Bulgaria's reputation has transformed from an
'unstable' country regulations-wise to one now providing a
consistent, reliable environment for HR and payroll operations.
Decades of change
Bulgaria's transition to democracy has seen regular
legislative changes, including to rules affecting payroll. The
constant revisions made to social security laws, pensions, taxes,
etc. were to an extent to be expected, due to the uncertain
atmosphere around the new political system. However, this period of
uncertainty is now behind the country, and today Bulgaria's
political parties try to avoid making major changes in legislation
- notably in the HR and payroll field.
In recent years there have been hardly any major changes related
to HR and payroll rules in Bulgaria. Social security and health
security instalments and the way they are calculated have not been
subject to amendment for some time, and changes are not anticipated
in the near future.
Similarly, taxes have also remained constant and the local
market has no reason to believe there will be any change shortly,
as it is well recognised that a stable legislative environment
creates broader economic stability. Local businesses do not find
themselves needing to tune their administrations to accommodate
frequent change. In the past, rules would change on an annual
basis; sometimes quite dramatically.
Bulgarian HR rules are well established, with the only regular
changes being legislative upgrades intended to create a better
environment for employers, taking into account the local labour
legislation (which is not as modern as foreign investors would
prefer or be accustomed to).
Social security and tax rates
Bulgarian social and health security rates are among the lowest
in Europe and there is no expectation of an increase in these rates
in the foreseeable future. Local rules provide for the social
security cap. If an employee (or other socially insured person)
receives more than BGN 2,600 (approx. €1,300) per month, the
amount exceeding this cap will remain out of the scope of the
social security calculations. Although this cap is sometimes
increased at the beginning of each year, in general it does provide
for a limit of the social (and health) security installments due to
the local budget.
Taxes are also easy to anticipate and calculate in Bulgaria. The
country's flat 10% income tax is well accepted by the leading
political parties and there are no specific indications of any
change of stance. Combined with relatively low salary costs,
it's easy to understand why Bulgaria is a preferred destination
for employers looking to decrease their overall personnel-related
Electronic correspondence and reporting
Bulgaria's 'electronic governance' has mostly
developed around correspondence and reporting to the local revenue
authorities. Almost all required declarations, submissions and
exchanges of information from the local employer can be processed
online via the National Revenue Agency's
platform. Recently the National Social Security Institute
also developed an online platform, allowing for more
necessary declarations and reports to be submitted online.
Bulgaria is still working towards the implementation of full
electronic coverage of the services provided by local institutions,
but it is increasingly apparent that paperless correspondence with
the authorities will be 'the norm' in the future.
Demanding compliance requirements
While Bulgarian HR and payroll administration can now be managed
online in what is quite a stable and attractive regulatory
environment, local compliance remains a burden, particularly for
foreign companies. The many short, strict deadlines, form
fulfillments and correspondence - in the Bulgarian language –
can be difficult to navigate.
While HR and payroll rules have not changed much in recent
years, they are scattered amongst different laws, regulations and
ordinances; many of them quite vague to those without an
understanding of the local market. The authorities also regularly
publish letters with instructions to taxable persons which should
be considered for compliance purposes.
Talk to us
Our experts in Bulgaria can assist both local and international
companies entering the market with all payroll matters; from the
necessary registrations to monthly calculations and making the
respective reporting and payments.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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