Social Security Contributions in Bulgaria

We are often asked by clients what additional costs they have to pay for their employees – managers or employees – in Bulgaria. With this article (as at Junе 2024) we would like to shortly describe this matter.

For the purposes of Bulgarian social security obligations, the Contract for management and control is treated as an Employment contract. The persons appointed under such contracts in Bulgaria must pay contributions for all social security risks as well as income tax. In addition, social security declarations must be submitted each month together with payment of the due tax and social security obligations by the 25th day of the month following the month to which they relate.

Different types of management positions, depending on the activity of the company, have according to Bulgarian law a minimum insurable income, which must be respected. There is also a maximum insurable income, which from 01.01.2024 in the amount BGN 3,750. The base for determining the social security contributions cannot exceed this maximum threshold and for any higher income above this threshold only income tax is due. Regardless of the insurable income, the outstanding social security contributions are of the same percentage, as follows:

1). Social security contributions at the expense of employee:

• State social security – 8,38%
• Supplementary mandatory pension insurance – 2.2%
• Health insurance – 3.2%

The total amount of contributions by the employee amounts to 13.78%. The gross salary is reduced by this percentage and the residue is subject to 10% income tax.

2) Social security contributions at the expense of the employer

• State social security – 10.92%
• Supplementary mandatory pension insurance – 2.8%
• Health insurance – 4.8%.

To the above listed contributions to the State social security fund the Occupational accidents and diseases fund contributions are added, which, depending on the risks of the activity, range from 0.4% to 1.1%.

The highest rate is relevant for the industries involving the highest risk, such as construction. The total amount of contributions payable by employers ranges from 18.92% to 19.62% depending on the company’s activities.

The minimum insurable income for a manager in the services sector is currently BGN 1.008, i.e. the minimum amount of insurance under a Contract for management and control in that area, as well.

Let us look at the following example where the gross remuneration is BGN 1,008 in the services sector:

The total social security contributions at the expense of the employee, as described above, amount to 13.78% or BGN 138.91. This amount is deducted from the gross salary to get the taxable income amount BGN 1,008 – BGN 138.91 = BGN 869.09. The amount of BGN 869.09 is subject to 10% tax, i.e. BGN 86.91. The gross salary is reduced by the social security contributions at the expense of the employee and the income tax and thus we get the net amount that the person should receive

BGN 1,008 – BGN 138.91 – BGN 86.91 = BGN 782.18

Payroll expenses of the employer in the field of provision of services amount to 18.92%, or in this case 190.71 lev The total cost of an employer is formed as the gross salary of the person plus social security contributions, which are paid by the employer, i.e. in this case:

BGN 1,008 + BGN 190.71 = BGN 1,198.71.

Let us look at another example where the gross salary is higher than the maximum insurable income – BGN 5,000.The total social security contributions at the expense of the employee amount to 13.78% of the maximum insurable income – BGN 3,750 – or BGN 516.75. This amount is deducted from the gross salary to get the taxable income tax amount:

BGN 5.000 – BGN 516.75 = BGN 4.483,25 The amount of BGN 4.483,25 is subject to 10% tax, i.e. BGN BGN 448,32. The gross salary is reduced by the social security contributions at the expense of the employee and the income tax and thus we get the net amount that the person should receive, i.e.

BGN 5.000 – BGN 516.75– BGN 448,32= BGN 4.034,93.

The social security contributions at the expense of the employer in the services sector amount to 18.92%, but in this case of the maximum insurable income of BGN 3.750 or BGN 709,5. The total cost of an employer is formed as the gross salary of the person plus social security contributions, which are paid by the employer, i.e. in this case:

BGN 5.000 + BGN 709,5= BGN 5.709,5

The author of this article, Ms. Desislava Ivanova, is a hr-accountant in the Germania tax office.