A Practical Guide to Payroll in Bulgaria for Employers

Running payroll in Bulgaria involves several steps, from registering as an employer to calculating deductions and submitting monthly declarations. Here's what you need to know to stay compliant and keep your team paid on time.

Registering as an employer

Before hiring your first employee, you must register as an employer with the National Revenue Agency (NRA). This is done by submitting a declaration within three days of signing the first employment contract. You will receive a unique employer identification number used in all payroll-related filings.

Employment contracts and personal data

Every employee must have a written employment contract registered with the NRA. The contract specifies the gross salary, position, working hours, and other terms. Employers must also collect and store employees' personal data in compliance with GDPR, including their unified civil number (EGN) and bank account details.

Calculating gross to net salary

The gross salary is the starting point. From this, you deduct mandatory social security contributions and income tax. As of 2026, the total social security contribution rate is 33.4%, split between employer (18.92%) and employee (14.48%). These contributions cover pensions, health insurance, unemployment, and other funds. The employer's share is an additional cost on top of the gross salary, while the employee's share is deducted from the gross.

Income tax is a flat 10% on the taxable income after deducting social security contributions and any applicable tax relief, such as for young families or persons with disabilities. For example, if an employee's gross salary is 2,000 BGN, the employee's social security contributions are 289.60 BGN (14.48%), leaving 1,710.40 BGN. The 10% income tax on that amount is 171.04 BGN, resulting in a net salary of approximately 1,539.36 BGN. (The employer's share of 378.40 BGN is paid in addition to the gross salary.)

Minimum insurance thresholds

Social security contributions cannot be calculated on a salary lower than the minimum insurance threshold for the employee's profession and economic activity. These thresholds are set annually by the state budget and vary by sector. Employers must ensure that salaries meet at least the minimum threshold, even if the agreed gross salary is lower, to avoid underpayment of contributions.

Monthly declarations and payment deadlines

Employers must file a monthly declaration (Form 1) and a six-monthly declaration (Form 6) with the NRA. Form 1 reports each employee's social security contributions and is due by the 25th of the following month. Form 6 reports the insurance income for each employee and is due by the end of the month following the respective six-month period. Payments of social security contributions and income tax must be made by the same deadlines.

Annual reporting and certificates

At the end of the year, employers must provide employees with a certificate of income and taxes paid (Form 3) by 31 January of the following year. This certificate is used by employees for their own tax declarations and other purposes. Employers also need to reconcile payroll data with the NRA's records and correct any discrepancies.

Common pitfalls to avoid

• Late registration: Failing to register as an employer on time can result in fines.
• Incorrect contributions: Using the wrong insurance threshold or contribution rate can lead to penalties.
• Missed deadlines: Submitting declarations or paying contributions late accrues interest and may trigger inspections.
• Not keeping records: Payroll records must be kept for at least 50 years, including payslips and contracts.

Payroll in Bulgaria is highly regulated but manageable with proper systems and attention to deadlines. Many businesses use local payroll providers or accounting software to ensure accuracy and compliance.