Employ Candidates Compliantly in
Bulgaria

Talk to Expert

25

+ years of industry leadership

Global PEO and Payroll in Bulgaria

Expanding into Bulgaria offers strategic advantages, but the real challenge is managing payroll and employment compliance to local standards. For international employers, setting up a Bulgarian entity can mean months of administrative complexity, high fixed costs, and exposure to legal risks if statutory obligations are missed or misunderstood.

The compliant alternative:
For most global businesses, a licensed Employer of Record (EOR) is the only practical route to payrolling local and expatriate staff in Bulgaria without establishing a company. While many search for “PEO Bulgaria,” only an EOR model is recognised by Bulgarian authorities for legal employment, payroll administration, and full statutory compliance. This distinction matters, EOR means local employment contracts, payroll, tax, and benefits, all handled under a single accountable provider.

With Acumen’s Global EOR and Payroll solution, employers can hire and compensate their Bulgarian or international workforce legally, efficiently, and with confidence, freeing you to focus on growth, not paperwork or regulatory hurdles.

EOR, PEO, and Payroll Compliance: What Actually Works in Bulgaria

In Bulgaria, “PEO” is widely searched but not recognised in law.
Only an Employer of Record (EOR) can legally hire, sponsor, and payroll staff for overseas clients. The EOR is the local employer on record, responsible for all contracts, payroll, tax, and reporting, whether the employee is Bulgarian or a foreign national. This model removes ambiguity and liability from the client, closing off compliance risks.

Shadow payroll, a common workaround elsewhere, is not a compliant solution for regular employment in Bulgaria.
Authorities require all locally working staff to be payrolled by a Bulgarian entity or EOR, with full local tax and social security contributions. Shadow payroll may be considered in limited, short-term assignments, but it does not replace the requirement for local employment contracts, monthly payroll, and statutory benefit administration. Relying on shadow payroll for standard or long-term hiring exposes employers to audit risk, back taxes, and penalties.

Key features of EOR payroll in Bulgaria:

  • Employment contracts:
    All employees must have a written Bulgarian employment contract, executed by the EOR. Contract terms must meet Labour Code requirements—covering job title, salary, hours, leave, and notice periods.
  • Payroll administration:
    EOR processes monthly payroll in local currency (BGN), calculates all statutory taxes and contributions, and ensures employees are paid in full compliance with national law.
  • Tax and social contributions:
    Both employer and employee social security, health, and pension contributions are calculated and remitted by the EOR. Employment income is subject to a flat 10% personal income tax, withheld and paid at source.
  • Reporting and documentation:
    The EOR files all mandatory employment and tax reports, including monthly declarations to the National Revenue Agency and annual income statements for employees.

Using an EOR is the only way for non-resident companies to employ and payroll staff in Bulgaria without opening their own legal entity. “PEO” and “co-employment” are not relevant under Bulgarian legislation; all local compliance liability sits with the EOR.

Payroll Cycle, Core Components, and Statutory Benefits in Bulgaria (2025)

Payroll cycle:

  • Salaries are paid monthly, typically on the last working day of the month, by bank transfer in Bulgarian lev (BGN) to a local account.
  • Digital or paper payslips must be provided, itemising gross pay, all deductions, and net pay.

Core payroll components:

  • Base salary: Must be specified in the employment contract and meet or exceed the national minimum wage (BGN 1,077/month for 2025) or any higher sectoral minimum.
  • Mandatory deductions:
    • Personal income tax: Flat 10%, withheld at source by the employer.
    • Social security and health insurance (2025 rates):
      • Employer: 18.92% to 19.62% (includes variable Accident at Work/Occupational Diseases Fund)
      • Employee: 13.78%
      • Combined total: 32.7% to 33.4%
      • Calculation base capped at BGN 4,130/month (April 2025)
    • Breakdown:
      • Social security: Employer 14.12–14.82%, employee 10.58%
      • Health insurance: Employer 4.8%, employee 3.2%
  • Employer contributions:
    Paid on top of gross salary, covering pension, unemployment, workplace accident, health, and other statutory funds.
  • Additional pay and allowances:
    • Overtime, bonuses, or contractually agreed benefits, all subject to the same tax and contribution rules.
    • Overtime rates: minimum 150% (weekdays), 175% (weekends), 200% (public holidays).

Statutory benefits and leave:

  • Annual paid leave: Minimum 20 working days per year (more for employees with disabilities, minors, or hazardous work). Eligibility after 4 months’ service.
  • Public holidays: 12–15 days per year; work on a public holiday is paid at double rate or compensated with time off.
  • Sick leave:
    • First 3 days: 70% of average daily pay, paid by employer.
    • From day 4: 80% (or 90% for work accidents) by National Social Security Institute, provided at least six months’ contributions.
    • Maximum: up to 18 months for eligible employees.
  • Maternity leave: 410 days (45 pre-birth), paid at 90% of average earnings by NSSI (12 months’ contributions required). After this, additional leave to age 2 with a fixed monthly allowance.
  • Paternity leave: 15 days after birth at 90% pay; further leave available under certain conditions.
  • Parental leave: Paid or unpaid options up to child’s second birthday, plus six months of unpaid leave per parent (transferable in part).

Payroll compliance:

  • Employers must submit monthly payroll declarations (e.g., Declarations 1 and 6) and an annual income statement to the National Revenue Agency (NRA).
  • Records must be retained for up to 50 years.
  • The Unified Electronic Employment Record (UEER) system (active June 2025) requires prompt electronic reporting of salary changes and terminations.
  • Errors or late filings result in immediate financial penalties.
Get Express Quote