Employer Contributions in Bulgaria
Social insurance
The state social insurance provides benefits, allowances and pensions to employees for:
- temporary incapacity for work
- temporarily reduced working capacity
- disability
- motherhood
- unemployment
- old age
- death
The total amount of social security contributions is 32.70%-33.40% on the gross remuneration, with the employer contributing 18.92%-19.62%, depending on the insurable income. The percentage is distributed as follows:
- Mandatory state pension fund: 8.22%
- Additional mandatory pension insurance: 2.8%
- general illness and maternity fund: 2.1%
- Unemployment fund: 0.6%
- Accident at work and occupational disease fund: 0.4% - 1.1%
- Health insurance fund: 4.8%
Pension
Several pensions are funded through labour activity:
- Pension for insurance for the length of service and old age
- Disability pension due to general illness, occupational accidents and illnesses
- Pensions for surviving relatives (Survivor’s pension)
There are three types of pension funds:
- Mandatory state pension fund - 14.8% of the gross remuneration of the employee funds it (8.22% by the employer)
- Additional mandatory pension insurance, which licensed pension insurance companies to carry out. It’s obligatory for those born after 31/12/1959 who are insured through state social insurance. Both the employer and the employee contribute a total of 5% to it.
- Additional voluntary pension insurance, in which any individual over 16 can participate. Contributions can be made by the employee at their own expense or the employer as a part of a social benefits package plan. The contribution amount, the regularity of the payment and the period depend on the choice of the insured individual. When concluding the insurance contract, only the amount of the contribution is determined, not the amount of the pension that the person will receive. The pension amount cannot be determined in advance, as it depends on the funds accumulated at the time of retirement and the type and term of receiving the pension.
Health insurance
Health insurance is mandatory by law. It covers Bulgarian citizens, Bulgarian citizens with dual citizenship permanently living in Bulgaria, foreigners allowed long-term or permanent residence in Bulgaria, and foreign students accepted in a Bulgarian university.
The funds are raised from health insurance contributions, transferred by and for all insured individuals, and spent on compensations in insurance cases (i.e. Illness). It is on the principle of equal rights, regardless of individual contribution.
The amount of the health insurance contribution is determined as a percentage of the income on which the contributions are due. It is determined every year by the National Health Insurance Fund Budget Act, and for 2024 it is 8%, with the employer contributing 4.8%.
Employee Contributions in Bulgaria
Social security
The total amount of social security contributions is 32.70%-33.40% on gross remuneration, with the employee contributing 13.78%. The percentage is distributed as follows:
- Mandatory state pension fund: 6.58%
- Additional mandatory pension insurance: 2.2%
- General illness and maternity fund: 1.4%
- Unemployment fund: 0.4%
- Health insurance fund: 3.2%
Pension
Several pensions are funded through labour activity:
- Pension for insurance for the length of service and old age
- Disability pension due to general illness, occupational accidents and illnesses
- Pensions for surviving relatives (Survivor’s pension)
There are three types of pension funds:
- Mandatory state pension fund - 14.8% of the gross remuneration of the employee funds it (6.58% by the employee)
- Additional mandatory pension insurance, which licensed pension insurance companies to carry out. It’s obligatory for those born after 31/12/1959 who are insured through state social insurance. Both the employer and the employee contribute a total of 5% to it.
- Additional voluntary pension insurance, in which any individual over 16 can participate. Contributions can be made by the employee at their own expense or the employer as a part of a social benefits package plan. The amount of the contribution, the regularity of the payment and the period depend on the choice of the insured individual. When concluding the insurance contract, only the amount of the contribution is determined, not the amount of the pension that the person will receive. The pension amount cannot be determined in advance, as it depends on the funds accumulated at the time of retirement and on the type and term of receiving the pension.
Health insurance
Health insurance is mandatory by law. It covers Bulgarian citizens, Bulgarian citizens with dual citizenship permanently living in Bulgaria, foreigners allowed long-term or permanent residence in Bulgaria, and foreign students accepted in a Bulgarian university.
The funds are raised from health insurance contributions, transferred by and for all insured individuals, and spent on compensations in insurance cases (i.e. Illness). It is on the principle of equal rights, regardless of individual contribution.
The amount of the health insurance contribution is determined as a percentage of the income on which the contributions are due. It is determined every year by the National Health Insurance Fund Budget Act, and for 2023 it is 8%, with the employee contributing 3.2%.
Income tax
The income tax in Bulgaria is 10% flat regardless of income. The annual tax base for employment income is determined as the yearly taxable income reduced by mandatory employee insurance contributions locally and abroad.
Subjects of annual income tax are resident individuals taxed for income from the country and abroad. Foreign individuals are taxed only for income from Bulgaria.
A resident individual, regardless of citizenship, is an individual with a permanent address in Bulgaria or who resides in the country for more than 183 days in every 12 months.
The employer must recalculate the annual tax by January 31st of the following year.
Tax relief cases
The following applies:
- Reduced ability to work at 50% and above allows the taxable income to be reduced by BGN 7 920 (around EUR 4 049)
- Voluntary insurance – contributions made by the individuals for up to a 10% reduction of the taxable income
- Retirement insurance instalments
- Certain donations, up to 65% reduction of the taxable income basis
- For young families that have taken a housing loan - the tax is reduced by the amount of interest paid on the first BGN 100 000 (around EUR 51 129) of the housing loan
- Children (amounts valid for 2024):
-
- BGN 6 000 (around EUR 3 068) - for one child
- BGN 12 000 (around EUR 6 136) - for two children
- BGN 18 000 (around EUR 9 204) - for three or more children
- Disabled children (amounts valid for 2024) - BGN 12 000 (around EUR 6 136) for raising a child with 50% or above the degree of disability
- Cashless payments – no more than BGN 500 (around EUR 256)
- For improvements and/or repairs of real estate up to BGN 2 000 (around EUR 1 022)
Benefits in kind exemptions
The following items and compensations related to employment are exempt from taxation:
- Food provided in kind to employees working in certain conditions
- Food vouchers up to BGN 200 (around EUR 102.26) per month
- Work clothing and protective gear
- Various compensations, including but not limited to:
- Per diem for business travel up to their double amount specified by law
- Compensation for damages from occupational accidents and illnesses that prevent the individual from working
- Compensations for employment termination due to illness or retirement
- Compensation for damages caused by the employer due to improper employment relation documentation
- Compensation for pregnancy and maternity leave or adoption of a child under the age of 5
- The following financial aids:
- one-time financial aid for medical treatment up to the cost of the treatment
- one-time financial aid is given for childbirth, civil marriage, or death of a family member, up to BGN 2 400 (around EUR 1 227) in total
- the cost of transport to work, which is at the expense of the employer.
