the same as local companies, and register for incorporation by following the requirements of the Registry Agency. Although opening a branch in Bulgaria is permitted, the usual choice for foreign and local investors is establishing a private limited liability company. Required documentation and procedures include:

Registration and Documentation:

  • The nine-digit Tax Identification Number (TIN) is obtained from the Registry Agency, which administers the BULSTAT Register (Commercial Register).
  • The Unified Identification Code (UIC), or BULSTAT Code, identifies all business entities in Bulgaria.
  • The BULSTAT UIC is quoted in all business documents.
  • Notarized incorporation documents for the Registry Agency – power of attorney, Articles and Memorandum of Association.
  • Notarized IDs for all founders of the subsidiary and verified passport details for foreign members.

Accounts and Taxation:

  • Registration with the National Revenue Agency (NRA) to withhold and remit payroll taxes.
  • Registration for Value Added Tax as per the Tax Procedure Code and Value Added Tax Law to receive the VAT number prefixed BG. Once entered in the Commercial Register, the NRA automatically registers the company for VAT.
  • Bank account for depositing minimum share capital, two Bulgarian leva (€1, US$1), subsequently replaced by a business bank account.
  • Bank certificate for proof of deposit
  • Corporate Tax is paid at 10% on worldwide profits.
  • The company’s assets are separate from the shareholders’ contribution, whose liability is limited to their contribution.
  • The subsidiary complies with taxation and accounting laws applying to all Bulgarian companies.
  • The subsidiary does not need to provide audited accounts of the parent company and creates its reports, filed annually with the Trade Register and complying with the Accountancy Act (ZS).

Management:

  • The private limited liability subsidiary has a minimum of two shareholders.
  • There are no legal restrictions on the nationality of shareholders or managers.
  • Manager(s) and director(s) elected by the shareholders.
  • Shareholders must hold an annual meeting.

Bulgaria has become an increasingly attractive location for companies planning on entering the Bulgarian market, either with investment or by establishing their corporate presence in the country. It is at a cultural and commercial crossroads of north-south routes to the Mediterranean basin and from west and central Europe towards the Middle East. Bulgaria has a Black Sea coastline and includes nearly 500 kilometres of the iconic River Danube, which forms most of its border with Romania. Bulgaria also borders Serbia, North Macedonia, Greece and Turkey at the eastern end of the Balkan Peninsula.

The Republic of Bulgaria is also strategically placed in the rapidly-developing Central and Eastern Europe (CEE) economic bloc. It is ideally positioned for investment by international companies who have set their sights on the region’s economic potential. Bulgaria’s increasing role in European and global affairs is reflected in memberships of the European Union (EU), the International Monetary Fund (IMF), the United Nations, the World Bank and the World Trade Organisation.

Starting a business in Bulgaria

Bulgaria is developing into an open, market-based upper-middle-income economy. Alongside traditional sectors such as manufacturing and engineering, the economy has advanced through the development of Information and Communications Technology (ICT), food production, tourism, energy production and pharmaceuticals. Tourism has become a priority sector for Bulgaria, underpinned by the Ministry of Tourism’s annual action plans to create a supportive business environment that promotes Bulgaria in international markets.

Forward-looking, enterprising international companies entering the Bulgarian market usually take a foothold by establishing a private limited liability company. In Bulgaria this is a drujestvo s ogranichena otgovornost (OOD), which has two or more shareholders. The subsidiary incorporates under the Bulgarian Commerce Act, which regulates different business entities.

Many procedures must be followed to comply with the Commerce Act and the Registry Agency, including:

  • Obtaining the nine-digit Tax Identification Number (TIN) from the Registry Agency, which administers the BULSTAT Register (Commercial Register)
  • Obtaining the Unified Identification Code (UIC) or BULSTAT Code. This is used to identify all business entities in Bulgaria and is quoted on all business documents and transactions.
  • Notarize incorporation documents for the Registry Agency – such as the power of attorney, Articles and Memorandum of Association
  • Notarise IDs of all founders of the subsidiary and verify passport details for foreign members.

Expanding your business into Bulgaria

Expanding your business in Bulgaria, as in any overseas territory, can bring new challenges. Drawing up an expansion blueprint is not enough. Moving staff worldwide means lengthy processes to obtain visas and residence permits. When employees are in place, who will handle payroll? How will your company deal with regulations on taxation, entitlements and benefits, termination and severance? Your business plan will have to deal with all these issues.

Bulgaria has a welcoming business attitude towards foreign investment, with low personal and corporate tax rates and other incentives. But there are always issues surrounding compliance with the relevant legislation. In Bulgaria, this revolves around the Commerce Act, the Labour Code and other laws – plus European Union Directives.

There are other questions, too. Where will you find manufacturers, offices or distributors? A simple and effective alternative is partnering with a Professional Employment Organisation (PEO) and Employer of Record (EOR) such as Bradford Jacobs. This way, companies can plot a time-efficient and cost-effective path to locating and employing staff in Bulgaria.

Some Bulgarian Facts

  • Capital – Sofia
  • Population – 6.84 million
  • Regions – Bulgaria has 28 provinces (oblasti) and five climatic or topographical regions:  The Danubian Plain, the Balkan Mountains, the Transitional Region, the Rilo-Rhodope Region and the Black Sea Coastal Region.
  • Official language – Bulgarian
  • Economy – US$77.9 million (2021), 72nd globally
  • Leading sectors by GDP – Service 67%, including ICT, tourism, transport, and logistics; Industry 28%, including mining, metallurgy, and pharmaceuticals; Agriculture 5%
  • Primary exports include – Refined and raw copper, packaged medications, refined petroleum, and precious metal ore.
  • Leading imports include – Copper ore, crude petroleum, packaged medications, broadcasting equipment, and cars.
  • Main trading partners – Germany, Italy, Turkey, Romania, Greece, and Russia (before 2022)
  • Government – Unitary parliamentary republic
  • Currency – Bulgarian Lev (BGN)

Advantages and Challenges when entering the Bulgarian Market

Some advantages of entering the Bulgarian market include the following:

  • Location: At the hub of east-west and north-south trade corridors, access to western and northern Europe with Black Sea ports opening routes to the Near East, Middle East and North Africa.
  • Trade: Part of the European Union’s ‘open market’ with access to structural funding from the community.
  • Workforce: Well-educated, flexible towards new trends with low labour costs. Traditional experience in engineering, economics, medicine and science.
  • Taxation: Competitive rates for personal and corporate taxes are among the lowest in the EU.
  • Incentives: Possibility of state aid and institutional support for incoming companies, public-private partnerships and joint ventures under the Investment Promotion Act.

Some challenges of entering the Bulgarian market include the following:

  • Risks: Perception of lack of transparency in bureaucratic and judicial systems.
  • Red Tape: According to the World Bank, lack of public sector support hinders private sector involvement; acquiring business permits can be difficult.
  • Employment: Potential skills shortages in developing sectors such as ICT, education, chemicals, gas and nuclear energy.
  • Consumers: Discrepancy in spending potential between middle-income to high-earning and low-paid sectors of the economy.
  • Workforce: Low wages can be matched by low productivity.

Companies extending their operations into Bulgaria need a complete grasp of Bulgarian employment contracts. The employment relationship with the employees is governed by Bulgaria’s Labour Code and supplementary legislation, as well as European Union Directives, dealing with benefits, entitlements and compensation. These issues are a major consideration during the process of hiring, onboarding and drawing up contracts with new staff.

Once Bradford Jacobs’ Professional Employment Organisation (PEO) recruitment networks have located the best talent for your company, we step in to steer you through this crucial element of recruitment. Thanks to our PEO and EOR services, we can provide compliant labour contracts for your employees in Bulgaria, including local benefits. Our team keeps track of Bulgarian laws and regulations daily to be duly aware of updates that can be implemented in working contracts and to ensure a smooth entry for your business into the Bulgarian economy.

The different types of Bulgarian Employment Contracts

The Labour Code stipulates that employment contracts must be in writing, signed by both parties who keep a copy each, and the National Revenue Agency are advised within three days of the contract being signed. Employment cannot legally start until this has been done. Initially, the contract can be in any language. Still, there must be a Bulgarian translation in the case of legal issues, and the Labour Inspectorate can request a Bulgarian version to be provided at any time. The minimum requirements for the contract are detailed in Article 67 of the Labor Code. Any changes to the contract must also be in writing. Employers risk financial penalties for non-compliance.

Although the Labor Code generally applies to all contracts, if there is an international aspect to the agreement, the parties can elect to be governed by another country’s contract laws.

Open-ended Employment Contracts:  Unless otherwise specified, an employment contract is considered open-ended, permanent and indefinite. Employment continues until terminated mutually or by complying with relevant procedures.

Fixed-term Employment Contracts:  Fixed-term contracts can be entered into for a minimum of one year (less than one year in specified limited circumstances) to a maximum of three years. The contract becomes permanent if an employee is required to work for five days after the end date. Fixed-term contracts can also be applied to completing specific tasks or for the temporary substitution of a permanent member of staff.

Probation Periods:  These cannot exceed six months. The contract must stipulate whether the employer or the prospective employee requested the trial period, and whichever applies can terminate the contract prematurely without notice. The arrangement becomes permanent and indefinite if it is not ended during the fixed-term trial period.

Collective Bargaining Agreements (CBAs):  These can be in force at the company, municipality, or industry level. Typically, CBAs improve working conditions such as pay, paid vacations, benefits, and entitlements. Agreements cannot apply terms less favourable than any statutory minimums in place. Where a contract relates to an area not covered by statutes, it cannot exceed two years.

Bulgarian Employment Contracts Requirements

Most aspects of employment law are dealt with in the Labour Code, with issues over non-compliance dealt with by the Labour Inspectorate. Other areas of employment legislation, articles and statutes cover collective bargaining, anti-discrimination in the workplace, health and safety, employee protection against employer bankruptcy, social assistance and family benefits. Here are the general requirements when dealing with Bulgarian employment contracts:

  • The mandatory written contract must be registered with the National Revenue Agency within three days of being signed by the employer and employee. Both parties retain a copy.
  • Employment cannot be legally started before the Agency is notified.
  • The contract can be in any language, but a Bulgarian translation will be needed in legal disputes. The Labour Inspectorate may require a Bulgarian version at any time.
  • Minimum details for the contract are the Date of signing and when employment begins; length of employment if relevant (fixed-term contracts); working hours; salary and payment schedule; notice period for termination (the same for both parties); location of workplace and role description.
  • Under Article 67 of the Labor Code, contracts are generally open-ended for an unlimited period.
  • Fixed-term contracts cannot exceed a total of three years, either in the case of single or repeated contracts.
  • Contracted probation periods cannot exceed six months.

Employee benefits in Bulgaria come under the Labour Code, supplemented by specific legislation such as the Protection against Discrimination Act, the Safe and Healthy Work Conditions Act, the Social Security Code, the Civil Procedures Code and the Personal Data Protection Act. Foreign companies hiring employees in Bulgaria must operate within this framework of legislation, which provides safeguards and guarantees for the workforce.

Foreign companies’ responsibilities reach beyond simply complying with tax, social security, and payroll regulations. Failure to comply with specific rules applying to benefits and entitlements runs the risk of fines and sanctions. Employers must have a firm grasp of what is guaranteed for their employees, which will affect the employer-employee relationship. This is where Bradford Jacobs points you in the right direction, drawing on over 20 years of experience as a Professional Employment Organisation (PEO) and Employer of Record (EOR).

What are the Compensation Laws in Bulgaria?

The Labour Code is the central legislation framework regulating the relationship in Bulgaria between employers and employees. Other acts and laws specifically deal with anti-discrimination in the workplace, healthy working conditions, the role of collective agreements and employee protection against employers becoming bankrupt. As a member of the European Union, there are also areas where EU Directives influence employment practices.

  • National Minimum Wage: The minimum wage for 2022 was set by the Council of Ministers at BGN 645 (€332, US$349) per month, the lowest minimum among the European Union’s 21 member nations out of 27 that apply a minimum wage.
  • Sick Leave and Benefit: Employees are entitled to up to 18 months of leave, with the first three days’ benefit paid by the employer at 70% of gross pay or social insurance contributions over the previous 18 months. The following days are covered by the National Social Security Institute (NSSI) for 80% or 90% of gross daily remuneration or average insurable income based on contributions.
  • Working Hours and Breaks: A 40-hour week based on five eight-hour days is the norm under the Labour Code. Employers can increase working hours in consultation with workers’ representatives to 10 hours a day for a maximum of 60 days a year and no more than 20 consecutive working days.
  • Overtime: Extra hours cannot exceed 150 hours annually, 30 hours in a calendar month, six hours a week, or more than three hours on two consecutive days and are allowed only for exceptional operational reasons. Minimum compensation is 50% above the basic salary on working days, 75% above basic pay on holidays, and 100% extra for working on public holidays.
  • Paid Vacations: Employees are entitled to 20 work days of paid vacation and qualify for leave once they have been with an employer for four months.
  • Maternity / Paternity / Parental Leave and Benefit: Pregnant employees have a total of 410 days of leave, with 45 days taken before the due date. Where the birth comes within that period, the balance is added to the post-natal period. Fathers receive 15 days of paternity leave, while parental leave of two years can be shared after the child is six months old.
  • Probation Period: Trial periods cannot exceed six months and, during that time, can be terminated without notice by whichever parties asked for the probationary period.
  • Termination and Severance: Terminations must be advised in writing and lodged with the National Revenue Administration within seven days. The National Labour Inspectorate must permit if a workers’ representative is issued with a termination notice. Depending on circumstances and length of service, severance payments can range from one month’s salary to six months. Collective redundancies require prior consultation with trade unions, workers’ committees and the Employment Agency. This applies in the following circumstances: 10 employees in companies employing between 20 and 99 staff; 10% of companies hiring between 100 and 300; 30 employees where the workforce exceeds 300.
  • Notice Periods: The employer gives the statutory minimum of 30 days up to a maximum of three months, as does the employee unless collective agreements or contracts allow for different terms.

Guarantees and Restrictions on Employee Benefits in Bulgaria

Guaranteed Benefits:

  • Maternity Leave and Benefit:  Leave is for 410 days, allowing for 45 days before the due date, with any balance transferred to the post-natal allowance if the birth is earlier than 45 days. The benefit is 90% of the average gross daily income covered by insurance over the previous 24 months and cannot be less than the national minimum wage.
  • Sick Leave and Benefit:  Benefit for the first three days is paid by the employer at 70% of gross salary or the gross social insurance coverage over the previous 18 months. Subsequent days are covered by the National Social Security Institute (NSSI) for 80% or 90% of gross daily remuneration or average insurable income assessed against contributions. Employees are allowed up to 18 months’ leave for illness.
  • Paid Vacations:  Minimum paid vacation allowance is 20 work days, with entitlement beginning after four months’ work for the employer.

Restrictions:

  • Maternity Benefit: Applicants must have been insured for sickness and maternity benefits for at least 12 months before the leave is due to begin. The employer must be provided with medical certificates confirming the pregnancy. It is not necessary to have been working for the same employer.
  • Unemployment Benefit: Claimants must be registered as unemployed with the Employment Agency within seven days of stopping work; must not be entitled to old age or retirement pension; must not be undertaking any job that requires compulsory insurance. The benefit is generally 60% of the average insurable income over the previous two years.

Social Security in Bulgaria

Health insurance programs in Bulgaria are administered by the National Social Security Institute (NSSI). The state organisation oversees compulsory social security provisions for ill health, maternity, unemployment, occupational illness and injury, disability benefits and pensions for old age and survivors. The NSSI’s Supervisory Board comprises representatives from the state plus employer and employee organisations.

The National Health Insurance Fund covers benefits and mandatory health insurance for all Bulgarian citizens, plus foreigners who live in Bulgaria and do not have health insurance provided in another European Union member nation. Visits to a general practitioner are subject to a small user charge.

Employers and employees contribute to the social security and health insurance funds between 32.7% and 33.4%. Employers’ contribution is between 18.92%-19.62%, with 13.78% withheld and remitted from employees’ salaries.

Recruiting in Bulgaria, as in any overseas territory, is a significant commitment for international companies undertaking Global Expansion. Bulgaria is developing into an open, market-based upper-middle-income economy. It is moving away from traditional manufacturing and engineering into sectors such as IT, food production, energy, pharmaceuticals, real estate, chemicals, gas, and nuclear power, while further boosting its tourism market.

These areas reflect where the most significant demand for recruits exists, with employers searching for highly-skilled, multi-lingual and experienced staff with the go-ahead willingness to learn new skills to match these developing sectors. Membership of the European Union (EU) has further stimulated the employment market with free movement between its member nations, often leading mega-companies such as IBM to look for foreign recruits. This potential – and the challenges it brings – underlines why Bradford Jacobs’ global experience is indispensable for taking the smartest recruitment route into Bulgaria.

Bradford Jacobs’ benchmark platforms as a Professional Employment Organisation (PEO) have worldwide reach and include a total understanding of Bulgaria’s challenging employment market complexities. You can trust Bradford Jacobs to put the brightest talent in place for your company.

Recruiting in Bulgaria

Bulgaria’s population of just under seven million showed a slight decline in the two years up to 2022, with a correspondingly small workforce of under five million. This poses challenges for companies recruiting in Bulgaria, although the effects are offset by free market access for workers from other European Union nations.

Recruitment is the first stage of making your company operational and competitive in Bulgaria. There are many complications in moving staff into the country and the complexities of obtaining work visas and permits. It is vital to know where to locate the finest candidates for your company’s expansion plans to avoid these issues.

Once recruited, companies must consider the implications of handling payroll for their staff and deal with the revenue and social insurance authorities. To undertake these tasks, foreign companies must establish a limited liability subsidiary, known as a drujestvo s ogranichena otgovornost (OOD). The requirements and procedures include the following:

  • Apply for the nine-digit Tax Identification Number (TIN) from the Registry Agency, which administers the BULSTAT Register (Commercial Register), and obtain the Unified Identification Code (UIC), or BULSTAT Code, which identifies all business entities in Bulgaria.
  • Quote The BULSTAT UIC in all business documents and for interface with state authorities.
  • Compile incorporation documents for the Registry Agency after verifying a unique name for the company.
  • Provide notarized IDs for all founders of the subsidiary.
  • Register with the National Revenue Agency (NRA) to withhold and remit payroll taxes.
  • The NRA automatically registers the company for Value Added Tax as per the Tax Procedure Code and Value Added Tax Law to receive the VAT number, prefixed BG.
  • Open a bank account for depositing initial share capital, subsequently replaced by a business bank account.
  • Minimum share capital cannot be less than two Bulgarian leva (BGN), €1 or US$1.

Employees’ Legal Checks in Bulgaria

Pre-hire checks are generally initiated by the employer asking the candidate to supply a number of documents before employment can be agreed upon and before drawing up the contract. Legally-required documents when recruiting in Bulgaria include the following:

  • Medical certificate: To confirm the applicant’s health.
  • Professional and educational qualifications: Evidence of the relevant qualifications for the role.
  • Personal data: Documents confirming the candidate’s ID.
  • Criminal record: Can be requested for specific roles as allowed under employment legislation.
  • Any other information the employer requires cannot compromise the candidate’s protection under the Protection against Discrimination Act.

Required: Check that the potential employee satisfies work permit, residency and visa requirements.

Basic Facts when Recruiting in Bulgaria

The Labour Code is the primary legislation governing the employer-employee relationship in Bulgaria, which also establishes regulations applying to contracts.

  • A written contract must be registered with the National Revenue Agency within three days of being signed by the employer and employee.
  • Both parties retain a copy.
  • Employment cannot be lawfully started before the NRA is notified.
  • The contract can be in any language, but the authorities may require a Bulgarian translation and will be required in case of legal disputes.
  • Minimum details for the contract are the date of signing and when employment begins; location of work and job description; length of employment if relevant (fixed-term contracts); working hours; salary and payment schedule; notice period for termination (the same for both parties).
  • Under Article 67 of the Labor Code, contracts are generally open-ended for an unlimited period.
  • Fixed-term contracts cannot exceed a total of three years, either in the case of single or repeated contracts.
  • Contracted probation periods cannot exceed six months.

After hiring and onboarding, employers must know other considerations detailed in the Labour Code. Minimum standards include sick leave, working hours, maternity allowances, paid vacations, termination and severance, notice periods and social insurance payments. Other rules regulate workplace discrimination. Examples include the following:

  • Working hours are 40 a week based on five eight-hour days, as set by the Labor Code. Employers can increase working hours by written agreement or consultation with workers’ representatives to 10 hours daily.
  • The minimum wage set for 2022 remained at BGN 645 (EUR 332, USD 349) per month, as set by the Council of Ministers.
  • Employers withhold employees’ income tax and social insurance contributions and remit them to the National Revenue Agency and the National Social Security Institute.
  • Maternity leave totals 410 days, 45 of which are taken before the due date. If the birth is within 45 days, the balance is added to the allowance taken after the birth.

To succeed in your expansion into Bulgaria, employers and employees must have a strong understanding of the Bulgarian work culture. The Republic of Bulgaria’s expanding and increasingly diversified economy, interaction with its regional neighbours and membership in global institutions have many attractions for foreign companies and international investment.

Bulgaria has a Black Sea coastline and includes the River Danube, which marks most of its border with Romania, a mountainous interior and sprawling lowlands. Bulgaria also has borders with Serbia, North Macedonia, Greece and Turkey. At the eastern end of the Balkan Peninsula, Bulgaria is at the crossroads of north-south routes to the Mediterranean basin and from the west and central Europe to the Middle East. Culture and heritage include Greek, Ottoman, Persian and Slavic influences, and it is one of the oldest nations of continental Europe. There is a mix of east and west as displayed by its heritage, architecture, cuisine and religions. Bulgarians comprise 80% of the population, with Turks the most significant minority, plus Armenians, Russians, Greeks and Romanians.

Bulgaria joined the European Union (EU) in 2007, NATO in 2004 and the International Monetary Fund in 1990. It is also a member of the United Nations, the World Bank and the World Trade Organisation. Bulgaria is pursuing membership in the Organisation for Economic Cooperation and Development and is part of the OECD’s South East Europe regional program. Membership of the EU’s ‘free market’ means incoming companies and workers will be part of a varied employment market likely to feature several nationalities.

As a global Professional Employment Organisation (PEO), we aim to be familiar and updated with the business culture in the country we work with and in. By sharing our knowledge about the Bulgarian work culture, we want to support your Global Expansion plans.

The Basics of the Bulgarian Work Culture

  • Language: English is taught in schools and widely used in business, at least in the capital Sofia and other major cities and business centres. Outside of these, it may be wise to engage an interpreter.
  • Punctuality: You are expected to be on time. If using public transport in the cities, study the timetables.
  • Getting Started: Face-to-face contact is essential to building business relationships and trust. Relying on emails will not move things along at the desired pace.
  • Negotiations: Where ‘yes’ means ‘no’, and ‘no’ means ‘yes’ … unlike in the body language most western Europeans are used to. Bulgarians shake their head side to side to indicate agreement, but nodding up and down means ‘no’—something to get used to in early meetings and negotiations. Once the relationship develops, Bulgarians will be voluble and enjoy discussion – verbal agreements are a good sign, but always go for contracts. Expect to deal with the top management for decisions when you want to move matters forward.
  • Greetings: maintain eye contact as you make a firm handshake. Titles will be used initially, though your opposite number will likely move quickly to first names.
  • Business Cards: These should show your job title and professional qualifications and are exchanged without undue formality at the first meeting
  • Dress Codes: Smart, conservative and stylish is safest for both sexes
  • Gift Giving: Something modest and thoughtful from the home country will suffice; fine wine is always appreciated. ‘Going expensive’ at the first meeting may be misinterpreted
  • Out of Hours: Business meals with alcohol are an integral part of the business process. Wait to be invited to sit by the host and wish ‘Nazdrave’ –‘Good Health’ – to each of your fellow guests as a toast.

Labour Law and Bulgarian Work Culture

Bulgarian Minimum Wage

The 2022 minimum remained at BGN 645 (€332, US$349) per month, as set by the Council of Ministers. However, there were proposals in April 2022 from the National Council for Tripartite Cooperation to increase the minimum to BGN 710 (€363, US$382) per month.

Probation Periods in Bulgaria

Trial periods are a maximum of six months. If the probation exceeds the fixed-term trial period, the arrangement becomes permanent and indefinite.

Working Hours in Bulgaria

The regular working week is 40 hours based on five eight-hour days, as ruled in the Labour Code. The permitted 30-minute break is not considered working time. Employers can increase working hours by written agreement or consultation with workers’ representatives to 10 hours daily.

Overtime in Bulgaria

Working extra hours cannot exceed 150 annually or 30 in a calendar month, six hours a week or more than three hours on two consecutive days. Remuneration above basic hourly pay is 50% on regular work days, 75% for working on holidays and 100% on public holidays.

Contact Us

Join Our Newsletter

Stay up to date with latest service offerings while receiving tips and strategies for making your next remote hire.

JOIN US