The Real Cost of Employing Someone in Bulgaria in 2026
Bulgaria’s headline numbers are famously low: 10% corporate tax, 10% flat personal income tax, 5% dividend tax. Payroll is where the arithmetic gets more interesting, and where foreign owners often underbudget. The short version: budget roughly 1.19× the gross salary as your total company cost, up to the social security ceiling, above which the ratio falls sharply. Since 1 August 2026 there has also been a complication that did not exist in the first half of the year: the minimum insurable income tables by occupation are back, so what you contribute is no longer driven purely by what you agreed to pay.
Current as of 23 September 2026. Contribution rates come from the Social Insurance Code; the 2026 thresholds from the State Social Security Budget Act 2026 (State Gazette No. 68, 28 July 2026), in force from 1 August 2026. Bulgaria uses the euro at the fixed rate €1 = 1.95583 BGN. Rates below assume a person born after 1959 in the standard (third) labour category. General information, not legal or tax advice.
The three numbers that decide everything
1. Gross salary. Freely agreed, but never below the national minimum wage: €620.20 per month for a full-time month in 2026 (€3.74 per hour).
2. The minimum insurable income. Contributions are calculated on the higher of the gross salary and a statutory floor for the job. From 1 August 2026 that floor is differentiated by economic activity code and occupational group in the annex to the State Social Security Budget Act 2026. The figures used in the examples below are illustrative levels for a typical activity: €620.20 for unskilled and service roles, about €661 for skilled trades, €716 for administrative staff, €771 for technicians, €826 for specialists and from €936 for managers. Several sectors are materially higher, so check the row for your own activity code in the annex before you run payroll.
3. The ceiling. Contributions stop accruing above €2,300 of monthly insurable income (up from €2,111.64 until 31 July 2026). Income tax does not stop there; it applies to the whole salary.
What each side pays
For an employment contract, third labour category, employee born after 1959:
| Fund | Total | Employer | Employee |
|---|---|---|---|
| Pensions | 14.80% | 8.22% | 6.58% |
| Supplementary mandatory pension (universal pension fund) | 5.00% | 2.80% | 2.20% |
| General sickness and maternity | 3.50% | 2.10% | 1.40% |
| Unemployment | 1.00% | 0.60% | 0.40% |
| Health insurance | 8.00% | 4.80% | 3.20% |
| Occupational accident and disease | 0.40–1.10% | 0.40–1.10% | 0% |
| Total | 32.70–33.40% | 18.92–19.62% | 13.78% |
The occupational accident rate depends on your activity. An IT company sits at the bottom of the band, construction and food production near the top. The examples below use the minimum 0.40%, which is already included in the 18.92%, so treat them as a floor.
On top of contributions the employer withholds 10% flat income tax, calculated on gross salary minus the employee’s own contributions.
Worked examples
A minimum-wage full-time employee
| Item | Amount |
|---|---|
| Gross salary | €620.20 |
| Employer contributions (18.92%) | €117.34 |
| Total company cost | €737.54 |
| Employee contributions (13.78%) | €85.46 |
| Taxable base | €534.74 |
| Income tax (10%) | €53.47 |
| Net to employee | €481.27 |
A mid-level salary of €1,500
| Item | Amount |
|---|---|
| Gross salary | €1,500.00 |
| Employer contributions (18.92%) | €283.80 |
| Total company cost | €1,783.80 |
| Employee contributions (13.78%) | €206.70 |
| Taxable base | €1,293.30 |
| Income tax (10%) | €129.33 |
| Net to employee | €1,163.97 |
Read that as a ratio: for every €1,000 net in your employee’s account, the company spends about €1,533.
A senior salary of €3,000, where the ceiling applies
| Item | Amount |
|---|---|
| Gross salary | €3,000.00 |
| Insurable income (capped) | €2,300.00 |
| Employer contributions (18.92% of €2,300) | €435.16 |
| Total company cost | €3,435.16 |
| Employee contributions (13.78% of €2,300) | €316.94 |
| Taxable base | €2,683.06 |
| Income tax (10%) | €268.31 |
| Net to employee | €2,414.75 |
The employer’s on-cost has fallen from 18.92% to 14.5% of gross, and the employee keeps 80.5% of gross. This is why senior hires cost relatively little in Bulgaria: the ceiling is low in absolute terms, so above roughly €2,300 you are paying a near-flat 10% tax plus a fixed contribution amount.
Run your own figures through the Bulgaria tax calculator.
The trap: paying above minimum wage but below the occupational floor
Suppose you hire an administrative assistant at €620.20, which is legal because that is the minimum wage. If the minimum insurable income for administrative staff in your activity is €716, contributions are calculated on €716, not on what you pay.
- Employer cost rises by €18.13 per month.
- The employee’s own contributions rise too. They are withheld from an unchanged salary, so the net pay falls by roughly €12.
Nothing in the employment contract changed; the payslip simply got worse for both sides. If your salary sits between the minimum wage and the occupational floor, the clean fix is to raise the gross to the floor: the contributions are due anyway, so the money may as well reach the employee.
This is also why the same job can cost different amounts at two Bulgarian companies: the floor follows the company’s activity code, not the employee’s actual duties.
What else you owe beyond contributions
- Paid annual leave: at least 20 working days per calendar year, accrued regardless of use, and payable in cash on termination if untaken. Budget it as roughly 8% of annual salary in accrued liability.
- Sick pay. The employer pays the first two working days of any sickness absence at 70% of the average daily gross remuneration; from the third day the National Social Security Institute pays.
- Notice period. One month for open-ended contracts unless the contract sets a longer term (capped at three months).
- Registration with the NRA. The employment contract must be notified electronically within three days of signing and in any case before the employee starts work. A person working without a registered contract is one of the costliest findings in a labour inspection.
- Occupational health service contract and an initial safety briefing. It is a small annual cost, but mandatory, and inspectors ask for it.
Employee, manager, or contractor?
Foreign owners often try to route everything through a service contract to avoid payroll. Three points to keep in mind:
- A manager is not an employee. If you appoint yourself or someone else as managing director under a management contract, the insurable income cannot fall below the floor for the managers group (from €936 in the illustrative figures above). See social security for owners and managers.
- A Bulgarian contractor is not free of contributions. Payments under a civil contract to a non-self-insured individual carry social and health contributions withheld at source, with an employer share. The saving over employment is real but far smaller than most owners assume.
- Substance decides. Fixed hours, your equipment, your instructions and a single client add up to employment, whatever the contract is called, and the reclassification comes with back contributions plus interest.
The low-cost route is a contractor who is registered as self-insured and invoices you: they handle their own contributions, and your company deducts the invoice. That works for genuinely independent suppliers, not for staff.
Putting it together
For a company employing five people at an average gross of €1,200, annual payroll cost lands near €85,600 (5 × €1,200 × 12 × 1.1892 = €85,622), before leave accrual and occupational health. The full cost is deductible from the 10% corporate tax base (see the Bulgarian corporate tax guide), and any profit left over is distributed at 5%.
If you are still at the setup stage, note that none of this requires you to be resident. A non-resident owner can run a Bulgarian payroll entirely remotely, provided the filings are made on time. See opening a company in Bulgaria as a non-resident.
We run Bulgarian payroll end to end: contract registration, monthly declarations, checks of the occupational floor against your activity code, and payslips your employees can read. See our accounting services, company formation and pricing.