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Global Payroll Team
Written by Global Payroll Team
Last updated May 1, 2026
Expert Reviewed
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Mercans offers complete payroll, PEO and HR services in Bulgaria

Bulgaria remains an attractive destination for foreign direct investment thanks to comparatively competitive labor costs, a strategic location within the EU, and flat corporate and personal income tax rates. Foreign investors are generally treated the same as local businesses, and sectors such as IT, business process outsourcing, manufacturing, logistics and automotive continue to attract international companies.

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Doing Business in Bulgaria

Bulgaria offers an accessible business environment for investors and continues to support SMEs and strategic investment. Businesses benefit from EU market access, a relatively simple tax framework and established outsourcing and manufacturing sectors, although employers should still plan carefully for regulatory compliance, labor law and administrative procedures.

Entity Registration and Incorporation Requirements

Setting up a new business or expanding an existing one in Bulgaria is straightforward. Choose how your company operates from a range of entity types that suit your individual circumstance.

Banking

Banking Hours: 9:00 am to 5:00 pm from Monday to Friday

Working Week

The normal full-time working week in Bulgaria is 40 hours, usually worked over 5 days.

Labor Law

The Labor Code is the primary source of employment law in Bulgaria and regulates employment contracts, working time, leave, remuneration, termination and employer obligations, together with the Social Insurance Code and related secondary legislation.

Main Industries

Information technology, business process outsourcing, machinery and equipment, metallurgy, food processing, energy and automotive components

GDP Growth

3.0%

Dates & Numbers

dd/mm/yyyy

Official State Name

Republic of Bulgaria

Population

6.44 million

Capital

Sofia

Major Languages

Bulgarian

Currency

Bulgarian Lev (BGN)

Internet Domain

.bg

International Dialing Code

+359

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Bulgaria
Sofia, BG
11:39 am, May 3, 2026
9°C
broken clouds
46 %
Wind Gust: 0 mph
Clouds: 75%
Sunrise: 6:18 am
Sunset: 8:28 pm

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Payroll

The national minimum wage is set by the government and applies broadly to employees in Bulgaria. Employers must also comply with statutory payroll, withholding and social insurance requirements.

It is acceptable to provide employees with online payslips, provided payroll documentation requirements are met.

Payslip

Payroll and employment records relating to work history are commonly retained for long-term archiving, with certain records kept for 50 years.

Reports

Employees receive paid annual leave of at least 20 working days.

Annual Leave

Employees are entitled to sickness compensation subject to medical certification and social insurance rules, with the employer covering the initial period and the NSSI paying thereafter.

Sick Leave

Employees are entitled to 410 days of maternity leave and 15 days of paid paternity leave, subject to eligibility conditions.

Maternity & Paternity Leave

Termination of an employee generally requires notice of 30 days, unless a longer period up to 3 months has been agreed.

Employee Termination

This is not mandated by law.

13th month salary

1213 BGN per month

Minimum Wage

Overtime payment is generally 50% for work on regular working days, 75% on weekly rest days and 100% on official holidays.

Overtime

There is generally no universal statutory severance pay, although compensation may apply in specific termination scenarios.

Severance Pay

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Tax and Social Security

Individuals are taxed based on their tax residency status. Bulgaria applies flat personal and corporate income tax rates, while national insurance contributions include both social security and health insurance contributions.

Tax

Bulgarian tax residents are generally taxed on their worldwide income and non-residents are taxed on Bulgarian-source income. Bulgaria continues to apply a flat 10% corporate income tax rate and a flat 10% personal income tax rate. The standard VAT rate is 20%.

10%

Corporate Income Tax

10%

Personal Income Tax

20%

Sales Tax

20%

VAT

Social Security

The Bulgarian social security system provides protection for sickness, maternity, unemployment, workplace injury, old age and death. National insurance contributions include both social security and health insurance contributions and are shared between employer and employee.

≤ 33.4%

Social Security Rate

≤ 19.62%

Social Security Rate for Employers

13.78%

Social Security Rate for Employees

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Employment Law

In general, the Bulgarian Labor Code applies to employment relationships in Bulgaria. Employees benefit from statutory protection in areas such as minimum wage, working time, leave, overtime, notice and termination.

Employment Agreement

An employment agreement must be in writing to be valid and enforceable. It must include the main particulars of the employment relationship such as job title, place of work, remuneration, working time, leave and notice terms.

Working condition

The standard working time is 8 hours per day and 40 hours per week. Overtime is regulated by law and is subject to statutory limits and premium pay requirements.

Leaves

The basic paid annual leave may not be shorter than 20 working days. Additional leave and other categories of leave may apply depending on the employee’s circumstances and the nature of the work.

Employment termination

Termination of employment is regulated by the Labor Code and may occur with or without notice depending on the ground for termination. Employers should assess statutory compensation, accrued leave and procedural requirements in each case.

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30 days

Minimum notice period for terminating an employee

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14 days

Total number of public holidays

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40

Working hours per week

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2 days

Total number of days for Compassionate & Bereavement Leave

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Immigration

The process for EU citizens is generally simpler than for third-country nationals. Third-country nationals who will work in Bulgaria typically need the appropriate visa and residence and work authorization, including a Single Permit or other applicable route such as an EU Blue Card.

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Residency permits

Foreign nationals may apply for short-term, long-term or permanent residence depending on the legal basis of stay. For employment-based residence, the relevant authorization route, supporting employer documents and migration formalities must be completed before or upon arrival, depending on the case.

Work Permit Validity

Up to 3 years

Required Documents

A valid passport and copy of the passport identification page

Relevant visa or long-stay visa documentation where applicable

Employment contract or binding job offer

Employer corporate documents and labor market authorization documents where required

Proof of accommodation in Bulgaria

Proof of medical insurance where applicable

Evidence of sufficient financial means where required

Police clearance or other background documents where required by the route

Compliant, reliable, error-free and touchless payroll in Bulgaria

Build the best team and hire top talent compliantly in Bulgaria. Get in touch with Bulgaria payroll outsourcing & PEO specialists for a free consultation!

This document was prepared for informational purposes only. As local laws & regulations keeps on changing. Please consult your tax & legal advisors as well.
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    FAQs

    What is an Employer of Record (EOR) in Bulgaria and how does it support foreign companies?

    An Employer of Record (EOR) in Bulgaria legally employs staff on behalf of foreign companies. It manages employment contracts, payroll, taxes, social security, and compliance with local labor laws, allowing companies to hire employees quickly without establishing a local legal entity.

    Why should businesses choose an EOR instead of establishing a legal entity in Bulgaria?

    Using an EOR avoids the time and costs of setting up a local company. It provides fast market entry, reduces administrative work, ensures legal and tax compliance, and is ideal for businesses testing the Bulgarian market or hiring a small team.

    How does payroll outsourcing in Bulgaria help with compliance and local tax regulations?

    Payroll outsourcing ensures accurate salary processing, tax filings, and social security contributions according to Bulgarian law. It reduces compliance risks, avoids penalties, and provides expertise on local labor and tax regulations.

    Can an Employer of Record in Bulgaria hire employees and manage work permits for international companies?

    Yes, an EOR can legally hire employees for foreign companies and manage work permits. It handles HR operations, payroll, and compliance with local labor and immigration laws, enabling smooth operations without a local entity.

    What are the main advantages of using EOR and payroll services in Bulgaria for business expansion?

    EOR and payroll services enable faster hiring, local compliance, reduced legal and financial risk, and access to market expertise. They allow companies to expand into Bulgaria efficiently while focusing on business growth.

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