Monthly Archives: July 2026

On 1 August 2026 the ceiling on Bulgarian social security contributions rises from EUR 2,111.64 to EUR 2,300 a month. Parliament passed the 2026 budget on 24 July, seven months late. The first version of it brought down a government in December. Two things follow for any company employing staff in Bulgaria from abroad. Your monthly cost per above-ceiling employee goes up by EUR 36.96. And that two-point pension contribution rise a lot of 2026 guides still list as law? It was dropped, then pushed out to 2027.

Quick answer: You can employ someone in Bulgaria without a branch or a subsidiary. Register with the National Revenue Agency (NRA, which runs both tax and social security collection here) for a service number. Then file Declarations 1 and 6 monthly, and pay contributions by the 25th. Here is the part most guides get wrong. With no permanent establishment in Bulgaria you do not withhold Bulgarian income tax. Your employee declares and pays it themselves by 30 April.

Jump to: Who counts as a foreign employer · What changed on 1 August 2026 · Registering with the NRA · Contributions yes, income tax no · What it actually costs · Filing calendar · Which country insures your employee · If you’re outside the EU · Labour rules you can’t contract around · If you have a branch or subsidiary · Which setup fits you · Where employers get caught · FAQ

Last reviewed: July 2026, after the budget vote on 24 July. Figures checked against the National Revenue Agency, the National Social Security Institute and the Ministry of Labour and Social Policy. Thresholds come from the enacted budget, not the draft.

Where these figures come from

Bulgarian payroll numbers were a moving target for most of this year, so a note on sourcing earns its place. The 2026 social insurance parameters were drafted in November 2025 and voted at first reading in December. Then they died with the government. From 1 January the country ran on transitional rules that carried the 2025 figures forward. The real 2026 budget only became law on 24 July.

Any figure published between December 2025 and July 2026 therefore needs checking twice. We threw out three categories of source. First, anything quoting the December draft as settled law. That is where the phantom two-point pension rise comes from. Second, any threshold figure dated before the 24 July vote. Third, converted lev amounts that don’t reconcile at the fixed rate of 1.95583 BGN to 1 EUR.

Kept: the NRA and the National Social Security Institute for rates and insurable income. Parliamentary reporting covered the enacted budget provisions, and EUR-Lex the EU coordination regulations quoted below. The bilateral agreements with non-EU states come from the Ministry of Labour and Social Policy. Employer cost figures here are our own calculations from published rates, with the arithmetic shown so you can check it.

Two honest limits. We haven’t obtained a binding NRA ruling for any specific company, and your industry code changes one of the rates. Minimum insurance thresholds by profession run to several hundred entries. We quote the practical floor for a full-time hire instead of reproducing the table.

Who counts as a foreign employer in Bulgaria

One test decides it. Did you sign an employment contract whose place of work is Bulgarian territory? Then you’re a foreign employer here. Where your company sits, and where your customers are, makes no difference. A German GmbH hiring a developer in Plovdiv is a Bulgarian employer for social security purposes. No office, no branch, no local revenue required.

Three situations look similar and are not the same thing:

• Posting. You send an existing employee from your home country to Bulgaria temporarily. Different rules, covered below. No NRA registration if the A1 certificate is in place.
• Contractor. You buy services from a Bulgarian self-employed person or single-owner company (EOOD). No employment contract, so no employer duties. Misclassification is a real risk if the relationship looks like employment.
• Trade representative office. A registered non-trading presence. This one does count as an employer for income tax, which flips the withholding question below.

That test cuts both ways, which catches people out. Hiring a Bulgarian national who lives and works in Vienna doesn’t make you a Bulgarian employer. Hiring a Dutch national who has moved to Sofia does.

What changed on 1 August 2026

Adopted on 24 July by 125 votes to 84, the budget moved four things that touch payroll. All of them start on 1 August.

Ceiling: now EUR 2,300 a month (about BGN 4,498), up from EUR 2,111.64. Above that figure, contributions stop. An earlier draft proposed EUR 2,352, and that number is still circulating. It isn’t the enacted one. Parliament also fixed the ceiling at EUR 2,300 for 2027 and 2028, so plan against it for three years.

Minimum insurance thresholds rise about 5%, reaching 498 individual professions. For self-employed people the floor moves to EUR 620.20. A full-time employee’s practical floor is still the statutory minimum wage. Contributions are due on the higher of actual pay and the threshold for the role.

Minimum wage: still EUR 620.20 (BGN 1,213). Parliament scrapped the formula that pegged it to half the average wage, and froze the figure while a new model gets negotiated. So January’s 12.6% jump was the only rise this year.

The pension rise never happened. Correct this one in your own planning. A two percentage point increase to the Pensions Fund sat in the November 2025 draft. It passed first reading in December, then got dropped. It’s now postponed to 2027 and 2028, so 2026 rates sit exactly where 2025 left them.

One more change belongs here even though it isn’t in the budget. Bulgaria’s transposition deadline for the EU pay transparency directive was 7 June 2026, and implementation runs mainly through amendments to the Protection Against Discrimination Act. Recruitment duties bite first: salary ranges in job ads or before interview, and no questions about a candidate’s pay history. Reporting phases in from 7 June 2027 for employers with 150 or more staff, and 7 June 2031 for those with 100 to 149. Advertise a Bulgarian role and this applies to you, wherever your HR team sits.

Registering with the NRA: the actual procedure

You register as an insurer, not as a taxpayer. Registration produces a service number under Article 82(4) of the Tax and Social Security Procedure Code. Nothing goes into the Commercial Register, and you incorporate nothing.

Document prep is where timelines slip. You’ll need a current extract or certificate of good standing from your home commercial register. Add your tax registration certificate, and your VAT certificate if you have one. Each needs an apostille, then a sworn Bulgarian translation. Then the identification documents for whoever represents the company, plus the application itself.

Once the file is complete, the NRA check is quick. Providers report up to three business days for the number to issue. Realistically, count one to two weeks end to end once apostilles and translation are in. Two more items aren’t strictly mandatory but save trouble. A Bulgarian bank account, because contributions paid from abroad get misallocated. And an authorised person in Bulgaria who can file on your behalf.

Then comes the deadline people miss. Article 62(3) of the Labour Code gives you three days from signing to notify the NRA of the contract. Amendments and terminations carry the same duty. Miss it and you’re in Article 414 territory. The fine on the employer runs from BGN 1,500 to BGN 15,000, roughly EUR 767 to EUR 7,669. A separate range applies to the responsible official. Notice the sequencing problem. Contract notification is due in three days, but your service number takes longer than that to issue. Register first, hire second.

The bit most guides get wrong: contributions yes, income tax no

Bulgarian social security and Bulgarian income tax use different definitions of “employer”. The gap between them is the most misreported point in this whole topic.

On social security, you’re the insurer. EU Regulation 883/2004 puts your employee under Bulgarian legislation, because that’s where the work happens. The Social Insurance Code then makes you responsible for calculating, declaring and paying both halves. Data goes in under Ordinance N-13 of 17 December 2019. Declaration 1 covers the individual, Declaration 6 the totals.

On income tax, you’re not an employer at all. Under §1, item 27 of the Personal Income Tax Act, the definition covers three things. Local persons. Foreign persons operating through a permanent establishment or fixed base in Bulgaria. And trade representative offices. A foreign company with none of those doesn’t meet it. So no monthly advance withholding falls on you, because the article creating one applies to employers as defined.

Tax is still owed, though. Article 8(2) sources the income in Bulgaria, because that’s where the work is performed, and it’s taxed at the flat 10%. Your employee declares it on the annual return under Article 50(3), and pays by 30 April. File electronically and settle by 31 March for a 5% discount on the outstanding tax, capped at EUR 255.65.

Why does this matter to you and not just to them? Because an employee taxed at source their whole career won’t expect a four-figure bill in April. They’ll blame the payroll they can see, not the law they haven’t read. Tell them at offer stage, in writing, that their salary arrives without Bulgarian tax deducted. The annual return is theirs to file.

Then give them a written statement of the year’s gross pay and the contributions withheld. One correction here, because this gets repeated everywhere. Guides for foreign employers routinely tell you to issue an “income certificate under Article 45(1) by the end of February”. That deadline isn’t in the Act. Article 45 runs on 10 January and 5 February, and it attaches to employers who withhold tax and do the annual reconciliation. You do neither, so the provision doesn’t really reach you. Your employee still can’t file cleanly without a gross-pay figure from you. Send it in early January and the question never arises.

What employing someone in Bulgaria actually costs

Rates for 2026 are unchanged from 2025. Here’s the full picture:

• Employee: 13.78% of gross, withheld from pay. That’s 10.58% social insurance plus 3.20% health.
• Employer: 18.92% to 19.62% of gross. That’s 14.12% to 14.82% social insurance plus 4.80% health.
• Combined: 32.70% to 33.40%.
• One fund creates the employer range: accidents at work and occupational disease, from 0.4% to 1.1% by industry classification.
• Income tax: 10% flat, paid by the employee as described above.
• Contributions apply between EUR 620.20 and EUR 2,300 a month per person.

Run it on a minimum wage hire at EUR 620.20 gross. Employer contributions come to EUR 117.34 at the low industry rate, EUR 121.68 at the high one. Total cost: EUR 737.54 to EUR 741.88 a month. On the employee’s side, EUR 85.46 goes out in contributions. That leaves a taxable base of EUR 534.74 and tax of EUR 53.47. They net EUR 481.27.

So EUR 741.88 leaves your account and EUR 481.27 reaches theirs. About 35% goes to the state. That’s low by EU standards, and the reason the arithmetic works at all.

Now the ceiling, which is where Bulgaria gets interesting for senior roles. From 1 August your contribution per employee caps at EUR 451.26 a month, or 19.62% of EUR 2,300. Pay above that and the cap holds. Watch the effective rate fall:

• Gross EUR 2,300: employer pays EUR 451.26, an effective 19.62%.
• Gross EUR 3,000: still EUR 451.26, an effective 15.04%.
• Gross EUR 5,000: still EUR 451.26, an effective 9.03%.
• Gross EUR 10,000: still EUR 451.26, an effective 4.51%.

Hire a EUR 5,000-a-month engineer and your social cost is 9%, against roughly 20% on a junior. That gap, not the headline rate, makes Bulgaria cheap for senior technical hiring.

Minimum wage is the wrong benchmark for most hires, so run a realistic one. A developer on EUR 3,000 gross, from 1 August, sitting above the ceiling. Your contribution is EUR 451.26, so total cost is EUR 3,451.26 a month. They pay EUR 316.94 in contributions and EUR 268.31 in tax, netting EUR 2,414.75. Between what you spend and what they keep, EUR 1,036.51 goes to the state. That’s 30% of your cost, against 35.1% on the minimum wage hire. Bulgaria gets proportionally cheaper the more you pay, which is the reverse of most EU systems.

August’s change costs an employer EUR 36.96 more per month per above-ceiling employee, or EUR 443.47 a year. Your employee pays EUR 25.96 more a month. On a team of ten senior people, budget roughly EUR 4,435 a year extra on the employer side. Not dramatic. But it lands mid-year, which is exactly when nobody has it in the forecast. Want the numbers run against your own salary bands? That’s what our payroll services are for.

Your filing calendar as a foreign employer

Bulgarian deadlines are fixed dates rather than rolling windows, which makes them easy once they’re in the calendar.

• Within 3 days of signing: notify the NRA of the employment contract, and of any amendment or termination.
• Monthly, by the 25th: file Declaration 1 and Declaration 6, and pay the social security and health contributions for the previous month.
• Early January, no statutory deadline: give each employee a written statement of last year’s gross pay and withheld contributions, so they can file.
• By 30 April, your employee’s job: the annual tax return under Article 50, with the 10% due. The 5% discount needs e-filing and payment by 31 March.

What you don’t file matters as much. Without a Bulgarian company or branch, there are no annual financial statements to publish. No corporate tax return either, and no VAT registration arising from employment. You also stay outside SAF-T reporting, which in 2026 binds only the largest enterprises. Payroll declarations and the contribution payment are the whole of it.

Which country’s social security covers your employee

Only one country at a time, under Regulation 883/2004. Article 11 defaults to the country where the work is physically done. So a Bulgaria-based employee is insured in Bulgaria. Three exceptions matter.

Posting. Send an existing employee to Bulgaria temporarily and they can stay in your home system for up to 24 months. You apply for the A1 certificate in the sending country. There’s a substance test: your turnover in the sending state must be at least 25% of the total over the previous 12 months. Simply hiring someone who happens to live in Bulgaria isn’t posting, whatever the contract calls it. The person has to have been in your home system first.

Work in two or more countries. Split time between Bulgaria and your own office, and an A1 decides which system applies. In Bulgaria, the NRA issues them.

Cross-border telework. Here’s a gap that catches EU employers who researched this once and moved on. The multilateral Framework Agreement of 1 July 2023 lets a teleworker spend 25% to 50% of their time in their country of residence. They stay insured in the employer’s country. Bulgaria has not signed it. So the standard rules apply. Want a different outcome? You need a mutual agreement between the two states under Article 16, negotiated case by case. Don’t assume the framework covers a Sofia-based teleworker, because it doesn’t.

One provision matters before you build any of this. Article 21(2) of Regulation 987/2009 covers an employer with no place of business in the member state. You may agree that the employee fulfils the contribution payment obligations on your behalf. You must notify the competent institution, and you stay liable underneath the arrangement. It shifts the mechanics, not the responsibility. Some foreign employers use it to avoid opening a Bulgarian bank account. It is not a way to hand your compliance risk to your employee.

If your company sits outside the EU

Everything in the section above rests on EU law, and its reach stops at the EU, the EEA and Switzerland. Nothing beyond that. Are you a US, Indian, Australian or Singaporean company? Then the A1 certificate, the posting rules and the Article 21(2) mechanism are not yours to use. Read that section as background, not instructions.

In its place sits a patchwork of bilateral agreements. Bulgaria’s Ministry of Labour and Social Policy lists 17 of them. The ones employers ask about most: Canada and Quebec, Brazil, Israel, South Korea, Turkey, Ukraine, Serbia, North Macedonia, Moldova and Albania. Where an agreement exists, it decides which country collects, and stops the same pay being charged twice.

The United States isn’t on it. No agreement, no coordination, no relief. A US company hiring in Bulgaria owes Bulgarian contributions from the first month, with no route to keep the person in US social security instead. If US payroll taxes also bite on the same salary, you pay both, and neither system credits the other. Bulgaria has flagged the USA as a negotiating priority for 2025 and 2026, so this may change. Budget as though it won’t.

UK employers are better placed. The social security protocol in the EU and UK Trade and Cooperation Agreement carries over detached-worker treatment. Posting someone to Bulgaria for up to 24 months on home-country coverage still works. Ordinary hiring of someone already living in Bulgaria doesn’t, exactly as within the EU.

The registration mechanics don’t change. Same service number, same Declarations 1 and 6, same 25th of the month. One practical difference: apostilles only work between states in the Hague Convention. Outside it, your corporate documents need full consular legalisation, which adds weeks rather than days.

One last trap, and this one is about your employee’s passport rather than your company’s. Bulgarian and EU nationals can be hired freely. A third-country national needs work authorisation, and the Single Permit route is built around an employer registered in Bulgaria, with a labour market test attached. The EU Blue Card skips that test but sets a salary floor near EUR 23,500 a year. Check your candidate’s status before assuming an NRA registration alone is enough, because for some hires it won’t be.

Bulgarian labour rules you can’t contract around

You may be able to choose which country’s law governs the contract. But under the Rome I Regulation, the protections of the country where the employee habitually works apply anyway. For someone working from Bulgaria full time, that’s Bulgarian labour law, whatever the governing-law clause says. The floor includes:

• 20 working days of paid annual leave, minimum.
• Sick pay: you pay the first 3 days at 70% of average daily gross, and you can’t reclaim it. From day four the National Social Security Institute pays 80%, or 90% for a work-related injury.
• Remote work by mutual agreement only, with the contract specifying place and conditions. You can’t impose it unilaterally outside a declared emergency.
• Equipment, internet connectivity and consumables for remote work are your cost. So is written health-and-safety information about the home workplace.
• Using algorithmic tools to manage or monitor remote work? Tell the employee in writing how those decisions get made.

Remote-work duties surprise people most. They read like office rules transplanted into someone’s spare bedroom. Enforceable all the same. Where a contract needs drafting to match, our legal services team handles it.

If you already have a branch or a subsidiary here

A local entity changes the picture more than people expect. It converts you into an “employer” under the income tax definition, so now you do withhold. Advance tax comes off monthly and goes to the NRA by the 25th, alongside the contributions. Your employee stops filing an annual return purely because of salary.

Everything else that comes with a Bulgarian company arrives too. Corporate income tax at 10% flat on profit, with the annual return due 30 June. Annual financial statements published in the Commercial Register by 30 September. VAT registration becomes mandatory above EUR 51,130 of taxable turnover in a calendar year, then monthly returns. Dividend withholding of 5% to individuals, and often 0% to a qualifying EU parent.

Trade-offs here are clean. A subsidiary costs more to run and takes on real filing duties. In return you can invoice Bulgarian customers, hold assets, and grow a team without permanent establishment anxiety. Weighing that step? Start with what registering a Bulgarian company involves. Then decide which of the filings above your own team can absorb, and which need local accountancy support.

Which setup fits your situation

Four common scenarios, with the thresholds that actually decide them.

One to three employees. No Bulgarian customers, salaries above EUR 2,300. Register directly with the NRA. Contributions are identical in every structure, so an employer of record saves you nothing on the EUR 451.26 cap. It adds a per-employee margin on top, for filings a local accountant handles for less. Skip the EOR here. What direct registration buys you is a payroll run and two monthly declarations.

Posting someone for under 24 months. Don’t register at all. Get the A1 in the sending country and keep them in your home system. Check the 25% turnover test first. Failing it collapses the arrangement and puts them into Bulgarian insurance retroactively. Cheapest legitimate route, and the one most often claimed when it doesn’t apply.

Headcount past five. Or you want to sell into Bulgaria. Incorporate. Once someone here can conclude contracts on your behalf, you’re arguably a permanent establishment already. Being one by accident is worse than being one on purpose. An EOOD costs more per month than an NRA registration and removes the ambiguity. It also fixes the withholding oddity, so your staff aren’t filing personal returns on salary. Choose the subsidiary the moment local revenue enters the plan.

Budget under EUR 800 a month. All in, per hire. A minimum-wage employment costs EUR 741.88 at the top industry rate, so it fits, just. A contractor on an EOOD invoice looks cheaper, and often is. But set their hours, supply their tools, take all their capacity, and that’s employment with a different label. Reclassification brings back-dated contributions plus fines. Under this budget, hire part time on a proper contract rather than full time on a fake invoice.

Two notes on employer of record arrangements, since they get pitched hard. In Bulgaria the model is only legal through a licensed temporary work agency, registered with the Employment Agency. An end-user can source at most 30% of its personnel that way. Agency work also needs a valid ground under the Labour Code, such as a defined project or covering an absent employee. Providers often blend agency and outsourcing models to get around the gaps. That can expose both sides to fines, and leaves the end-user jointly liable for salary and contributions. Going the EOR route? Ask to see the licence.

Where foreign employers get caught

Hiring before the service number exists. Contract notification is due in three days, and registration takes longer. Sequence it properly or you start with a breach.

Assuming you withhold tax. Several English-language guides say the foreign employer deducts monthly advance tax. Without a permanent establishment, you don’t. Setting up a withholding you don’t owe creates a reconciliation mess in April.

Not warning the employee about April. They owe 10% on the year, unwithheld, and won’t have set it aside. This is the complaint that turns into a resignation.

Trusting the EU framework agreement. For a Sofia-based teleworker, Bulgaria never signed it. Default rules put them in Bulgarian insurance from day one.

Applying EU rules from outside. A1 certificates and the employee-pays mechanism come from EU regulations. If you’re American, there’s no equivalent, and no bilateral agreement to fall back on either.

Paying contributions from a foreign account. Payments arrive unallocated and show as arrears while someone traces them. A Bulgarian account avoids the whole category.

Budgeting off the December 2025 draft. If your 2026 model has a two-point pension increase in it, take it out. Put the ceiling at EUR 2,300 from August instead.

Questions foreign employers ask

Can a foreign company hire someone in Bulgaria without opening a company?

Yes. Register with the NRA as a foreign employer and you get a service number. It lets you run payroll and pay social security with no Commercial Register entry. No branch, no subsidiary, no share capital. You will need apostilled corporate documents with sworn Bulgarian translations, plus a Bulgarian bank account in practice.

How much does it cost to employ someone in Bulgaria in 2026?

Add 18.92% to 19.62% to gross pay, depending on your industry’s accident insurance rate. On the EUR 620.20 minimum wage that’s a total employer cost of EUR 737.54 to EUR 741.88 a month. Contributions stop at EUR 2,300 of monthly pay from 1 August 2026. That caps your contribution at EUR 451.26 per employee, however much you pay above it.

Who pays the income tax if my company has no office in Bulgaria?

Your employee does. A foreign company without a permanent establishment isn’t an “employer” under §1, item 27 of the Personal Income Tax Act. So no monthly withholding applies to you. The employee declares the salary under Article 50(3) and pays the flat 10% by 30 April. Send them a written statement of gross pay in January so they can file. The Article 45 certificate rules don’t strictly bind an employer without a permanent establishment.

Does hiring one remote employee in Bulgaria create a permanent establishment?

Usually not. A single person working from their own home generally falls short of a permanent establishment. That holds under both Bulgarian law and OECD principles, provided they can’t sign contracts for you and have no local revenue role. Risk rises sharply if they habitually conclude contracts on your behalf, or if you take premises. At that point, incorporating an EOOD deliberately beats arguing about it later.

How long does NRA registration take for a foreign employer?

The NRA side is up to three business days once the file is complete. Plan one to two weeks realistically, because apostilles and sworn translations dominate the timeline. Start before you sign the employment contract. Article 62(3) of the Labour Code gives you only three days from signature to notify the NRA.

Can my Bulgarian employee pay the social security contributions instead of us?

Yes, and it’s a proper EU mechanism rather than a workaround. Article 21(2) of Regulation 987/2009 applies to an employer with no place of business in Bulgaria. You may agree that the employee handles the contribution payments on your behalf. You must notify the competent institution, and you stay legally liable if the payments don’t happen. Useful if you’d rather not open a Bulgarian bank account.

Can a US company hire an employee in Bulgaria?

Yes, and the registration route is the same as for an EU company. What’s different is that Bulgaria and the United States have no social security agreement, so there’s no way to keep the person in US coverage. Bulgarian contributions are due from month one, and if US payroll taxes apply to the same salary you pay twice with no credit either way. Bulgaria lists the USA as a negotiating priority, but nothing is signed.

Is an employer of record legal in Bulgaria?

Only through a licensed temporary work agency registered with the Employment Agency, and with limits. Agency workers can make up no more than 30% of the end-user’s personnel. The engagement also needs a valid ground under the Labour Code, such as a specific project or replacing an absent employee. Providers that mix agency and outsourcing models to sidestep those rules can trigger fines for both parties. The end-user can end up jointly liable for wages and contributions. Ask for the licence number before signing.

Getting it set up

Compliance here is light once it’s running. Two monthly declarations, one payment by the 25th, one certificate in February. What’s heavy is the setup. Apostilles, sworn translations, a service number, a bank account, and a contract that satisfies Bulgarian labour law. Plus the three-day notification clock that starts the moment you sign. Most of the trouble we see comes from that first month, not the years after it.

And the moving parts are real this year. The ceiling changed on 1 August. The minimum wage formula was scrapped. That pension rise everyone budgeted for evaporated, and pay transparency rules arrived in June. A guide written in February 2026 gets at least two of those wrong.

Our team handles foreign employer registration with the NRA, the monthly payroll and declarations, and the employment contract itself. Growing past direct registration? An entity needs a Bulgarian address on file, which is what our virtual office options are for. It also brings the recurring filings covered further up. The apostilled paperwork the NRA wants has to be sworn into Bulgarian too, so translation and legalisation normally runs alongside the registration. Tell us how many people you’re hiring and where they’ll be based, and we’ll tell you which structure to use. Start on the contact page.