Bulgaria joined the eurozone on January 1, 2026, making it one of the more significant recent changes for foreign companies with staff in the country. The lev (BGN) is no longer the operating currency, but the fixed conversion rate of 1 EUR = 1.95583 BGN means many contracts and figures will still be expressed in BGN during the transition period. If you’re running payroll in Bulgaria this year, you need to understand both what’s changed and what stays the same. This guide covers the key rules: contributions, tax, the seniority bonus, compliance obligations, and how to structure the whole operation efficiently.
How payroll works in bulgaria
Bulgarian payroll sits at the intersection of three government bodies, each handling a different piece of the puzzle. The National Revenue Agency (NRA, known locally as НАП) oversees income tax and receives monthly declarations from employers. The National Social Security Institute (NSSI / НОИ) administers social security contributions for pensions, illness, unemployment, and related programs. The National Health Insurance Fund (NHIF / НЗОК) manages compulsory health insurance.
As an employer, you’re responsible for calculating, withholding, and remitting contributions to all three on a monthly basis. You don’t pass that responsibility to the employee. Every payslip you issue must itemize all deductions, so employees can see exactly what’s been withheld on their behalf.
Contracts and working hours
Employment contracts must be in Bulgarian. A bilingual version is acceptable, but Bulgarian must be one of the languages. Contracts should state the role, salary, working hours, and place of work.
Standard working hours are 40 per week, structured as eight hours per day. Most businesses in Bulgaria run from around 8 or 9am. Probationary periods can be up to six months, and this must be stated in the contract.
Pay frequency and deadlines
Bulgaria requires monthly payroll. Salaries must be paid by the 5th of the following month. That means wages for January are due by February 5th, February wages by March 5th, and so on.
Missing this deadline isn’t just a compliance issue. Late wages carry legal consequences and can damage your employment relationship from the outset. Build your payroll run schedule to clear well before the 5th, especially when that date falls on a weekend or public holiday.
Contributions and deductions
Bulgarian payroll involves two separate layers of contributions: what the employer pays on top of gross salary, and what gets deducted from the employee’s gross before they receive their net pay. You handle both as the employer.
Employer contributions
Employers pay between 18.92% and 19.62% of gross salary in social security contributions. The rate varies slightly depending on the nature of the work and applicable risk categories. Budget using the upper end of that range to avoid underestimating your cost per hire.
Employee deductions
You also withhold the employee’s share of contributions from their gross salary each month. The employee-side deductions break down as follows:
- Pension insurance: 6.58%
- Maternity and illness: 1.40%
- Unemployment: 0.40%
- Supplementary pension: 2.20%
- Health insurance: 3.20%
The combined employee deduction is approximately 13.78% of gross salary. You remit this to the relevant authorities on the employee’s behalf. The employee never handles this directly.
Minimum wage
From January 1, 2026, Bulgaria’s minimum wage is BGN 1,213 per month (approximately €620 at the fixed conversion rate), or BGN 7.31 per hour. No employment contract can pay below this threshold. If a contract specifies a lower amount, the employee is legally entitled to the statutory minimum regardless.
Income tax
Bulgaria operates a flat income tax rate of 10%. There are no progressive brackets to navigate, which makes the calculation straightforward. You calculate each employee’s tax liability on their monthly gross income (after social security deductions), withhold the 10%, and remit it to the NRA.
You’re also required to file a monthly declaration with the NRA for each employee. This declaration reports the income paid and the tax withheld for that period. Missing or late declarations can trigger penalties, so your payroll calendar should include these filing deadlines alongside the payment runs.
The seniority bonus
Bulgaria has a mandatory seniority bonus that many foreign employers overlook. Employees are entitled to 0.6% of their base salary for each year of professional experience. This applies to all employees covered by the Labour Code and must appear as a line item on every payslip.
The seniority bonus is calculated on base salary, not on total remuneration. You’ll need to collect documentation of each employee’s relevant work history when they join, so you can calculate the correct amount from day one. Keep that documentation on file as part of your employment records.
It’s worth noting that Bulgaria doesn’t have a statutory 13th month payment. Any end-of-year bonuses or additional payments are discretionary unless you’ve committed to them contractually.
Payroll records and compliance
Every employee must receive a payslip each pay cycle. The payslip must show the gross salary, all individual deductions (employer and employee contributions, income tax, and the seniority bonus component), and the net amount paid. Vague or incomplete payslips aren’t compliant.
Beyond payslips, you’ll be filing monthly declarations with the NRA. You’ll also need to register each employee with the NSSI before or at the start of employment. Missing this registration creates a gap in the employee’s social insurance coverage and a compliance breach for your company.
Payroll records should be retained in line with Bulgarian statutory requirements. Employment documentation, including the signed contract, payslips, and contribution records, must be kept for the periods prescribed by law.
How an EOR handles bulgarian payroll
If you’re a foreign company without a registered entity in Bulgaria, you can’t put someone on local payroll directly. Bulgarian employment law requires the employing entity to be legally registered in the country. Two options are available to you.
You can establish a Bulgarian legal entity, which gives you full control but takes time and comes with ongoing administrative obligations. Or you can work with an Employer of Record (EOR), which is a local entity that employs your worker on your behalf. The EOR handles the employment contract, NSSI registration, payroll processing, tax declarations, and compliance. You direct the work; the EOR manages the employment relationship.
For companies that want to hire in Bulgaria quickly without setting up a subsidiary, the EOR model is usually the more practical path. If you’re comparing providers, this overview of EOR services explains what to look for in a compliant, capable partner.
Get bulgarian payroll right from day one
Bulgarian payroll is manageable once you know the rules. The flat 10% tax rate and monthly pay cycle keep the mechanics relatively simple, but the seniority bonus, the NRA filing requirements, and the euro transition all require attention. Getting set up correctly from the start is far less costly than fixing errors after the fact.
Book a demo to see how RemotePass handles Bulgarian payroll, contributions, and compliance so you can hire with confidence.
