Employer of Record in Bulgaria

Expanding your team into Bulgaria in 2025 presents a strategic opportunity, offering access to a skilled talent pool within a European Union member state. Successfully hiring employees in Bulgaria requires a clear understanding of the country's specific labor laws, social security contributions, and tax regulations. Businesses typically have a few primary options for engaging talent in the Bulgarian market.

Companies can choose to establish a local legal entity, which involves a comprehensive registration process and ongoing administrative and compliance obligations. Alternatively, for those seeking a faster and more streamlined approach, engaging an independent contractor is an option, though this carries the risk of misclassification if the working relationship resembles employment. A third, increasingly popular solution is to partner with an Employer of Record (EOR) service.

• Establishing a local legal entity
• Utilizing an Employer of Record (EOR), such as Rivermate
• Engaging an independent contractor

How an Employer of Record (EOR) Works in Bulgaria

An EOR acts as the legal employer for your Bulgarian workforce, handling all compliance and administrative tasks, while you retain full control over day-to-day management and assignments. This allows your company to operate in Bulgaria without needing to register a local entity. Specifically, an EOR in Bulgaria takes care of:

• Onboarding and Employment Contracts: Ensuring all employment agreements comply with Bulgarian labor law, including specific clauses for working hours, holidays, and termination.
• Payroll Processing: Accurately calculating salaries, mandatory social security contributions (e.g., for health, pension, unemployment), and income tax deductions in accordance with Bulgarian regulations.
• Tax and Social Security Remittance: Registering with local authorities and submitting all required employer and employee contributions to the National Revenue Agency and other relevant Bulgarian institutions.
• Benefits Administration: Managing statutory benefits such as annual leave, sick leave, maternity/paternity leave, and other employee entitlements as mandated by Bulgarian law.
• HR Compliance: Providing guidance on local labor laws, managing terminations, and ensuring adherence to all HR-related regulations in Bulgaria.

Benefits of Using an EOR for Hiring in Bulgaria

Partnering with an EOR offers significant advantages for companies looking to expand into Bulgaria without the complexities of establishing a local presence. These benefits include:

• Speed to Market: Hire employees in Bulgaria quickly, bypassing the lengthy and complex process of entity registration and setup.
• Assured Compliance: Mitigate the risks associated with navigating unfamiliar Bulgarian labor laws, tax regulations, and social security requirements.
• Reduced Administrative Burden: Outsource the complexities of local payroll, tax filings, and HR administration, freeing up your internal resources.
• Cost Efficiency: Avoid the substantial costs and ongoing expenses associated with establishing and maintaining a local subsidiary in Bulgaria.
• Flexibility and Scalability: Easily expand or contract your Bulgarian team as business needs evolve, without the fixed overhead of a local entity.

Rivermate's transparent pricing model eliminates complexity with a single, competitive monthly fee per employee. Unlike traditional PEO providers, our pricing in Bulgaria includes comprehensive HR support, benefits administration, compliance management, and access to our proprietary dashboard for real-time workforce analytics. No hidden costs, no setup fees—just straightforward pricing that scales with your business needs while ensuring full legal compliance in Bulgaria.

In Bulgaria, employers are responsible for social security contributions covering pension, health, unemployment, accident, and maternity benefits, with rates split between employer and employee. For 2025, typical contribution rates are summarized as follows:

Employers must withhold a flat personal income tax of 10% from employees' gross salaries, remitting these to the NRA. Employees can benefit from deductions such as social security contributions, disability credits, donations, and mortgage interest, which reduce taxable income.

Tax compliance requires monthly social security and income tax declarations by the 25th of the following month, and an annual income tax return by the end of April. Foreign workers' tax obligations depend on residency status, with treaties potentially providing relief. Foreign companies should consider permanent establishment rules for tax purposes. Accurate adherence to deadlines and regulations is essential to avoid penalties.

Bulgaria's salary landscape in 2025 reflects economic growth and EU integration, with significant variation across industries and regions. Sofia offers higher salaries, especially in IT, where software developers earn between 45,000-75,000 BGN annually, and project managers between 55,000-85,000 BGN. Other sectors like finance, manufacturing, sales, and HR have lower ranges, with average salaries generally increasing in high-demand roles.

The statutory minimum gross wage is approximately 980 BGN per month, applicable to all employees, with strict compliance required to avoid penalties. Compensation packages often include bonuses such as performance-based, holiday, meal vouchers, transportation allowances, and private health insurance, which vary by employer and role.

Payroll is typically processed monthly via bank transfers, with payslips detailing earnings and deductions. Salary trends are upward, driven by economic factors, skill shortages, and policy changes, especially in IT. Employers should stay updated on minimum wage laws and market norms to remain competitive and compliant.

Bulgarian labor law guarantees a minimum of 20 working days of paid annual leave, with additional leave possible for specific categories such as workers in hazardous conditions or with disabilities. Employees accrue leave based on service length, and unused leave can often be carried over, with employers required to facilitate leave-taking upon employee request.

The country observes several public holidays, including New Year's Day, Liberation Day, Labour Day, and Christmas, during which most businesses are closed and employees receive paid time off. If a holiday falls on a weekend, the following Monday is typically observed as a day off.

Employees are entitled to paid sick leave, with the first three days paid at 70% of gross salary, followed by 80% paid by the National Social Security Institute (NSSI) for up to 18 months. Parental leave includes 410 days of maternity leave at 90% salary, 15 days of paternity leave, and adoption leave with similar benefits.

In Bulgaria, employers must provide mandatory benefits including at least 20 days of paid annual leave, paid public holidays, sick leave (first three days paid by the employer), maternity and parental leave benefits funded by the National Social Security Institute (NSSI), and contributions to social security and health insurance systems. These statutory benefits form the core of employee compensation and are complemented by social security contributions, unemployment insurance, and health insurance contributions, with rates subject to annual updates.

Employers often enhance packages with optional benefits such as supplementary health insurance, life insurance, pension plans, meal vouchers, transportation allowances, professional development, wellness programs, and company cars, especially in larger firms and competitive sectors like IT. Bulgaria’s health system combines mandatory contributions to the National Health Insurance Fund (NHIF) with private supplementary insurance for broader coverage, faster services, and additional medical expenses.

The country’s pension system comprises three pillars: a mandatory state pension, mandatory private pension insurance for those born after 1959, and voluntary private pension plans. Employers can contribute to voluntary pension schemes as an attractive benefit. Benefit packages vary by company size, with startups offering basic benefits and larger firms providing comprehensive plans including health, pension, and development programs.

Bulgaria's Labour Code mandates written employment contracts to define employment terms, ensuring legal compliance and protecting rights. Contracts must include specific clauses such as type, probation, confidentiality, non-compete, and termination procedures. Employers should carefully navigate these legal requirements to avoid disputes.

There are several contract types tailored to different employment scenarios:

Understanding these distinctions and legal obligations is vital for employers operating in Bulgaria to ensure lawful employment practices.

Bulgaria's remote work landscape is expanding, driven by technological progress and a focus on work-life balance. Employers must navigate evolving legal requirements, including clear employment contracts, health and safety standards, and mutual agreement on work-from-home arrangements. Key legal points include employer obligations to ensure safe remote workplaces and compliance with Bulgarian labor laws, with remote agreements terminable under standard conditions.

Flexible work options are increasingly common, such as telecommuting, flexible hours, and hybrid models. Employers should establish clear policies on equipment provision, expense reimbursement, and data security, ensuring compliance with GDPR and Bulgarian data protection laws. Critical considerations include robust cybersecurity measures, employee training, and data processing agreements.

Reliable connectivity, secure communication tools, and ongoing technical support are vital for effective remote work. Companies should prioritize high-quality internet access, cybersecurity, and cloud-based platforms to maintain productivity and compliance.

In Bulgaria, employment termination is regulated by the Labour Code, requiring adherence to specific procedures, notice periods, and justified grounds. Employers must follow legal steps, including providing written notices, gathering evidence, and offering severance pay when applicable. Failure to comply can lead to legal challenges, including claims of unfair dismissal or discrimination.

Notice periods vary based on employee tenure and contract type, with minimum durations ranging from 3 days during probation to 4 months for employees with over 10 years of service. Severance pay is generally mandated in cases of redundancy, retirement, or illness, calculated as a multiple of the gross monthly salary, often influenced by collective agreements.

Employers must establish valid grounds for termination, such as poor performance, disciplinary violations, or redundancy, and follow procedural steps including providing written notices, consulting employees if needed, and issuing final payments. Employees are protected against unfair dismissal, with legal recourse for reinstatement or compensation, especially for pregnant employees or union members.

Bulgaria's shift towards flexible work arrangements has led to a rise in independent contracting, benefiting both businesses and individuals by providing access to specialized skills and work autonomy. Proper classification between employees and contractors is crucial to avoid legal issues, with key criteria including control, integration, exclusivity, duration, payment method, provision of tools, and risk. Misclassification can result in penalties, making it essential for companies to adhere to Bulgarian labor laws and the Law on Obligations and Contracts.

Independent contractor agreements in Bulgaria typically include detailed terms such as scope of work, payment terms, confidentiality, and intellectual property rights. Contractors are responsible for their own tax and social security obligations, with a flat income tax rate of 10% and mandatory VAT registration if turnover exceeds BGN 100,000. Social security contributions are based on a self-declared income base. Common industries utilizing contractors include IT, creative and marketing, consulting, and education, with the IT sector particularly reliant on this model due to its project-based nature and global demand for technical skills.

Bulgaria's work permit system for 2025 includes several visa types tailored for different employment needs. The Type D Visa is for long-term stays over 90 days and is required before applying for a residence permit. The Single Permit combines residence and work authorization, issued for specific jobs and employers. The EU Blue Card targets highly qualified professionals with higher education and salary thresholds, while the ICT Permit facilitates intra-company transfers for multinational employees.

The application process involves employer registration of job vacancies, submission of documents (including qualifications and criminal records), and approval by authorities. Once approved, employees may need a Type D visa to enter Bulgaria and subsequently apply for a residence permit. Visa fees range from EUR 100 to EUR 300, with processing times between 15 and 45 days.

Employers must also pay applicable fees and ensure compliance with Bulgarian labor and immigration laws.