Employer of Record Bulgaria
Skuad’s EoR solution in Bulgaria gives companies a competitive edge. Bulgaria can play a strategic role in the expansion plans of your business into Europe. One of the fastest ways to access the Bulgarian market is to hire Skuad as your Employer of Record in Bulgaria. Skuad’s unified employment platform enables organizations to hire and onboard, manage payroll efficiently, and ensure compliance with the Bulgarian taxes and employment laws.
Organizations can begin operations in Bulgaria without the need of setting up a subsidiary as Skuad becomes the legal employer on behalf of the organization. Contact Skuad to know more.
Bulgaria At A Glance
The Republic of Bulgaria, the 16th largest country of the European Union, is located towards the south-eastern part of the continent. On the HDI, Bulgaria is ranked 56th which reflects the quality of life that is better than the global average.
Population: 6,951,482 (as on 1.01.2020)
Currency: Bulgarian Lev or BGN/ Euro(EUR)
Capital: Bulgaria
Languages spoke: Bulgarian
GDP: $164 billion (PPP, 2020)
Employment In Bulgaria
The workforce in Bulgaria gets divided into three categories as per the Bulgarian labor laws and the Social Security Law. These employees are known as first, second, and third category workers. The third category is the most popular work category with favorable working conditions. The Council of Ministers of Bulgaria is primarily responsible for the segregation of work categories.
Here are some of the rights and entitlements of workers according to Bulgaria employment laws in brief:
| Entitlement
|
Explanation
|
| Characteristics of the Labor Laws in Bulgaria |
The laws are multistage normative.
The Labor Code, 1996, is the basic legislative regulation.
|
| Employment in Bulgaria |
- The Labor Law regulates the employment relationship.
- The law identifies employees as people doing physical labor work and clerks as people doing mental labor work.
- The employee is committed to following work discipline and work timings.
- The minimum age to start working in Bulgaria is 16 years, as mentioned in Article 301 (3), Labor Code).
In some instances, the minimum age can be 18 years for job roles that involve harmful or dangerous work. The only exceptions to this age clause are:
- Fourteen years for girls and thirteen years for boys who wish to work in a circus.
- Fifteen years for duties that are not harmful and are suitable for the development of the individual.
The employer's obligations are
- Offering a congenial working environment for employees.
- Offer remuneration to employees.
- Contribution toward social security.
|
| Employment contract |
The legal regulations of employment contracts are mentioned in the Labor Code – Chapter V, Section I. It is obligatory for the contract to be in writing.
The employment contract must have the following details (as per Article 66 of the Labor Code):
- The work location
- Name of the employee and the employer
- The personal number of the employee
- ID number of the employee
- Address
- Experience required for the position
- Job description and seniority in the organization.
Employer details that need to go into the contract include:
- The name of the company
- Registered office address
- The authorized representative and his ID number.
In addition, the employment contract needs to contain:
- Term of the contract
- Probation period
- Termination clause
- Working week and day duration
- Basic and supplementary remuneration
|
| Employment contract |
- Both parties must sign the employment contract.
- The contract needs to be filed with the tax office in Bulgaria.
- In most cases, the employment contract is for an indefinite period.
- In some cases, there are fixed-term contracts, too; such contracts have a term of not more than three years.
|
| Wage |
- The remuneration is regulated as per the Universal Declaration of Human Rights.
- It is also regulated by Article 7 of the CESCR (International Covenant on Economics, Social and Cultural Rights).
- The basic remuneration needs to be paid each month.
- The gross remuneration paid every month = basic + additional remuneration, social security contribution, and the 10% tax rate.
- The remuneration is calculated using two methods:
- Time pay – the time spent in doing the work is used for calculating the remuneration. The amount of work done or the quality of work is not taken into account.
- Payment by results – the remuneration is calculated using the results achieved. Under this payment method, the payment is the basic remuneration plus an additional allowance.
|
| Additional remuneration or bonus |
Few allowances that get paid additionally to employees include the following:
- Overtime allowance
- Public holiday allowance
- Allowances due to internal and external representations
- Allowances as a result of a higher academic degree
- Allowances dependent on the employer's discretion
|
| Working hours |
The standard accepted working hours are eight hours a week.
- The workweek consists of five days.
- Overtime is restricted.
- The overtime hours can go up to 48 hours, but it can be only for 60 workdays annually.
- Individuals under 18 years cannot work overtime in a week.
- Employees who work overtime are entitled to overtime pay and time off.
- Employees working at night are entitled to get additional pay, the terms of which are decided between the employer and the employee.
|
| Period of rest |
Article 151, Labor Code, provides that breaks are usually given to employees as lunch breaks during working days. The minimum duration should be about 30 minutes.
Article 152, Labor Code states that the daily rest period needs to be 12 hours or more.
Article 153, Labor Code states that the weekly rest period is two successive days of rest or 48 hours for every five days of work.
|
Leaves and Holidays
| Sick leaves |
Employers pay full salary for the three days of sick leave.
After three days, the sick leave gets paid from social security. The employee must have worked for at least six months to start getting social benefits.
To get social security benefits, the employee needs to submit a licensed doctor's prescription or a medical note.
|
| Annual Vacation |
Bulgarian employees are entitled to a vacation of 20 days after working continuously for eight months.
Some employees get up to 26 days of annual leave.
|
| Maternity Leave |
Pregnant women employees are entitled to 410 days of leave. Out of these days, 45 days’ leave is to be taken before childbirth.
The employee must have worked for at least one year to get social security benefits. She must also have made the required contributions toward social security.
In the case of adoption, the mother is entitled to get as many days of maternity leave as the biological mother if the child is less than two years old.
If the child is older than two years of age, the mother gets about 365 days of leave until the child is five years old.
|
| Paternity Leave |
A male employee is entitled to about 15 days of leave after the biological child's birth or after adopting a child.
|
| Public Holidays in Bulgaria |
- New Years Day: 1st January
- Liberation Day: 3rd March
- Orthodox Good Friday : 30th April
- Orthodox Holy Saturday: 1st May
- Orthodox Easter: 2nd May
- Orthodox Easter Monday: 3rd May
- Labor Day (in lieu): 4th May
- St. George's Day: 6th May
- Culture and Literacy Day: 24th May
- Unification Day: 6th September
- Independence Day: 22nd September
- Christmas Eve: 24th December
- Christmas: 25th December
- Second Day of Christmas: 26th-28th December
|
Social Security
Social security in Bulgaria offers financial protection from accidents at the workplace, fatal diseases and illnesses, life risks, old age, unemployment, maternity, and employee death.
1. Each employee needs to be mandatorily insured.
2. The social security contribution calculations include:
- Health insurance = 8% of the salary (gross)
- Pension insurance = 5% of the salary (gross)
- Basic social security = 17.3% of the salary (gross)
- The occupational accident insurance is borne by the employer that costs between 0.4% to 1.1%, depending on the job position.
The details mentioned here are just a glimpse into details and clauses of the Bulgarian Labor Law. The first thing you need to do as a company looking to expand in Bulgaria is to get accustomed to and well-versed with the local labor and employment regulations. It is a challenging task and could take time – not to forget the expertise that you would require to hire to do so.
With an Employer of Record in Bulgaria, such as Skuad, these processes become simple and smoother. We help you expand in Bulgaria, effectively impacting your business costs and productivity.
Call us for more details.
Contractors vs. Full-time Employees
The employment contracts in Bulgaria define only the employee-employer relationship. The Bulgarian Labour Law defines workers as people involved in physical labor while employees are involved in mental tasks. The said employer employs independent contractors not on an employment basis but as a civil relationship. Contractors get employed for specific jobs that involve the expertise of the said field. Therefore, a contractor is not part of the employer's labor force and is not covered by clauses mentioned in the employment agreement in Bulgaria.
The relationship basis between the contractor and the employer is governed by the commercial and civil laws and not employment contract laws in Bulgaria. As per the Bulgarian laws, any attempt to hide an employment relationship under a contractual agreement will be classified as an employment relationship and would attract legal penalties for the concerned parties.
Hiring In Bulgaria
One way to do this is to get help from hiring companies in Bulgaria to sort your HR domain. The other way is to hire candidates from job portals like www.Jobs.bg, www.JobTiger.bg, www.Karieri.bg, www.Zaplata.com, and www.Buljobs.bg.
Instead of such a long-drawn process for hiring a workforce, you can enter Bulgaria with a faster turnaround if you consider hiring an EOR. Skuad is one of the leading Employers of Record in Bulgaria, offering you an automated and smart platform to hire employees in Bulgaria, ensuring payroll and taxation compliance, optimized employee health benefits of Bulgaria, social security contributions, and more. In short, Skuad is in charge of the entire hire-to-fire process leaving you to focus on your expansion plans.
Call our experts for a demo today!
Probation & Termination
Here are some of the legal provisions of probation and termination in Bulgaria:
| Standard probation period Bulgaria |
The probationary period in Bulgaria is not more than six(6) months. |
| Termination of employment Bulgaria |
Either the employer or the employee can terminate the employment contract without any notice.
Employees can get terminated by mutual consent, expiration of the contract term, finishing a specific job, or when a substituted employee returns to work.
Under two conditions, termination of employment is not allowed in Bulgaria:
- A health contraindication that an expert medical commission has vetted.
- An illness that permanently impacts the employee’s standard working capacities.
|
To ensure your expansion endeavors adhere to the laws regarding probation and termination in Bulgaria, talk to Skuad experts and book a demo.
EOR Solution
EOR or Employer of Record is an incorporated business in a foreign country wherein the registered entity offers professional HR services. Employer of Record EOR is responsible for providing end-to-end assistance and support in the HR functionality.
The labor and employment terms in any land are unique and distinct from other countries. Hiring the labor force is the first necessity for any foreign business entity. In such a scenario, as a business, you need experts in the local employment laws to carry on your business expansion plans hassle-free.Employer of Record services includes compliance with the payroll and taxation laws while ensuring that all terms and clauses of the local labor laws get fulfilled, through and through.
Skuad is one of the top employers of record companies in Bulgaria, offering top-of-the-class automated EOR solutions. Speak to our Bulgarian specialists, who will take you through hiring, recruiting, and onboarding employees, handling the complete payroll, HR admin, and taxation for the business in Bulgaria in strict adherence with the local laws.
Contact our seasoned experts for more information.
Types Of Visas In Bulgaria
| Bulgaria work visa |
Citizens from EU member nations do not require any work visa to travel, stay or work in Bulgaria.
There are three types of Bulgarian work visas:
- Type A – airport transit.
- Type C – short stays
- Type D – long stays
|
| Types of work visas |
Before applying for a work permit, non-EU residents need to apply for a Type D visa to work and stay in Bulgaria.
If you need to visit Bulgaria for a short business trip, Type C is the correct visa to obtain.
|
| Bulgaria work visa requirements |
- Work permit
- Colored passport photo
- Reason for travel
- The first page of the passport
- Medical insurance proof
- Financial proof of banking statement
- Proof of accommodation in Bulgaria
- A police verification certificate
|
Work Permits
Employers who wish to hire a workforce for their unit in Bulgaria need to apply for a work permit in Bulgaria. The requirements for a work permit are:
| Topic
|
Explanation
|
| Can Skuad Sponsor work Permit in Moldova |
Yes
|
| Processing Time |
3 to 4 Weeks
|
| Work Permit Process |
- Step 1: Skuad’s local partner in Moldova acts as an employer, sponsors work permits to the employee and submits the application form to the National Agency for Employment along with required documents such as a work contract.
- Step 2: The Agency upon verification approves and issues the work permit
- Step 3: The employee can enter and work in Moldova with Work Permit until its expiration.
|
Also, work permits are a must for foreign employees. It is not possible to get a Bulgaria work permit without a job offer.
As an EOR service for Bulgaria, Skuad takes care of all the requirements and responsibilities related to employment, including applying for and obtaining visas and work permits.
Get in touch with Skuad experts to learn more.
Payroll & Taxes in Bulgaria
Taxation in Bulgaria
Employer Taxation
| Laws
|
Explanation
|
| Laws that regulate payroll & taxes in Bulgaria are |
- Labor Code
- Healthy and Safe Working Conditions Act
- Employment Promotion Act
|
| Bulgaria payroll tax rates |
| Tax head
|
Bulgaria Employer payroll taxes
|
| Pension Fee
|
8.22%
|
| Health insurance fee |
4.80%
|
| Unemployment fee |
0.60%
|
| Maternity and common disease |
2.10% |
| Supplementary compulsory pension |
2.80% |
| Professional disease, labor accident insurance |
2.80% |
|
| Corporate taxes |
This tax is regulated by the Corporate Income Tax Act.
It is at the rate of a flat 10% on the income.
|
| Withholding taxes |
10% taxes get charged on non-commercial income like rent etc.
|
Employee taxation
| Laws
|
Explanation
|
| Bulgaria payroll tax rates
|
| Tax head
|
Bulgaria Employer payroll taxes
|
| Pension Fee
|
6.58%
|
| Health insurance fee |
3.20%
|
| Unemployment fee |
0.40%
|
| Maternity and common disease |
1.40% |
| Supplementary compulsory pension |
2.20% |
| Professional disease, labor accident insurance |
2.20% |
|
| Value-Added Taxes |
VAT is regulated by VATA (Value Added Tax Act)
20% tax is applied on all types of products and services
Hotel services are taxed at 9%
|
| Income Tax |
The rate is 10%. It is a flat rate charged on all types of income
|
Besides, there are other taxation sub-heads and rules that differ for foreign employees. When you hire Skuad as your EOR, there is no reason to worry because we handle the entire taxation gamut.
Bonuses
Bonuses are paid at the discretion of the employer in Bulgaria. They're prevalent, and they're frequently paid around December.
Book a demo here.
Incorporation
Incorporating a holding company in Bulgaria can be done in three ways: a Private Limited EOOD company, an OOD Private Limited company, and a Public Limited EAD company. If you are keen to do business in Bulgaria, you can consider setting up a Bulgarian holding company because of the formulation of dividend payments. The holding company needs to invest a minimum of 25% of capital stock in a subsidiary. Besides, at least 50% of the management should be with the holding company founding members.
The increasing business opportunities in Bulgaria make the country an attractive investment decision. But incorporation can take time and is a nitty-gritty process. The best way is to employ an EOR to allow you to dive into the business right away.
Skuad’s EOR Bulgaria services can fast-track your expansion process, allowing you to start your business operations in Bulgaria immediately. Right from recruiting the right employees to managing your payroll, Skuad’s services will handle all the compliances for you so that you can commence business operations on time.
Learn more here.
Professional Employer Organization (PEO)
A Professional Employer Organization in Bulgaria or PEO is also a facilitator offering HR support. However, when you employ a PEO service provider, you still need to incorporate your subsidiary in Bulgaria. A PEO works as a co-employer but not as a separate legal entity. In contrast, the EOR is a separate legal entity with specialization in the HR domain. It handles the entire workforce for your organization for a fee. The EOR pays the workers and laborers, and the taxation and other statutory compliances are taken care of by the EOR.
Skuad offers both types of services to foreign businesses that wish to expand into Bulgaria. Call us to learn more about the difference between the two services.
Conclusion
Bulgaria is an ideal country for expanding your business. The country is famously known as the European Outsourcing Destination ever since 2015. The government has also devised newer strategies for promoting foreign investments like the Innovation Strategy for Smart Specialization. The corporate taxes in Bulgaria are also considerably lower – it is 10%, while in other countries in the region, the taxes hover around 25%. To add to this, the workforce in Bulgaria is qualified and skilled. The production costs are comparatively lower, office spaces available at best rates, and starting a limited liability company here is cost-effective.
There are various ways of working in Bulgaria but hiring Skuad as your EOR helps as the entire HR is our responsibility and forte. We ensure that you get the best people to work for you.
Call our experts to know more.
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