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Bulgaria – Employer of Record

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Country Introduction – Bulgaria

Capital – Sofia
Currency – Bulgarian lev
GDP – 84.06 billion USD (2021)
People/Nationality- Bulgarian
Language – Bulgarian
Major Religion – Eastern Orthodox Christianity
Population – 6.73 million in (as of January 2023)

In recent years, Bulgaria has been experiencing positive economic growth and has emerged as one of the fastest-growing economies in the European Union. It is known for its rich history, diverse culture, and picturesque landscapes. Bulgaria has seen improvements in various economic indicators. The country has maintained low inflation rates, stable fiscal policies, and a relatively low level of public debt. It has also implemented measures to attract foreign direct investment, offering tax incentives, improving infrastructure, and streamlining bureaucratic procedures.

Bulgaria’s economy is a market-oriented economy with a mix of private and state ownership. The country has undergone significant economic reforms since the 1990s, transitioning from a centrally planned economy to a more open and liberalized market. This transformation has attracted foreign investment and fostered entrepreneurship, contributing to the country’s economic success.

Bulgaria has a diverse economy with various sectors playing significant roles. The services sector, including tourism, information technology, and outsourcing services, has experienced rapid growth. The country’s affordable cost of living and skilled workforce has attracted numerous international companies, leading to the establishment of outsourcing and technology canters in cities like Sofia and Plovdiv.

Contract of Employment

According to the Labor Code, employment contracts in Bulgaria must meet certain requirements. They must be written, signed by both parties, and each party should retain a copy. The National Revenue Agency must be notified within three days of the contract’s signing, and employment cannot commence until this requirement is fulfilled.

Initially, the contract can be in any language, but a Bulgarian translation must be provided for legal purposes, and the Labor Inspectorate may request a Bulgarian version at any time. The minimum requirements for the contract are specified in Article 67 of the Labor Code, and any modifications to the contract must also be in writing. Non-compliance with these regulations can result in financial penalties for employers.

While the Labor Code generally applies to all contracts, if there is an international aspect to the agreement, the parties have the option to choose the contract laws of another country to govern their agreement.

Probation Period

The maximum duration of the probation period depends on the type of employment contract:

– Fixed-term contracts with a duration of up to 3 months – no probation period.
– Fixed-term contracts exceeding 3 months or indefinite-term contracts will not exceed 6 months.


Termination can occur for various reasons, including:

– Termination by Mutual Agreement

– Termination by Notice:

Up to 6 months of employment – 3 days’ notice.
More than 6 months but less than 1 year of employment – 1 months’ notice.
More than 1 year of employment – 2 months’ notice.

The notice period may be reduced or waived by mutual agreement.

– Termination for Cause

– Termination by the Employer due to Objective Reasons

Working Hours

The standard working hours in Bulgaria are generally set at 8 hours per day and 40 hours per week for full-time employees.


The maximum allowable overtime is limited to 150 hours per calendar year for each employee unless a collective agreement provides for a higher limit. Overtime work must be voluntary and is usually compensated with additional pay or time off in lieu. 

13th Month Pay

In Bulgaria, there is no legal requirement for employers to provide a mandatory 13th month pay or a specific bonus payment known as a “13th salary.” However, employers have the discretion to provide additional bonuses or payments to employees beyond their regular salary.

Annual Leave

Employees are entitled to annual leave based on their length of service. The minimum annual leave entitlement is 20 working days per year for employees with less than 20 years of service. An additional day of annual leave is added for every subsequent five years of service until reaching a maximum of 30 working days per year.

Sick leave

The duration of sick leave depends on the medical condition and the recommendations provided by the attending physician. The initial period of sick leave is typically determined by the doctor and can be extended if necessary. The maximum duration of continuous sick leave is generally limited to 24 months for the same medical condition.

Maternity and Paternity Leave

Pregnant employees are entitled to a maternity leave period of 410 calendar days (56 weeks). This period is divided into two parts:

– Pre-natal leave
– Post-natal leave

The current regulations provide eligible fathers with 20 consecutive calendar days of paid paternity leave. This leave can be taken within the first 12 months following the birth of the child.


In Bulgaria, the standard VAT rate is 20% and applies to most goods and services. There are two reduced VAT rates: 9% for specific goods and services like certain food products, books, hotel accommodation, and cultural events, and 5% for essential goods like certain food products, water supplies, pharmaceutical products, medical devices, and certain social housing services.

Income Tax

The income tax rate for Bulgarian residents, regardless of their income level and whether they reside and work in Bulgaria or abroad, is 10%. This rate also applies to self-employment income. Non-resident individuals are only taxed on their income originating from Bulgarian sources, and the tax rate for such income is also 10%.

Employer/ Employee Contributions

In Bulgaria, both employers and employees contribute to the National Social Security Institute to finance social security programs. Employers make contributions on behalf of their employees, calculated as a percentage of the employee’s gross salary, which include social security, health insurance, and additional funds.

Employees also contribute from their gross salary, and the rates for employee contributions are usually lower than those for employers. These contributions support programs such as pensions, healthcare, and unemployment benefits.

Public Holidays

January 1 – New Year’s Day
March 3 – National Holiday / Bulgaria’s Liberation from the Ottoman Empire
May 1 – Labour and International Worker’s Solidarity Day
May 6 – Gergyovden (St. George’s Day), and the Bulgarian Army’s Day
May 24 – Bulgarian Education and Culture, and Slavic Script Day
September 6 – Unification Day
September 22 – Independence Day
November 1 – Day of the Bulgarian Enlighteners (Holiday for all educational institutions)
December 24 – Christmas Eve
December 25-26 – Christmas Days
Easter Holidays– 4 days / Good Friday, Holy Saturday, Easter Sunday and Monday / according to the Orthodox calendar of the year.

Severance Pay

In Bulgaria, employees are generally entitled to severance pay in cases of redundancy or termination without notice. The amount of severance pay is determined based on the employee’s length of service and average monthly remuneration over the preceding twelve months. Severance pays may not be provided for voluntary resignations unless specified in agreements or collective bargaining agreements.

The calculation and payment of severance pay should adhere to the timeframe outlined in the Labor Code, and employers are responsible for ensuring compliance. It’s recommended seeking legal advice or consult with employment professionals for current and accurate information on severance pay in Bulgaria.

Work and Residence Permits (Expatriates)

Foreign nationals who wish to work and reside in Bulgaria typically require a combination of work and residence permits. Here is an overview of the process and requirements for obtaining work and residence permits in Bulgaria for expatriates:

Work Permit: Before applying for a work permit, the employer must first obtain a permit from the Bulgarian Employment Agency to employ a foreign national. Once the employer has received the permit, the foreign national can proceed with their work permit application.

Residence Permit: Once the work permit is granted, the foreign national can apply for a residence permit in Bulgaria. The residence permit allows them to legally reside and work in the country.

Application Process: The application for both the work and residence permits is typically submitted to the Bulgarian Ministry of Interior or the regional migration directorate. The required documents may include a valid passport, employment contract, health insurance, proof of accommodation, and other supporting documents.

Duration and Renewal: Work permits, and residence permits are generally issued for a specific period, typically up to one year. Before the permits expire, they can be renewed by submitting the necessary documents and meeting the renewal requirements.

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