Payroll in Bulgaria for foreign employers

Payroll is more than a salary calculation

Employing someone who works in Bulgaria creates a connected set of labour, payroll, tax and social-security obligations. The monthly payslip is only the visible output.

A compliant process starts before the employee's first working day and continues through contract changes, leave, bonuses, monthly reporting and eventual termination. Foreign employers need a local calendar and a clear division of responsibilities.

Ways to employ a person working in Bulgaria

A compliant third-party employment arrangement may also be considered, but it should be reviewed carefully. Commercial labels such as “EOR” do not remove the need to understand who the legal employer is, which labour law applies and who bears the local obligations.

The choice should also consider permanent-establishment risk, management activity, expected headcount, duration and whether the business already needs a Bulgarian operating company.

Questions to resolve before hiring

• Where will the employee physically work?
• Will the arrangement be permanent or temporary?
• Which entity will sign and manage the employment contract?
• Is the employee an EU/EEA/Swiss or third-country national?
• Is work or residence authorisation required?
• Which country's social-security legislation applies?
• What are the gross salary, benefits and working hours?
• Will the employee work remotely from more than one country?
• Who approves monthly payroll changes and by what deadline?

These questions should be answered before a start date is promised. Payroll cannot safely repair an incorrectly structured employment relationship after work has already begun.

Bulgaria's Employment Register and electronic records

Since 1 June 2025, the National Revenue Agency maintains Bulgaria's Employment Register with unified electronic employment records. Employers submit information about the start, amendment and termination of employment within statutory deadlines.

The electronic record includes important employment data such as the legal basis, position, workplace, working time, base salary and agreed annual leave. Changes should therefore be communicated to payroll before they take effect.

The employee should not be admitted to work before the written employment contract and required registration steps are complete. Late filing is not a routine correction: after statutory deadlines expire, additional labour-inspectorate procedures may be required.

Employee onboarding checklist

SofiaTax coordinates payroll onboarding around the agreed employment setup. Typical inputs include:

• employer and employee identification details;
• start date, position, workplace and working time;
• gross salary, recurring benefits and payment date;
• employment-contract and job-description information;
• leave entitlement and probation arrangements;
• bank details and payroll communication language;
• social-security or A1 evidence where relevant;
• work-authorisation status for third-country nationals.

The exact employment documentation and legal clauses should be coordinated with qualified employment-law support where the case requires it. Payroll then implements the agreed terms consistently.

How gross-to-net payroll works

Bulgarian payroll begins with gross remuneration and applicable taxable benefits. Employee social-security and health contributions are deducted, and personal income tax is calculated on the relevant tax base.

The employer also bears employer-side contributions. The exact result depends on the current statutory rates, minimum and maximum insurable-income rules, economic-activity classification, work category and employee-specific circumstances.

For budgeting, distinguish clearly between gross salary, employee deductions, net salary and total employer cost. Offering a net salary without modelling the employer cost can create avoidable budget surprises.

The monthly payroll cycle

1. Payroll input

The employer provides approved changes: new hires, leavers, salary changes, bonuses, absences, leave, sick leave and benefit updates.

2. Calculation and review

Payroll calculates gross-to-net results, employer costs and the relevant payroll liabilities. An agreed approval process catches unusual changes before payment.

3. Payslips and payment files

Payslips and agreed payment information are prepared for the employer. Salary-payment and approval responsibilities should be documented.

4. Statutory reporting

Payroll data is used for the required social-security and tax declarations and payment instructions within the applicable monthly deadlines.

5. Archive and reconciliation

Payroll reports, accounting entries, payments and employee records should reconcile and remain available for audit and employee questions.

What the employer should report every month

• approved salary and position changes;
• new employees and terminations;
• working time, overtime and shift information;
• paid and unpaid leave;
• sick-leave documentation;
• bonuses, commissions and one-off payments;
• benefits in cash or kind;
• business-travel and expense information;
• garnishments or other official instructions;
• changes to employee personal or bank details.

A fixed cut-off date is essential. Last-minute inputs increase the risk of incorrect salaries, late filings and manual corrections.

Leave, sickness, bonuses and benefits

Payroll needs the legal and factual basis for every absence or additional payment. Paid leave, unpaid leave, sickness, parental leave, bonuses, meal benefits, company cars and other benefits may have different payroll and tax treatment.

Foreign group policies should be mapped to Bulgarian rules before rollout. A benefit treated one way by headquarters may require different documentation or payroll treatment in Bulgaria.

Remote work, postings and A1 certificates

Employees working across borders require a separate social-security review. Under EU coordination rules, a person is generally subject to only one country's social-security system at a time.

A temporary posting may allow the employee to remain insured in the sending country when the conditions are satisfied and an A1 certificate is obtained. Regular work in multiple countries follows different tests and should not be treated as an ordinary posting.

Remote work from Bulgaria can also create corporate-tax, immigration, labour-law and permanent-establishment questions beyond payroll. The full arrangement should be reviewed, not only the payslip.

EU and non-EU employees

EU/EEA/Swiss citizens and third-country nationals can face different immigration and work-authorisation requirements. Payroll onboarding should confirm that the person may legally work under the proposed arrangement before the start date.

For non-EU nationals, permit type, employer, role and residence status may be linked. A payroll record cannot cure a missing or unsuitable right to work.

Contract changes and offboarding

Salary, position, working time and other registered employment data should not be changed informally. Payroll must receive the approved effective date and supporting basis early enough to update records correctly.

Termination requires coordinated legal documents, electronic employment-record updates, final salary, unused-leave calculations, possible compensation and the return of company property. The termination ground and timing can materially affect the payroll result.

What SofiaTax payroll support includes

• employer and employee payroll onboarding;
• coordination of electronic employment records;
• monthly gross-to-net salary calculations;
• employer-cost and payroll-liability reports;
• payslips and agreed payment information;
• social-security and payroll-tax declarations;
• leave, sickness, bonus and benefit processing;
• onboarding, contract-change and offboarding support;
• bilingual communication with foreign employers;
• payroll-to-accounting reconciliation.

We define a monthly input calendar, named contacts and approval flow during onboarding. Employment-law and immigration work can be coordinated separately where the case requires specialist advice.

Common payroll mistakes

• allowing work to start before onboarding is completed;
• assuming a foreign contract automatically works in Bulgaria;
• confusing net salary with total employer cost;
• sending salary changes after payroll cut-off;
• omitting bonuses or benefits from payroll instructions;
• treating remote work as purely an HR-policy matter;
• assuming an A1 certificate applies without confirmation;
• processing a termination before legal grounds are finalised;
• keeping payroll and accounting records out of sync;
• failing to update electronic employment records on time.

Employment and social-security references

The National Revenue Agency Employment Register contains current information on electronic employment records. Cross-border employer registration and social-security principles are summarised by Your Europe.

Frequently asked questions

Can a foreign company employ someone working in Bulgaria?

Potentially yes. The employer structure, local registration, Bulgarian labour law, payroll tax and social-security obligations should be reviewed before work starts.

Does a foreign employer need a Bulgarian company?

Not in every case. A Bulgarian subsidiary, direct foreign-employer registration or another compliant model may be possible. Tax presence and operational risks should also be reviewed.

What is Bulgaria's Employment Register?

It is the NRA register containing unified electronic employment records. Employers submit employment events and changes within the applicable statutory deadlines.

Can an employee start before the employment record is filed?

The written contract and required registration steps should be completed before the employee is admitted to work.

How is Bulgarian net salary calculated?

Net salary starts from gross remuneration and reflects employee social-security and health contributions and personal income tax under the current rules.

Can SofiaTax run payroll for a foreign employer?

Yes. We provide onboarding, monthly calculations, electronic-record coordination, payroll reporting, payslips and offboarding support.

This guide provides general payroll information, not individual employment-law, immigration, tax or social-security advice. The correct setup depends on the employer, employee, work location, nationality and cross-border facts.