Taxation in Bulgaria

Taxation in Bulgaria is under the administration and monitoring by the National Revenue Agency (NRA) and there are two major types of taxes: direct taxes and indirect taxes.

Direct taxes include corporate tax, income tax of individuals and withholding tax.

The corporate income tax in Bulgaria is for 12-month period and it is flat tax of 10%. This tax is proclaimed by 31 of March of the following year of its appearing. National Revenue Agency has offices in each municipality which accepted the declaration form for their incomes. There is a possibility to submit the declaration form electronically. This tax is collected by each residential or foreign legal entity which has their business and economic activity on the territory of the country.

Income tax of individuals has to be paid for the previous year. Every person who is a Bulgarian citizen and lives in the country more than 6 months and have incomes of activities in the country or abroad is obliged to pay a fixed tax of 10 %of his/her incomes.

The withholding tax mainly is referred to the “dividend tax”.

Indirect taxes include value-added tax (VAT).

VAT taxation in Bulgaria follow the European Union model of VAT, which is collected every month of the year for all suppliers of good, except that good with lower rate or zero rate. VAT rate in Bulgaria is 20%, which in the scale of VAT taxation is in the middle. The lowest tax of VAT is 17 % is collected in Luxembourg and the highest is in Hungary – 27 %. When the person is registered there is a possibility of VAT return.

Payroll Bulgaria

Frequently asked question to a head of company when it comes to bookkeeping and accounting is “How many people do you have on the payroll?” Basically it is the same as asking how many employees work for the firm. For the worker this is also the document that verifies that the employer has paid for work performed. A proof that people who do the job are regularly rewarded and derived from that – the conclusion that business is developing in a stable way.

One important thing has to be mentioned about payroll in Bulgaria. It is compulsory to have such documents for employees – the people who are part of the work force, the persons who have been assigned on Labor contract. A company doesn’t have to issue payroll to workers who have been hired for a service and have been assigned on so called Civil contract. They receive document for payment too, but it is different and not connected to a fixed period of time.

Importance of payroll in Bulgaria

Payroll is essential part of proper bookkeeping of any company in Bulgaria considering both legally and businesswise – it tells the short story what is company made of and what is it all about. Although a trial balance is regarded as a secondary document, it has heavy influence on anything happening in or around the firm. Tables of numbers might look boring on first glimpse, but they show if your business idea is going the right way and reveal the cracks on surface that lead to subsequent errors in reporting and balance. Accountants use the data to forecast balance sheet, they need it for future cash flow statement, revenues and expenses and weighing company's equity as a whole.

A payroll should consist of starting, working and closing capital balance for any reporting account of the company. The nature of the payroll gives clearer picture of monthly accounting records, which are the basis for the annual financial report. Numbers in payroll in Bulgaria shows what are the expenses of the firm, is there excess of money going out of the house for any reason and what way for such outflow to be cut. As for revenues, payroll also guide us to where we could increase the money coming in and what are the positions at a certain stage that do not justify investment by the company. In the end of the day the most important if you have to put more on credit side of the scale than you have on debit saucer – 5 year old kid can tell you that if you spend more than you receive in a long run, then you are in trouble.

Payroll Processing and Administration in Bulgaria

Bulgarian Labor Code is a main law of Labor legislation, but there are also many various ordinances which covered all aspect of labor market, employee-employer relations, etc.

Payroll accounting and administration includes:

  • Providing recruitment procedures and administration related to hiring of employees;
  • Preparation, changes in the condition or termination of labor and civil agreements;
  • Collecting employees' data and keep personal individual records;
  • Monthly preparation and calculation of employees’ salaries;
  • Preparing social insurance and medical insurance payroll according to Bulgarian legislation which is a form of protection of employees. The state social security policy is managed by the National Social Security Institute (NSSI) and all contributions must be paid by the 25th of the following month;
  • Calculating personal income taxes;
  • Keeping payroll ledgers and preparing personal pay slips;
  • Managing bank accounts to make different payment according to the law.
  • Providing correspondence services to all different state agencies or third parties;
  • Preparing all papers to make registrations and declarations that should be send to state agencies;

Outsourcing bookkeeping

The “Outsourcing” is short term for "Outside Recourse Using". The outsourcing bookkeeping is a fast developed business in Bulgaria that offered wide range of services for business or individuals. On the market you can find many fully operational specialized accounting companies which can offer you very attractive options for optimizing you expenses and to be consulted by the best accounting specialists.

The main question which arises is what will give you outsoaring bookkeeping?

To focus on main activity. It allows you to increase the result of your activity and to be more focus on planning and solving problems for developing your business.

Saves money. There will be no costs for new positions for accountants, for expensive specialized professional accounting software and equipment for the fully operational accounting personnel at your company. If you use outsourcing firm, you will pay only for services that you use.

You can use only services that you need and you will pay only for that. Many companies offered different packages of services.

Saves time and recourses. It saves time to search and hire specialists in field of accounting, to train them and to look for further training to keep their expertise on higher level. If you use accounting firm, you received already trained specialists.

Office Sofia
Sofia 1000, BULGARIA
4 "Vitosha" Boulevard
++359 2 980 01 544
++359 888 403262
Office Burgas
Burgas 8000, BULGARIA
2 "Vasil Aprilov" Street
++359 56 814095
++359 888 403262
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