Professional Employer Organization (PEO) in Bulgaria

What is a professional employer organization (PEO)?

A professional employer organization (PEO) is an entity that contracts with businesses to provide comprehensive human resource outsourcing services. PEOs are also known as employee leasing companies or professional employer services providers. They are a business service provider that can help your company with a range of human resources (HR) functions, including payroll, benefits administration, workers' compensation, and compliance with employment-related laws. These companies also typically offer HR consulting services.

For organizations interested in hiring remote employees, Bulgaria offers many advantages as a destination. The country has a highly educated workforce and a lower cost of living than many Western European countries, making it an attractive option for companies looking to reduce their labor costs. With 312,710 people in tertiary education, the country offers a deep pool of potential employees.

Bulgaria has complex employment laws and regulations, which can be a challenge for companies unfamiliar with the Bulgarian legal system. PEOs can help your company navigate these laws and regulations and handle payroll and benefits administration. This can free up your time to focus on running your business.

What are the benefits of using a PEO in Bulgaria?

Partnering with a PEO in Bulgaria can simplify expanding your business into the country. Here are some of the benefits of working with a PEO:

  • Ensure compliance with Bulgarian employment laws and regulations. Every country has its employment laws and regulations, which can be complex and challenging to navigate. A PEO can help your company comply with all the relevant laws in Bulgaria. This includes social security contributions and tax compliance.
  • Handle payroll and benefits administration. A PEO can take care of payroll and benefits administration for your employees in Bulgaria. This can save you time and money and help ensure that your employees are paid correctly and on time.
  • Provide access to a wide range of HR services. A PEO can provide your company with a full range of HR services, from recruitment and training to performance management and succession planning. This can help you attract and retain the best talent in Bulgaria.
  • Mitigating risks. A PEO can help your company mitigate the risks associated with expanding into a new country. This includes things like currency risk, political risk, and compliance risk.
  • Mitigating employment costs. A PEO can help your company reduce its employment costs in Bulgaria by providing access to a pool of talented workers at a lower cost than hiring locally.
  • Managing work permit application and renewals. A PEO can assist your company obtain the work permits needed for your employees to work in Bulgaria. They can also help with the renewal process when the time comes. Note that Bulgarian work permits are valid for up to one year, after which you can renew them as long as the conditions of employment have not changed. After obtaining a work permit, the employees need to apply for a Type D visa at the Bulgarian embassy or consulate in their country.

A PEO like Skuad can ensure that your company is compliant with Bulgarian employment laws, handle payroll and benefits administration, and provide access to a wide range of HR services.

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What are the differences between an EOR and a PEO?

An employer of record (EOR) and professional employer organization (PEO) are both companies providing human resources outsourcing services. While they both offer similar services, there are some key differences between the two. Understanding these differences can help you choose the right type of company for your needs. Below we've outlined some key differences between an EOR and a PEO.

An EOR in Bulgaria:

  • Can act as the legal employer of your remote employees on behalf of your company
  • Handles HR-related tasks such as hiring, on-boarding, payroll, benefits, drafting contracts, and compliance
  • Would not require setting up a business  entity in Bulgaria
  • Drafts contracts for the employees on behalf of the client company

A PEO in Bulgaria:

  • Would be the client company’s co-employer.
  • Shares some HR responsibilities with your company, but provides you with more control over HR functions
  • Operates in the country only if your company is registered and able to hire employees
  • Does not handle the drafting of agreements and contracts. As the client company, you would handle these tasks.

Hiring in Bulgaria with a PEO

Bulgaria's labor market possesses several key advantages: high educational enrollment levels at all stages, widespread availability of essential skills, and relatively low employment costs compared to other EU member states. International students also make up 6% of the student population, which gives Bulgaria a truly international feel. Bulgaria also has a diverse range of industries, from agriculture and manufacturing to information technology. These factors make Bulgaria an attractive destination for companies hiring remote employees and allows businesses to find workers with the skills they need to support their specific business needs.

Despite the many benefits of hiring remote employees in Bulgaria, finding the right candidates and managing a remote team can still be challenging. In addition, you have to be mindful of local labor laws and cultural differences. Fortunately, professional employer organizations (PEOs) can help you navigate the process of hiring remote employees in Bulgaria.

Here's where Skuad comes in. Skuad's PEO services can help you create a foundation for your business growth by providing a streamlined solution for all your HR and payroll needs. It enables you to avoid the hassle of setting up a local entity and dealing with complex compliance issues. Instead, Skuad's team of experts will take care of everything for you so you can focus on your business.

Payroll in Bulgaria is challenging. It’s easy when you use a PEO.  

Payroll processing is a tedious but necessary task for any business. It becomes even more complicated when dealing with multiple countries and currencies.

There are several components to consider when processing payroll, including health insurance, accidents at work, occupational illness fund, and social security.

Processing payroll in Bulgaria involves a comprehensive understanding of taxable and non-taxable benefits, accumulating payroll taxes, and ensuring compliance with employment laws. Bulgaria taxes its individuals based on their tax residency status. Bulgarian tax residents are taxed on their worldwide income while non-residents are taxed in Bulgaria only on incomes earned in Bulgaria, which would include all income derived as a result of economic activities performed in the territory of Bulgaria or as a result of the disposal of property in Bulgaria. Apart from this, Bulgaria has a flat tax rate of 10%, which applies to all personal income.

Additionally, businesses operating in Bulgaria must comply with the country’s social security rules, which are different from other countries in the EU. The aggregate rate of social security contributions in Bulgaria is 24.7% to 25.4%, of which 14.12% to 14.82% is payable by the employer and 10.58% is payable by the employee. Additionally, employers and employees also need to pay for health insurance, at 4.8% and 3.2% respectively. Social security and health insurance make up the national insurance contribution. Standard statutory compliance requirements in Bulgaria include:

  • Taxes
  • Health insurance
  • Social security

Because of the complicated nature of payroll, many businesses choose to outsource this function to a professional employer organization (PEO). Skuad's comprehensive solution streamlines the payroll process and offers a hassle-free solution for businesses. If you're interested in learning more about how Skuad can help your business, contact us today.

What a PEO in Bulgaria can and cannot do for you

Extending HR services to an international workforce can be complicated. Local labor laws, cultural differences, and language barriers all need to be taken into account. It's natural to be apprehensive about managing a remote team and giving up some control over your business. Therefore, here's a breakdown of what a PEO can and cannot do for your business:

A PEO can:

  • Help you find the right candidates
  • Manage the onboarding process
  • Provide support with compliance issues
  • Offer payroll and HR solutions

A PEO cannot:

  • Serve as the only legal owner of your business
  • Fully control your business
  • Be solely responsible for your company's onboarding and termination process

Businesses of all sizes can benefit from collaborating with a PEO in Bulgaria.

Building a strong team in Bulgaria involves more than just finding the right candidates. There are many compliance issues to consider, and the onboarding process can be complicated. Understanding local labor laws can be challenging, but ensuring your business is compliant is important. Therefore, it's better to partner with a professional employer organization (PEO) that has knowledge of the Bulgarian labor market and can help your business navigate the process. A PEO can also handle HR and payroll administration, employee benefits, and other critical functions.

Skuad's consolidated solution offers your business a single point of contact for all your HR needs in Bulgaria. We will work with you to identify the right talent, handle compliance issues, and manage payroll and employee benefits. Our goal is to help your business succeed in Bulgaria by providing the support you need to build a strong team. Book a demo today to learn more about how we can help your business grow in Bulgaria.

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