Updated on: 2025/08/04 14:03 (UTC)
Overview
Bulgaria (България in Bulgarian Cyrillic), which officially is known as the Republic of Bulgaria, is located in southeastern Europe and is bordered to the east by the Black Sea. The countries that border Bulgaria are Romania to the north, Turkey to the southeast, Greece to the south, North Macedonia to the southwest, and Serbia to the west.
Bulgaria consists of 28 first-order administrative divisions known as oblasti. The 28 oblasti of Bulgaria are Blagoevgrad, Burgas, Dobrich, Gabrovo, Haskovo, Kardzhali, Kyustendil, Lovech, Montana, Pazardzhik, Pernik, Pleven, Plovdiv, Razgrad, Ruse, Shumen, Silistra, Sliven, Smolyan, Sofia, Sofia-Grad (Sofia City), Stara Zagora, Targovishte, Varna, Veliko Tarnovo, Vidin, Vratsa, and Yambol.
Bulgaria’s currency is the Bulgarian lev.
Employers in Bulgaria are required to withhold income tax and social tax payments from employee’s paychecks in addition to upholding labor law standards for compensation and benefits.
Foreign workers in Bulgaria are subject to the same income tax and social tax regulations as Bulgarian workers and they are protected by the same labor laws.
Bulgarian citizens working in the United States must comply with the appropriate visa requirements, labor and tax laws.
CURRENCY DETAILS
The currency of Bulgaria is the Bulgarian lev (BGN), also known simply as the lev. The internationally recognized three-letter currency code for the lev is BGN, which also is one of the currency’s commonly used currency symbols, and which is an abbreviation of Bulgarian. The standard plural form of lev is leva.
When an amount of leva is written using the currency symbol BGN, as is commonly done in English, the symbol precedes the numerical value with a space between the numerical value and symbol.
When an amount of leva is written using the Bulgarian-language currency symbol лв, the symbol follows the numerical value with a space between the numerical value and symbol. The Bulgarian-language currency symbol, which is composed of the letters л and в of Bulgarian Cyrillic, is an abbreviation of the word lev as written in Bulgarian Cyrillic, which is лев.
When an amount of leva is written using the currency symbol Lv or one of its variants (Lv., lv, lv., LV, and LV.), the symbol precedes or follows the numerical value with a space between the numerical value and symbol.
One hundredth ( 1 ⁄ 100 ) of a lev is referred to as a stotinka, with the plural form of stotinki.
When amounts of leva are written in Bulgarian, the comma that in English separates the thousands place from the hundreds place instead is rendered as a space or as a dot (.), and the dot that in English separates the ones place from the tenths place instead is rendered as a comma.
TAXES
The federal government in Bulgaria enacts laws related to income tax and social tax.
The tax year is the calendar year, Jan. 1 through Dec. 31.
Coronavirus (Covid-19) Guidance: According to European Commission guidance, employees who normally work in one European Union member country and live in another are still considered to be insured by the social insurance system of the normal work country while working at home.
Effective from March 13, 2020, to the end of Bulgaria’s officially-declared state of emergency, employers may direct employees to use annual leave, which includes providing annual leave to employees who have not reached the eight-month threshold. Certain categories of employees, including pregnant employees; mothers or single fathers of children up to age 12 or of children of any age with disabilities; employees under age 18; and disabled employees may request use of annual leave or unpaid leave.
Income Taxes
Bulgaria’s income tax law is administered by the National Revenue Agency (NRA) of Bulgaria. The NRA also administers Bulgaria’s social tax collections.
Coverage: The income tax law of Bulgaria covers all resident and nonresident income taxpayers in the country. Residents are considered any individual who has been present in Bulgaria for 183 days or more in any 12-month period or if his/her center of vital interest is in Bulgaria. Individuals who have a permanent address in Bulgaria but do not have their center of vital interest within the country are not considered tax residents.
Employees: An employee is a person who has reached the minimum age decreed by law who freely gives his/her labor force for temporary use to an employer for payment.
Rates and Thresholds: Income generally is subject to a flat personal income tax rate of 10% regardless of an individual’s income level.
Registration: Employers in Bulgaria must register with the Commercial and Nonprofit Institutions Register. There is no need to for employer to separately register with the National Revenue Agency, as the data from registration with the Commercial and Nonprofit Institutions Register is transferred automatically to the NRA. For newly-hired workers, employers are required to send a notification to the NRA within three days of hiring an employee. Employers are required to deliver a copy of the notice certified by the NRA to the employee before starting work.
Taxable Amounts: Amounts subject to income taxation include all remuneration received from employment either in cash or in kind.
Amounts exempt from taxation include: travel and accommodation expenses related to business trips, free food and certain social benefits.
Withholding Methods: Employers must withhold income tax monthly from each employee at the rate of 10%; there are no minimum earnings amounts exempt from tax withholding.
Returns and Remittance: Employers are required to submit tax returns and remittances, as well as social taxes, to the NRA by the 25th of the following month for which payments are due.
Individuals must submit annual returns by April 30th following the year of assessment unless they only receive employment income.
Returns can be submit through the National Revenue Agency’s E-Services online portal.
There is a discount of 5% for early payments made by Feb. 10, which as this is expressed as a percentage of 10% and not 5 percentage points, would reduce the effective rate of income tax to 9.5% from 10%. There is also a discount of 5% or the submission of electronic returns. These discounts cannot be combined.
Recordkeeping: Tax records generally must be kept for a minimum of 10 years. All payroll-related documents should be stored for 50 years, and all other documents should be stored for three years.
Penalties: Infringements of the income tax law can result in fines of up to BGN 2,000 per violation. Repeat offenses may result in larger fines.
Social Taxes
Social insurance is administered by the National Social Security Institute (NSSI) in Bulgaria. The social insurance system covers pensions, sickness, disability, maternity, funeral benefits, unemployment and a child care benefit. Employers also are required to contribute to public health insurance, which is managed by the National Health Insurance Fund (NHIF). Social security contributions and health insurance contributions are collected by the NRA.
There is a standard maximum monthly amount of wages upon which social security contributions may be assessed, which is in effect for the vast majority of industry sectors and occupation groups, but some have a different maximum monthly amount of assessable wages. Minimum monthly amounts of wages upon which social security contribution rates may be assessed vary among industry sectors and occupation groups, and some industry sectors and occupation groups do not have a specified minimum monthly amount of assessable wages.
The two main types of social security contribution rates in Bulgaria assessable on income from employment are those for State Social Security (Държавното обществено осигуряване), abbreviated in English as SSS and in Bulgarian Cyrillic as ДОО; and those for health insurance (здравно осигуряване, abbreviated as ЗО). State Social Security also is known as State Social Insurance, abbreviated as SSI. There are multiple types of State Social Security taxes, including those for pensions (Пенсии), General Sickness and Maternity (Общо заболяване и майчинство); unemployment (Безработица), and occupational injury and occupational disease (Трудова злополука и професионална болест), abbreviated in Bulgarian Cyrillic as ТЗПБ. Contributions for health insurance often are referred to as those for the National Health Insurance Fund (Националната здравноосигурителна каса), abbreviated in English as NHIF and in Bulgarian Cyrillic as НЗОК.
Applicable contribution rates for some of the social security contribution types are based on an employee’s industry sector or occupation groups, whether the employee to which wages were paid and upon which the contributions are assessed was born before Jan. 1, 1960, or on or after that date, and other factors, such as an employee’s work category, also known as category of labor. There are three applicable work categories. The first work category is for employment that involves especially dangerous working conditions regarding risk of harm. The second work category is for employment that involves an above-average level of workplace risk of harm, but which is not as dangerous as that of the first work category. The third work category is for all other types of employment, generally those with an average or below-average level of workplace risk of harm.
Contributions of Supplemental Mandatory Pension Insurance (SMPI), known in Bulgarian as допълнително задължително пенсионно осигуряване (ДЗПО), also are assessed based on wages paid to employees in some industry sectors and occupation groups, and such employees typically, but not always, are those born after Dec. 31, 1959. This type of insurance also is known in English as Supplemental Mandatory Pension Security (SMPS) and as Supplementary Compulsory Pension Insurance (SCPI). There are two types of contributions for Supplemental Mandatory Pension Insurance, including contributions for the Universal Pension Fund (UPF), known in Bulgarian as Универсален пенсионен фонд (УПФ), and contributions for the Professional Pension Fund (PPF), known in Bulgarian as професионален пенсионен фонд (ППФ).
Coverage: All resident and nonresident workers are covered by the social insurance contribution system. All Bulgarian citizens and residents are covered by the health insurance fund. Additionally, all individuals born after Dec. 31, 1959, are covered by mandatory individual pension accounts.
Rates and Thresholds: Employers are required to make mandatory contributions to the social insurance fund for each employee. Employers must also withhold employee contributions for the social insurance fund.
Effective for 2021, unchanged from 2020, the standard maximum monthly amount of wages upon which social security contribution rates may be assessed on employers and employees is BGN 3,000.
Bulgaria’s social taxes assessed on employers and employees also are subject to a minimum monthly tax base. If an employee’s compensation for a month was less than the minimum monthly tax base, the employee’s compensation for the month would be treated as having been the minimum monthly tax base for calculations of the social taxes assessed on the employee and employer. The minimum monthly tax base is equivalent to the monthly minimum wage.
Effective for 2021, the minimum monthly tax base for social taxes assessed on employment income is Bulgaria’s monthly minimum wage of BGN 650. Effective for 2020, the minimum monthly tax base for social taxes assessed on employment income was Bulgaria’s monthly minimum wage of BGN 610.
The Bulgarian National Revenue Agency (NRA) each year releases a document detailing, for each of 20 different types of industry sectors and occupation groups, the minimum monthly amounts of wages upon which social security contributions may be assessed and the applicable social security contribution rates for employees. The document is known as the Table of the Amount of the Social Insurance Contributions (Таблица за размера на осигурителните вноски) and is available from the website of the National Revenue Agency. The first industry sector/occupation group type listed in the table is for a broad range of workers that includes individuals working under standard labor contracts and legal relationships as employees in the third category of work, i.e. the category of work with standard workplace risk of harm, and as such, the social security contribution rates applicable to this industry sector/occupation group are the standard rates. While the table indicates applicable contributions for employer-employee relationships, some of the entries on the table are applicable for self-employed individuals.
The 2021 Table of the Amount of the Social Insurance Contributions and the2020 Table of the Amount of the Social Insurance Contributions contain 15 columns. The fourth through seventh columns have the header Total amount of insurance contributions (Общ размер на осигурителните вноски), referring to the total State Social Security and health insurance rates when combining employee and employer rates. The eighth through 15th columns have the header Distribution of social security contributions by percentage (Разпределение на осигурителните вноски %), with the eighth through 11th columns, as indicated by the subheading At the expense of the insured person (За сметка на осигуреното лице), referring to contribution rates applicable to employees, and the 12th through 15th columns, as indicated by the subheading At the expense of the insurer/provider (За сметка на осигурителя /осигуряващия), referring to contribution rates applicable to employers.
The State Social Security rates in the table include applicable combined rates for assessment of contributions for pensions, General Sickness and Maternity, and unemployment, but do not include applicable rates for occupational injury and occupational disease, which are assessed on employers but not employees.
In the context of employer-employee relationships, the columns are as follows:
- Column 1: Individuals subject to insurance (Лица, подлежащи на осигуряване), with each industry sector/occupation group section having at least two separate categories of individuals subject to insurance based on whether they were born before Jan. 1, 1960, or on or after that date;
- Column 2: Scope of insurance (Обхват на осигуряването), referring to the types of social insurance that individuals listed in Column 1 typically may be assessed;
- Column 3: Income on which contributions are paid (Доход, върху който се внасят осигурителни вноски), referring to the maximum and minimum monthly amounts of wages paid to an employee during a month upon which social security contributions may be assessed;
- Column 4: Total (Общо), of the employer and employee State Social Security and health insurance contributions;
- Column 5: For State Social Security Funds (за фондовете на ДОО), referring to the total State Social Security contribution percentage that is the sum of the employer and employee rates;
- Column 6: For supplemental mandatory pension insurance (за допълнително задължително пенсионно осигуряване), and with regard to such contributions, wages paid to some employees are subject to only contributions to the Universal Pension Fund, wages paid to some employees are subject to only contributions for the Professional Pension Fund, wages paid to some employees are subject to contributions for both the Universal Pension Fund and Professional Pension Fund, and wages paid to some employees are subject to neither of the funds;
- Column 7: For Health Insurance (за здравно осигуряване), referring to the total State Social Security contribution percentage that is the sum of the employer and employee rates;
- Column 8: Total (Общо), of the employee State Social Security and health insurance contributions;
- Column 9: For State Social Security Funds (за фондовете на ДОО), referring to the State Social Security contribution percentage for employees;
- Column 10: For supplemental mandatory pension insurance (за допълнително задължително пенсионно осигуряване), referring to the types and rates of supplemental mandatory pension insurance assessed on employees;
- Column 11: For Health Insurance (за здравно осигуряване), referring to the health insurance contribution percentage for employees;
- Column 12: Total (Общо), of the employer State Social Security and health insurance contributions;
- Column 13: For State Social Security Funds (за фондовете на ДОО), referring to the State Social Security contribution percentage for employers;
- Column 14: For supplemental mandatory pension insurance (за допълнително задължително пенсионно осигуряване), referring to the types and rates of supplemental mandatory pension insurance assessed on employees; and
- Column 15: For Health Insurance (за здравно осигуряване), referring to the health insurance contribution percentage for employers.
State Social Security (Pension, General Sickness and Maternity, Unemployment): Effective for 2021, unchanged from 2020, the standard State Social Security contribution rates, i.e. those in effect for the first industry sector/occupational group in the Table of the Amount of the Social Insurance Contributions, but without regard to occupational injury and occupational disease contribution rates, are as follows:
- for employees born before Jan. 1, 1960, the total Social Security contribution rate for employees and employers is 24.3%, consisting of a contribution rate of 10.58% for employees and a contribution rate of 13.72% for employers; and
- for employees born after Dec. 31, 1959, the total Social Security contribution rate for employees and employers is 19.3%, consisting of a contribution rate of 8.38% for employees and a contribution rate of 10.92% for employers.
With regard to the aforementioned 2021 and 2020 rates assessable on wages paid to employees who were born before Jan. 1, 1960, the total Social Security contribution rate of 24.3% is the sum of a pension insurance rate of 19.8%, a General Sickness and Maternity rate of 3.5%, and an unemployment insurance contribution rate of 1%. The pension insurance rate of 19.8% consists of an employee rate of 8.78% and an employer rate of 11.02%; the General Sickness and Maternity rate of 3.5% consists of an employee rate of 1.4% and an employer rate of 2.1%, and the unemployment insurance rate consists of an employee rate of 0.4% and an employer rate of 0.6%.
With regard to the aforementioned 2021 and 2020 rates assessable on wages paid to employees who were born after Dec. 31, 1959, the total Social Security contribution rate of 19.3% is the sum of a pension insurance rate of 14.8%, a General Sickness and Maternity rate of 3.5%, and an unemployment insurance contribution rate of 1%. The pension insurance rate of 19.8% consists of an employee rate of 6.58% and an employer rate of 8.22%; the General Sickness and Maternity rate of 3.5% consists of an employee rate of 1.4% and an employer rate of 2.1%, and the unemployment insurance rate consists of an employee rate of 0.4% and an employer rate of 0.6%.
State Social Security (Occupational Injury and Occupational Disease): Effective for 2021, unchanged from 2020, employer contribution rates for occupational injuries and occupational diseases range from 0.4% to 1.1%, and the rate assessed on an employer depends on the employer’s work category and risk factors.
Employees are not assessed a contribution rate for this type of insurance.
In each industry sector/occupation group, occupational injury and occupational disease contributions for employers are not differentiated based on whether their employees were born before Jan. 1, 1960, or after Dec. 31, 1959.
Health Insurance: Effective for 2021, unchanged from 2020, the standard health insurance contribution rate, i.e. the rate in effect for the first industry sector/occupational group in the Table of the Amount of the Social Insurance Contributions, is 8%, consisting of an employee contribution rate of 3.2% and an employer contribution rate of 4.8%.
In each industry sector/occupation group, health insurance contribution rates for employers and employees are not differentiated based on whether the employees were born before Jan. 1, 1960, or after Dec. 31, 1959.
Supplemental Mandatory Pension Insurance: Effective for 2021, unchanged from 2020, the standard Supplemental Mandatory Pension Insurance contribution rates, i.e. those in effect for the first industry sector/occupational group in the Table of the Amount of the Social Insurance Contributions, are as follows:
- for employees born before Jan. 1, 1960, the total Social Security contribution rate for employees and employers is zero for the Universal Pension Fund and zero for the Professional Pension Fund; and
- for employees born after Dec. 31, 1959, the total Social Security contribution rate for employees and employers is 5% for the Universal Pension Fund and zero for the Professional Pension Fund, consisting of a Universal Pension Fund contribution rate for employees of 2.2% and a Universal Pension Fund contribution rate for employers of 2.8%.
Universal Pension Fund contribution rates generally are assessed only on wages paid to employees who are in the third work category, i.e. employment with average or below-average workplace risk of harm, but not all employees in the third work category, and not all employers of such employees, are subject to Universal Pension Fund contributions.
Assessments of Universal Pension Fund contribution liability, when it is applicable, often are divided between employees and their employers, although for some industry sectors/occupational groups the contribution rate is not divided and either an employee or employer is assessed the full rate.
When Professional Pension Fund contributions are assessed, they generally are assessed on wages paid to employees in the first work category, i.e. employment involving especially dangerous working conditions regarding risk of harm, or on wages paid to employees in the second work category, i.e. employment involving an above-average level of workplace risk of harm, but which is not as dangerous as that of the first work category, and such contributions generally are not assessed on employees in the third work category. However, not all employees in the first and second work categories, and not all employers of such employees, are subject to Professional Pension Fund contributions.
The Professional Pension Fund contribution rate, when assessed on wages paid to employees in the first work category, generally is 12%, and the Professional Pension Fund contribution rate, when assessed on wages paid to employees in the second work category, generally is 7%. The liability for payment of the contribution rate, when it is applicable, typically is solely attributable to the employer, although in some cases the employee is solely liable.
Wages paid to employees in a few industry sectors/occupation groups are subject Universal Pension Fund contributions and Professional Pension Fund contributions.
Registration: As with income tax withholding requirements, employers are required to send notification to the NRA within three days of hiring an employee. Employers are required to deliver a copy of the notice certified by the NRA to the employee before starting work.
Taxable Amounts: Taxable wages for social insurance contributions are the same as taxable amounts for the Bulgarian income tax.
Withholding Methods: Employers are required to withhold the premium amounts from employees’ salaries monthly.
Returns and Remittance: Employers are required to remit employee contributions, along with the employee portion of contributions, to the NRA by the 25th of the following month in which the work is done.
Recordkeeping: Tax records generally must be kept for a minimum of 10 years. All payroll-related documents should be stored for 50 years, and all other documents should be stored for three years.
Penalties: Any infringement of social insurance regulations will be penalized with a fine, which cannot exceed 5,000 times the current minimum wage for each violation depending on the severity of the infringement.
Other Taxes
Bulgaria’s national government does not assess any taxes on employment income other than those covered in the Income Taxes and Social Taxes sections of this primer.
State/Jurisdiction Taxes
Taxes on employment income are not assessed by any of Bulgaria’s oblasti or local jurisdictions.
COMPENSATION AND BENEFITS
The Labor Code in Bulgaria covers minimum wage, overtime, hours of work, holidays, leave, wage payment and termination pay. Workers’ compensation and retirement plans are covered by social taxes.
The Labor Code is administered by the Ministry of Labor and Social Policy in Bulgaria.
Coronavirus (Covid-19) Guidance: The Ministry of Labor is allowing businesses to apply for funds to maintain the employment of employees after the period of emergency for the Covid-19 pandemic. The period applicants may receive funds is from August to December 2021. To be eligible, businesses must have had sales revenues decrease by at least 30% for the month preceding the application compared with the same month of 2019. The terms of when employers may apply are as follows:
- Apply Oct. 12 to Nov. 1, 2021, to receive funds for the months of August and September.
- Apply Nov. 1, 2021 to Nov. 30, 2021, to receive funds for the month of October.
- Apply Dec. 1-10, 2021, to receive funds for the month of November.
To be considered, employers must submit an application, a list of employees, documents certifying the revenue drop, and a certified copy of the 2019 annual tax return to the labor office in the area where its employees are located, among other requirements.
A business that has had sales revenues decrease by at least 40% during a month would receive financial support of 60% of each employee’s monthly income subject to social taxes. Similarly, a business with a decline of sales revenues of at least 30% and less than 40% can receive financial support of 50% of the employee’s monthly income. The subsidy would also cover employer social taxes.
Minimum Wage
Effective for 2021, Bulgaria’s minimum wage is BGN 650 per month. Effective for 2020, Bulgaria’s minimum wage was BGN 610 per month.
Overtime
Overtime work is generally forbidden by law but may be allowed in exceptional circumstances. Hours beyond agreed working hours are considered overtime work. Employees may not work more than 150 hours of overtime in a year, which, effective starting Jan. 1, 2021, may be extended to up to 300 hours per year by a collective bargaining agreement. Overtime work is also limited to 30 hours, or 20 hours of night work, in a month; six hours, or four hours of night work, in a week; and three hours, or two hours of night work, over two consecutive days.
An employer pays an employee remuneration for overtime work as agreed between them, but no less than:
- an additional 50% of the standard daily wage for overtime worked during a workday;
- an additional 75% of the standard daily wage for overtime worked on a nonworking day; and
- an additional 100% of the standard daily wage for overtime worked on an official holiday.
Certain categories of employees may not perform overtime work:
- employees under the age of 18;
- pregnant employees;
- mothers of children under six years old or of disabled children regardless of age;
- employees who have been retrained as a result of disability (unless they consent);
- employees who work reduced hours; and
- employees who are students.
Hours of Work
The Labor Code provides for a five-day, 40-hour workweek. Eight hours is the standard length of the working day. In no case may the length of the workweek exceed 48 hours (56 hours in the event of summarized calculation of working time).
For each hour worked between 10 p.m. and 6 a.m., which is considered night work, employees are entitled to additional remuneration of no less than BGN 0.25 per hour.
Holidays
Employers are required to give employees holidays as nonworking days with full pay. Employees working on holidays are entitled to double their normal remuneration.
The holidays specified by the Labor Code are as follows:
- Jan. 1: New Year’s Day
- March 3: National Day
- Good Friday
- Holy Saturday
- Easter
- Easter Monday
- May 1: Labor Day
- May 6: St. George’s Day
- May 24: Day of Bulgarian Education and Culture
- Sept. 6: Bulgaria-Rumelia Union Day
- Sept. 22: Independence Day
- Dec. 24: Christmas Eve
- Dec. 25 and 26: Christmas
Leave
The minimum paid annual leave is equal to 20 working days for employees who have worked for employers for at least eight months. The Labor Code states that all annual paid leave must be used during the year earned.
Upon termination of employment, employees are entitled to compensation for unused annual leave.
Maternity Leave: Employers must give pregnant employees paid maternity leave of at least 410 days, 45 of which are used before the birth. Employees receive compensation during this time from the NHIF in an amount equal to 90% of average gross salary or the average daily income on which social security contributions have been calculated.
Paternity Leave: Employers are required to give male employees 15 days paid paternity leave following the birth of the baby.
Employers also are required to allow parental leave to raise the child until the child reaches the age of two. The leave may be transferred to the father or grandparents.
Marriage Leave: Employers must give employees two days of paid leave in the event of their marriage.
Bereavement Leave: Employers must give employees two days of leave to attend the funeral of a family member.
Wage Payment
Employers must pay wages monthly as remuneration for work done under an employment contract. The Labor Code states that labor remuneration should be paid in cash but does not specify the currency or currencies that may be used.
Bonuses and Special Benefits
Bulgaria does not require employers to provide bonus payments to employees.
Termination Pay
Employers and employees are required to give 30 days’ notice before the termination of an employment contract but no longer than three months. Generally, employers must pay employees a severance payment no less than four months’ gross salary.
Workers’ Compensation
Workers’ compensation is covered by social taxes.
Recordkeeping
Tax records generally must be kept for a minimum of 10 years. All payroll-related documents should be stored for 50 years, and all other documents should be stored for three years.
FOREIGN WORKERS
Foreign workers are entitled to the same rights as Bulgarian citizens and are generally covered by the same tax and workplace laws.
Visas: EU nationals, Schengen members, citizens of European Economic Area (EEA) member states and Swiss citizens may enter Bulgaria with a valid ID or passport and reside freely within the country for up to three months.
Individuals not in the above mentioned group must obtain a work permit from the Employment Agency through the intended employer according to the Law on Employment Promotion. A work permit is valid for one year and can be extended for two consecutive years.
EU, EEA or Swiss individuals may be issued temporary residence certificates for a term of up to five years. After five years, EU, EEA and Swiss citizens can apply for a permanent residence certificate if they have resided legally in Bulgaria for more than five years.
Non-EU individuals who have entered Bulgaria with a Type D visa may be issued a residence permit valid for up to one year.
Taxes: Foreign workers are taxed on Bulgarian-sourced income at the same rate as Bulgarian citizens: 10%. Foreign workers also contribute to social security at the same rate as Bulgarian citizens.
Wages/Payments: There are no special wage payment requirements for foreign workers.
WORKING IN THE UNITED STATES
Foreign workers from Bulgaria must meet general visa requirements and be certified to be employed in the United States. General visa requirements for the U.S. are included in the separate
U.S. employers also must check the names of all new-hires and employees against the Specially Designated Nationals and Blocked Persons List, administered by the Treasury Department’s Office of Foreign Assets Control (OFAC).
For tax purposes, Bulgarians are subject to U.S. employment-based taxation on income earned in the U.S. unless they can claim an exemption under certain tax treaty provisions or they work under specific visa types that exempt earnings from taxes.
State and local taxation of Bulgarian workers also can apply.
The U.S. labor laws apply to all workers employed and providing services in the country.
Work eligibility as an employee is contingent upon Department of Homeland Security and Labor Department approval and the employee receiving a U.S. Social Security number from the Social Security Administration.
Tax Residency: In general, employees working in the U.S. on a temporary basis are considered nonresidents for tax purposes unless they qualify for resident status. Employees can be granted permanent resident status through the so-called green card test or if they meet the substantial presence test under the U.S. tax code. More information on these requirements is in the
Permanent residents are subject to U.S. tax requirements the same as U.S. citizens and are taxed under the U.S. system on their worldwide earnings.
Income Taxes: Generally, nonresidents in the U.S. who are from Bulgaria and are working in the U.S. are subject to U.S. taxes based on their U.S.-sourced income. Income is taxed differently based on whether it is categorized as wage income or nonwage income, which includes interest and dividends.
A Form W-4, Employee’s Withholding Certificate, must be filed by each employee with their employer. All nonresidents in the U.S. who are from Bulgaria and are working in the U.S. must claim “single” in Step 1c, regardless of marital status; write “Nonresident Alien” or “NRA” in the space under Step 4c of the form; and may not claim “exempt” in the space under Step 4c.
Nonresident alien employees may adjust withholding using Step 2b or 2c of the Form W-4; certain employees also may be able to use Steps 3, 4a, or 4b. More information about Form W-4 requirements for nonresident alien employees is available in the
Although the versions of Form W-4 issued in 2020 or later significantly differ from the versions issued in 2019 or earlier, nonresident employees that filed a valid version of Form W-4 from 2019 or earlier with their employer do not need to file another Form W-4 with the employer unless they need to implement a change for their withholding. On Forms W-4 issued in 2019 or earlier, nonresident alien employees were required to check the “single” box on line 3, regardless of marital status; write “Nonresident Alien” or “NRA” above the dotted line on line 6; and were not permitted to claim “exempt” on line 7 of the form.
An additional amount is added to a nonresident alien employee’s wages for calculating federal income tax withholding, with the amount based on pay period frequency and the date of the employee’s most recently filed Form W-4. The table of additional amounts applicable to Forms W-4 from 2020 or later and the table applicable to Forms W-4 issued before 2020 are available in the
Nonwage income and self-employed foreign workers can be subject to income tax withholding at a flat rate of 30%.
Additionally, foreign workers may be taxed differently based on the specific type of visa they hold.
Tax treaties: Bulgaria and the U.S. have a tax treaty with provisions addressing host country taxation of the nonresident workers. A summary of those benefits is listed in the Tax Treaty Exemption Comparison Chart. To claim the treaty benefit, the nonresident must file Form 8233, Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual, with the employer.
Students, trainees and teachers in particular must include a statement with Form 8233 to claim a tax treaty exemption from withholding of tax on compensation for dependent personal services. This statement affirms that the student, trainee or teacher is temporarily in the U.S. for purposes of studying or has accepted an invitation by the U.S. government (or by a political subdivision or local authority) for the purpose of teaching for a period not expected to exceed two years by a university or other recognized educational institution in the U.S. It also must affirm that the individual will receive compensation for services performed in the U.S. The student exemption is not to exceed $9,000 a year; no limit is placed on the teacher compensation for Bulgarians.
Examples of the statements necessary to claim a treaty exemption from U.S. taxes are included in Internal Revenue Service Publication 519, U.S. Tax Guide for Aliens.
Social Taxes: Most foreign workers are subject to paying into the U.S. Social Security system. Foreign nationals who are exempt from paying income tax and who do not have the eligibility to receive a social security number may not be required to pay social taxes. Foreign workers contributing to Social Security for a certain time period may be eligible to receive benefits.
Generally, foreign workers in the U.S. that have specific visas as exchange visitors or students or who are temporarily in the U.S. for agricultural work are not subject to social taxes on income that is obtained from the purpose in which they originally entered the United States.
Totalization Agreements: Bulgaria and the U.S. do not have a totalization agreement for social taxes.
Wage Payment: Under certain visas for certain types of employment, employers are required to pay foreign workers the higher of either the prevailing wage or the actual wage that is paid to U.S. workers that have similar skills and qualifications.
There are no particular requirements that employees be paid in U.S. dollars.
TREATY ARRANGEMENTS
Bulgaria has entered into more than 60 income tax treaties, including an income tax treaty with the United States.
The countries with which Bulgaria has a bilateral income tax treaty in effect are Albania, Algeria, Armenia, Austria, Azerbaijan, Bahrain, Belarus, Belgium, Canada, China, Croatia, Cyprus, the Czech Republic, Denmark, Egypt, Estonia, Finland, France, Georgia, Germany, Greece, Hungary, India, Indonesia, Iran, Ireland, Israel, Italy, Japan, Jordan, Kazakhstan, Kuwait, Latvia, Lebanon, Lithuania, Luxembourg, Macedonia, Malta, Moldova, Mongolia, Montenegro, Morocco, the Netherlands, North Korea, Norway, Poland, Portugal, Qatar, Romania, Russia, San Marino, Saudi Arabia, Serbia, Singapore, Slovakia, Slovenia, South Africa, South Korea, Spain, Sweden, Switzerland, Syria, Tajikistan, Thailand, Turkey, Ukraine, the United Arab Emirates, the United Kingdom, the United States, Uzbekistan, Vietnam, and Zimbabwe.
Bulgaria has eight totalization agreements for social tax purposes including with Azerbaijan, Bosnia and Herzegovina, Bulgaria, Canada, Israel, Libya, South Korea, and Tunisia. Bulgaria has a totalization treaty with the Quebec province of Canada that took effect Sept. 1, 2020.
RESOURCES
All resources are in English unless otherwise noted.
General
Invest Bulgaria Agency
Bulgarian Chamber of Commerce and Industry (Bulgarian)
CIA World Factbook: Bulgaria
U.S. State Department: U.S. Relations With Bulgaria
Currency Details
Unicode Consortium: Currency Symbols
International Organization for Standardization: Currency Codes - ISO 4217
United Nations: United Nations Terminology Database: Bulgaria
Taxes
Income Tax on Natural Persons Act
Social Insurance Code
Ministry of Finance
National Revenue Agency
National Social Security Institute
National Health Insurance Fund (Bulgarian)
Compensation and Benefits
Labor Code (Bulgarian)
Ministry of Labor and Social Policy (Bulgarian)
Foreign Workers
Ministry of Foreign Affairs (Bulgarian)
Ministry of Labor and Social Policy Employment Agency (Bulgarian)
Working in the United States
U.S. Department of Labor:
- Foreign Labor Certification
- Hiring Foreign Workers
U.S. Internal Revenue Service:
- IRS Notice 1392, Supplemental Form W-4 Instructions for Nonresident Aliens
- IRS Publication 15, Circular E, Employer’s Tax Guide
- IRS Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities
- IRS Publication 519, U.S. Tax Guide for Aliens
- IRS Publication 901, U.S. Tax Treaties
Treaty Arrangements
National Revenue Agency: International Treaties