Payroll Costs in Bulgaria: What You Need to Know Before Hiring

Since joining the European Union in 2007, Bulgaria has become a hotbed for foreign investors and multinational companies. Thanks to its cheaper but highly skilled labor and a hungry consumer base, it's not surprising that companies from all over the world are interested in expanding to this country. In the next sections, we'll discuss everything you need to know before hiring in Bulgaria, including payroll contributions and other expenses.

Hiring in Bulgaria - Payroll Costs

When adding employees to your payroll, there are several mandatory costs you need to consider, apart from the wage you agree to pay. Payroll taxes are covered by both workers and their employers. One important difference is that employer payroll contributions, currently between 18.92% and 19.62%, do not affect the worker's net pay. These include social security (up to BGN 3,400), health insurance, and accident at work and occupational illness fund. Social security aims to protect people in case of unemployment (loss of income), maternity, diseases, pensions for old age or disability, and others.

On the other hand, employee payroll contributions are deducted from the gross payment, thus lowering the net wage. Right now, Bulgaria's employee payroll contributions are 13.78% and include social security and health insurance.

There are also other employment taxes that need to be covered by the employer. Each worker's net income is taxed at 10%, which must be paid by the employer on behalf of the worker. If the employee receives any bonuses or additional payments, these are also taxed at the same rates as the regular wage.

At the end of the financial year, the employer must inform workers of the total amount of taxes and contributions they paid on their behalf,...

Continue reading on: