Payroll Services in Bulgaria (2026)
Bulgaria’s shift to the euro on January 1, 2026 has changed the payroll landscape overnight. Every salary, every contribution, every tax filing now happens in euros. For businesses operating in Sofia, this means updated systems, new compliance requirements, and a good reason to reconsider how you handle payroll.
Quick answer: Outsourcing payroll in Bulgaria saves time, reduces compliance risk, and gives you access to local expertise on constantly changing regulations. With social security contributions totaling over 32%, a flat 10% income tax, and strict monthly filing deadlines, getting payroll wrong can cost you. Below, we cover everything you need to know about Bulgarian payroll in 2026.
Last reviewed: January 2026. Rates and regulations verified.
Jump to: What Payroll Includes | 2026 Changes | Tax & Contribution Rates | Deadlines | Why Outsource | FAQ
What Does Payroll Service Include in Bulgaria?
Payroll in Bulgaria isn’t just about calculating wages. It’s a monthly cycle of calculations, declarations, and submissions to government agencies. Miss a step, and penalties start at BGN 500.
Core Payroll Functions
A proper payroll service handles the full cycle: gross-to-net wage calculations, social security and health insurance contributions, income tax withholding, and payment processing. But that’s the minimum.
The real complexity sits in the declarations. Every month, employers must submit Declaration Form 1 (individual employee data) and Declaration Form 6 (total contributions and taxes) to the National Revenue Agency electronically. These forms detail every employee’s income, every contribution category, every deduction. One error cascades into corrections, penalties, and frustrated employees.
Employment Administration
Beyond monthly calculations, payroll overlaps heavily with HR administration:
- Labor contract registration with the NRA (required before an employee can legally start work)
- Employment record maintenance and service certification
- Sick leave and annual leave calculations
- Termination processing and severance calculations
- Retirement documentation preparation
Here’s where many businesses stumble: in Bulgaria, you must register an employment contract with the National Revenue Agency no later than three days after signing. The employee cannot legally begin work until registration completes. Foreign companies unfamiliar with this requirement often find themselves in violation before their first hire even starts.
What Changed in 2026
Two major shifts hit Bulgarian payroll on January 1, 2026. If your systems weren’t ready, you’re already behind.
Euro Adoption
Bulgaria officially became the 21st Eurozone member on January 1, 2026. All salaries, social contributions, and tax payments now process in euros at the fixed rate of €1 = BGN 1.95583.
The practical impact: your payroll software needed updating. Your accounting systems needed reconfiguration. Your employees’ contracts? Those converted automatically without amendments, but the rounding rules matter. If the third decimal digit exceeds zero, the second decimal rounds up. Get the rounding wrong, and you’re either underpaying (compliance issue) or overpaying (budget issue) across your entire workforce.
On the positive side, foreign businesses operating in Bulgaria no longer deal with currency conversion fees or exchange rate volatility. If you’re paying employees from a euro-denominated account elsewhere in the EU, payroll just got simpler.
Minimum Wage Increase
The minimum monthly wage rose to €620.20 (BGN 1,213) as of January 1, 2026. That’s a 12.6% increase from 2025. The minimum hourly rate is now €3.74 (BGN 7.31).
This affects roughly 600,000 workers in Bulgaria. Even if none of your employees earn minimum wage, the minimum insurance income thresholds that determine contribution calculations also shifted. Your payroll provider should have adjusted these automatically.
Tax and Social Security Rates in 2026
Bulgarian payroll contributions add up quickly. The total burden ranges from 32.7% to 33.4% of gross salary, split between employer and employee.
Social Security Contributions
The baseline social security rate is 24.7% to 25.4%, depending on the occupational risk category. Here’s the split:
- Employer contribution: 14.12% to 14.82%
- Employee contribution: 10.58%
The variance comes from the Accident at Work and Occupational Illness Fund. This employer-only contribution ranges from 0.4% to 1.1% based on economic activity. Office and administrative roles typically fall at 0.5%.
Health Insurance
Health insurance adds a flat 8%:
- Employer: 4.8%
- Employee: 3.2%
Income Tax
Bulgaria maintains one of Europe’s simplest income tax systems: a flat 10% on employment income. The employer withholds and remits this monthly.
Insurance Income Thresholds
Contributions aren’t calculated on unlimited income. The maximum monthly insurance base is capped at €2,111.64 (approximately BGN 4,130). Income above this threshold doesn’t attract additional social security or health contributions.
The minimum insurance income depends on economic activity and profession, starting at BGN 1,077 for certain categories. These thresholds adjust annually.
Quick Calculation Example
For an employee earning €1,500 gross per month (well below the maximum threshold):
- Employer social security: ~€219 (14.6% average)
- Employer health insurance: €72 (4.8%)
- Employee social security: ~€159 (10.58%)
- Employee health insurance: €48 (3.2%)
- Employee income tax: ~€129 (10% of net insurable income)
- Employee net pay: approximately €1,164
- Total employer cost: approximately €1,791
These figures are illustrative. Actual calculations depend on specific circumstances, and a qualified payroll provider runs the precise numbers monthly.
Payroll Deadlines and Filing Requirements
Miss these deadlines and the NRA notices. Penalties accumulate. Here’s what you’re working against every month.
Monthly Obligations
- Salary payment: By the last working day of the month, or no later than the 10th of the following month
- Declaration 1 and Declaration 6 submission: Electronically to the NRA by the 25th of the following month
- Tax and contribution payment: By the 25th of the following month
Both declarations must be submitted electronically. Paper submissions aren’t accepted for payroll reporting.
Annual Obligations
- Annual employer declaration: Due to the NRA by February 28
- Employee income statements: Issued to each employee by March, detailing their total income and withheld amounts
Record Retention
Bulgarian law requires employers to retain payroll records for 50 years. That’s not a typo. Half a century of documentation, properly stored and accessible. Outsourced payroll providers typically handle this archival burden as part of their service.
Penalties
First-time filing violations start at BGN 500 (approximately €256). Repeated violations escalate. Beyond monetary penalties, consistent non-compliance attracts increased NRA scrutiny on all your tax matters.
Why Outsource Payroll in Bulgaria?
You could handle payroll in-house. Some companies do. But the math rarely works out favorably, especially for foreign businesses without existing Bulgarian HR infrastructure.
Compliance Expertise
Bulgarian payroll regulations change. The euro adoption alone required system updates across every payroll operation in the country. Minimum wage adjustments happen annually. Social security thresholds shift. A dedicated payroll provider tracks these changes professionally; your internal team tracks them as one of many responsibilities.
The 50-year record retention requirement alone makes outsourcing attractive. Do you want to maintain compliant archives for five decades? Or let someone who does this for hundreds of clients handle the infrastructure?
Cost Efficiency
Building in-house payroll capability means hiring or training staff who understand Bulgarian labor law, tax regulations, and NRA electronic filing systems. That expertise commands salary. Meanwhile, outsourced payroll comes with predictable monthly fees based on employee count.
Some studies suggest businesses save up to 40% by outsourcing compared to building equivalent internal capabilities. Your mileage varies depending on company size and existing resources.
Risk Transfer
When your payroll provider makes an error, they fix it. When you make an error in-house, you fix it and deal with the consequences. Professional providers carry insurance and have processes to catch mistakes before they reach the NRA.
Focus
Your business exists to do something other than process payroll. Every hour your management spends understanding Bulgarian social security splits is an hour not spent on actual operations. Outsourcing returns that focus.
How to Choose a Payroll Provider in Bulgaria
Not all payroll services deliver equal value. Here’s what separates adequate from excellent.
Local Presence and Knowledge
A provider based in Bulgaria navigates NRA requirements daily. They know which forms changed last month. They understand the practical realities of filing in Sofia. International payroll aggregators often lack this ground-level familiarity.
Integration with Related Services
Payroll doesn’t exist in isolation. It connects to accounting, tax filing, HR administration, and often company formation services. Providers offering integrated services reduce coordination overhead and often cost less than juggling multiple vendors.
Transparency on Pricing
Quality providers quote clear monthly fees based on employee count and payroll complexity. Watch for hidden charges: per-payroll-run fees, amendment fees, year-end processing surcharges. Ask upfront what’s included.
Communication and Responsiveness
When you need to add an employee mid-month or process an unplanned termination, how quickly can your provider act? Ask about response times and available communication channels.
Frequently Asked Questions
How much does payroll outsourcing cost in Bulgaria?
Pricing varies by provider and employee count. Expect monthly fees ranging from €30 to €100 per employee for basic payroll services, with lower per-employee rates for larger teams. Integrated services (payroll plus accounting plus HR administration) typically offer better value than standalone payroll.
Can foreign companies run payroll in Bulgaria without a local entity?
Not directly. To employ workers in Bulgaria, you need either a registered Bulgarian company or branch, or you work through an Employer of Record (EOR) service that employs workers on your behalf. Many foreign entrepreneurs start with company formation services to establish a proper legal presence.
What happens if I miss the monthly payroll deadline?
Penalties start at BGN 500 (€256) for first offenses and increase for repeated violations. Beyond fines, late or incorrect filings can trigger NRA audits. If you’re consistently late, your business reputation with tax authorities suffers.
Do I need to amend employment contracts after the euro switch?
No. Bulgarian law automatically converted all employment contracts to euros on January 1, 2026, using the fixed exchange rate. No contract amendments were required. However, payroll and accounting systems needed updates to process euro-denominated transactions.
How long must I keep payroll records in Bulgaria?
50 years. This requirement ensures employees can verify their employment and contribution history decades later when applying for pensions or other benefits. Most businesses outsource this archival burden to their payroll provider.
Final Thoughts
Bulgarian payroll demands precision. Monthly declarations, contribution splits across multiple categories, strict deadlines, and 50-year record retention combine into significant administrative burden. The 2026 euro adoption added another layer of complexity for businesses that weren’t prepared.
For most foreign companies establishing operations in Sofia, outsourcing payroll makes sense. You get compliance expertise, predictable costs, and the freedom to focus on why you came to Bulgaria in the first place.
If you’re considering a local provider, look for integrated services. A partner handling your virtual office, company formation, accounting, and payroll under one roof eliminates coordination friction and often costs less than juggling multiple vendors.