Payroll & Employment Guide: Bulgaria

Hiring in the United States

When hiring in the U.S., employers must identify the correct work location, classify workers properly and register with federal and state tax agencies before running payroll. Federal rules provide the baseline, but state and local laws often go further on wages and leave.

Key steps when hiring in the U.S.:

• Determine the employee’s work state and city — local laws may set higher minimum wages, paid-sick or family-leave entitlements and pay-transparency requirements.
• Classify each worker correctly as an employee or independent contractor; incorrect classification can trigger back taxes, penalties and benefits liabilities.
• Issue a written offer or contract that sets out pay, hours, exempt/non-exempt status, benefits and any probation terms.
• Collect Form W-4 for federal withholding plus any state withholding forms, and complete Form I-9 eligibility verification.
• Register as an employer with the IRS (EIN) and with each state tax and unemployment agency before payroll begins, or partner with an Employer of Record (EOR) if you lack a U.S. entity.

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Employee Benefits

Bulgaria has mandatory statutory benefits, with many employers offering additional perks to stay competitive.

Mandatory Benefits:

• Paid annual leave (minimum 20 working days)
• Paid public holidays
• Social security coverage (pension, sickness, unemployment)
• Maternity and parental leave
• Occupational accident and disease insurance

Leave policies:

• Annual Leave: Minimum 20 working days per year.

Sick Leave:

• First 3 days partially paid by employer
• From day 4 onwards, paid by social security (NSSI), subject to conditions
• Maternity Leave: 410 days (45 days before birth, rest after), partially paid by social security
• Paternity Leave: Short initial leave (e.g., 15 days) + shared parental rights in certain cases

Healthcare

• Public healthcare funded through mandatory health insurance contributions
• Employees and employers both contribute to health insurance
• Many international employers additionally offer private medical insurance

Retirement Benefits

• State pension system funded via mandatory social security contributions
• Employers and employees contribute to pensions as part of the overall social security rate
• Optional private pension schemes may be offered by some employers

Social Security Contributions (High-Level)

Employer contributions:

• Roughly 18–19% of gross salary (pension, health, unemployment, work accidents, etc.)

Employee contributions:

• Roughly 13% of gross salary

(Exact rates depend on income band and risk category.)

Bonus & Incentive Programs

Common practices include:

• Annual performance bonuses
• Sales commissions
• Holiday bonuses (e.g., for Christmas or Easter)

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Taxes in Bulgaria

Bulgaria is known for its flat personal income tax rate.

Personal Income Tax: Flat 10% on most employment income

Employees may have access to limited deductions and allowances, but the system remains relatively simple compared to many EU countries.

Payroll in Bulgaria

• Payroll Frequency: Typically monthly
• Payroll Currency: BGN

Employers must withhold income tax and social security contributions at source and remit them to authorities on set deadlines.

Salary Payment Deadline

Most employers pay salaries at month-end or within the first 10 days of the following month (as specified in the employment contract).

Taxes & Contributions Deadline

Social security and tax withholdings are reported and paid monthly.

Payroll Declarations

• Monthly declarations to the National Revenue Agency
• Annual summary reports for employees and authorities

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Legal Regulations

Bulgaria's labour framework is based on:

• Bulgarian Labour Code
• Social Security Code
• Health Insurance Act

Total Employment Cost

Employer social contributions typically add around 18–20% above gross salary.

For detailed, case-specific guidance, always consult a local HR/payroll specialist.

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Work Permits & Visas for Bulgaria

Non-EU nationals generally require both:

• A work permit, and
• A long-term residence permit

Common Types of Permits

• EU Blue Card for highly qualified workers
• National work permits tied to specific employers

Process Length: Typically 2–3 months, depending on documentation and category.

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Employer of Record (EOR) Services in Bulgaria

Employer of Record (EOR) services in Bulgaria allow companies to hire employees quickly and legally without establishing a Bulgarian legal entity. This enables fast market entry, reduced setup costs, and full compliance with Bulgaria's employment and payroll regulations.

With an EOR in Bulgaria, you can:

• Hire employees without opening a Bulgarian entity, saving time and administrative effort
• Issue legally compliant employment contracts aligned with Bulgarian labor laws
• Run monthly payroll with accurate tax withholding and mandatory social security contributions
• Manage employee benefits and HR compliance, ensuring alignment with local regulations
• Handle onboarding, documentation, and employee lifecycle administration

The EOR becomes the legal employer on record, while you maintain full control over day-to-day work, performance, and business operations.

PEO Services in Bulgaria

PEO services in Bulgaria are ideal for companies that already operate through a local Bulgarian entity but want to streamline HR operations, ensure payroll accuracy, and maintain full compliance with Bulgarian labor laws. A PEO functions as an extension of your in-country HR team, reducing administrative workload and minimizing compliance risks.

A PEO in Bulgaria supports your business with:

• HR administration, including employee records, onboarding, documentation, and daily HR support
• Payroll processing, covering monthly salary calculations, tax deductions, social security contributions, and statutory reporting
• Benefits management, ensuring employees receive all mandatory and optional benefits required under Bulgarian regulations
• Labour law compliance, including guidance on employment contracts, working time rules, leave entitlements, and regulatory updates
• Ongoing employee lifecycle support, from hiring to termination procedures

EOR in Bulgaria

Payroll Calculator

A Bulgaria payroll calculator can help you:

• Estimate net pay from gross salary
• See employer social cost
• Model total employment cost per hire

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