How does Bulgaria payroll tax work in 2026?

The employer social security stack in Bulgaria covers several funds:

• State pension (first pillar): employer share of the general state pension fund
• Supplementary compulsory pension (second pillar): applies to employees born after 31 December 1959
• General sickness and maternity fund: employer contribution
• Unemployment fund: employer contribution
• Accident-at-work and occupational disease fund: employer contribution, ranging from 0.4% to 1.1% by sector
• Health insurance: employer share

Because the accident fund rate varies by industry, the total employer social security rate ranges from approximately 18.92% to 19.62% of gross insurable income. No single rate applies to all employers. Check the applicable sector classification to determine the exact accident fund rate for your business.

Maximum insurable income

Social security contributions apply only up to a maximum insurable monthly income set by the annual state budget. Both employer and employee contributions are capped at that ceiling. Income above the ceiling attracts no additional social security. Verify the current ceiling with the National Revenue Agency before each payroll year.

The combined employee rate is 13.78% of gross insurable income. This is deducted from gross salary before net pay is calculated. The same maximum insurable income ceiling that caps employer contributions also caps the employee deduction.

Employees born on or before 31 December 1959 are not covered by the supplementary compulsory pension (second pillar). Their total rate differs marginally. In practice, most working-age employees in 2026 fall into the post-1959 cohort and pay the full 13.78% combined rate.

How income tax is calculated

The employer withholds income tax on each payroll run. The tax base is gross employment income minus the employee social security contributions for that period. The flat 10% rate applies to the resulting taxable income. There is no year-end reconciliation process comparable to the UK self-assessment or the German Lohnsteuer annual statement; the monthly withholding is generally final for most employees.

Annual income tax return

Most employees whose only income is employment income do not need to file a personal income tax return. A return is required where the employee has other income sources, or where the withheld tax does not cover the full liability. Employers submit an annual declaration of income paid and tax withheld to the National Revenue Agency.

Minimum wage context

From 1 January 2026 the national minimum wage is €620.20/month (€3.74/hour). The minimum wage rose 12.6% from the 2025 level. This is a gross figure; the employee takes home the minimum wage minus social security contributions and income tax.

The key filings on the Bulgarian payroll calendar:

• Declaration Form 1 (Декларация обр. 1): filed monthly by the 25th of the following month. Reports each employee's gross insurable income, social security base, and contributions withheld for the period.
• Declaration Form 6 (Декларация обр. 6): summarises total withholding tax and social security payable for the month. Filed and settled by the same 25th-of-following-month deadline.
• Annual employer declaration: filed with the National Revenue Agency after the year end. Reports total income paid and tax withheld for each employee across the year.

Bulgaria does not use a real-time reporting system like the UK's PAYE RTI. Filings are monthly, not per-payrun. However, the twice-monthly pay obligation means payroll runs at least twice in each filing period.

1. Collect pay data twice monthly

   Gather gross salary, hours, and any variable pay for each pay period. Bulgarian law requires at least two pay periods per month, so the payroll calendar runs on a bi-monthly cycle.

2. Calculate gross insurable income

   Total all earnings for the period. The social security base is gross income up to the maximum insurable income ceiling set by the annual state budget.

3. Deduct employee social security

   Apply the employee combined social security and health insurance rate to the insurable base. Deduct the result from gross pay before income tax is calculated.

4. Deduct income tax at the flat rate

   Apply the flat income tax rate to gross employment income minus the employee social security deductions for the period. No bands, no thresholds to cross.

5. Calculate employer social security

   Apply the employer social security rate to the same insurable base. The total employer cost is gross salary plus this contribution. The rate varies by sector; confirm your accident fund classification.

6. File and pay by the 25th

   Submit Declaration Form 1 and Declaration Form 6 to the National Revenue Agency by the 25th of the month following each pay period. Pay the income tax and social security liability at the same time.

The three-pillar structure

Bulgaria operates a three-pillar pension system:

• First pillar (state pension): funded through the social security contributions already captured in the employer and employee rates. All employees participate.
• Second pillar (supplementary compulsory pension): mandatory for employees born after 31 December 1959. Contributions are part of the combined social security rate and go to a Universal Pension Fund chosen by the employee. If an employee does not choose a fund, one is assigned.
• Third pillar (voluntary pension): employee-elected top-up contributions to a private supplementary fund. Not part of the payroll calculation unless the employee opts in.

Because pension contributions are embedded in the social security rate, there is no separate pension line on the payslip beyond the breakdown of the social security components. The total employer cost is the gross salary plus the employer social security rate (18.92% to 19.62% depending on sector). There is no additional pension charge on top.

Sick pay in the payroll stack

The employer funds the first three days of any sick leave at 70% of the employee's salary. From day four, the National Social Security Institute (NSSI) pays 80% of the employee's average insurable income for a common illness. The employer does not carry the cost beyond day three. This is funded through the sickness and maternity component of the social security contributions.

Real HR and legal experts handle your Bulgaria hires, from the first offer letter through every Declaration Form 1 submission and year-end employer declaration. An actual person, not a chatbot or a pooled queue. There is no setup fee and no exit fee. Employer cost passes through at cost, itemised on every invoice.

EOR payroll, contractor onboarding, and entity setup all live on one platform. A Bulgaria contractor who converts to payroll keeps their record. That same employee can graduate from EOR to your own Bulgaria entity without switching systems. Run the Employer Cost Calculator to see the full picture. EOR is the right model for a first Bulgaria hire, until it isn't. Start from the Bulgaria hiring overview.

Key sources: Bulgarian Ministry of Economy: Remuneration, income tax and social security and PwC Tax Summaries: Bulgaria individual income tax.