Bulgaria Salary Tax Calculator: what you need to know

Bulgaria has become an appealing destination for companies looking to expand their growth and maximize their profit. And there is a good reason for this…

Not only Bulgaria has an attractive 10% flat rate tax on corporate income, but it also has made it easy and straightforward to start a company in Bulgaria.

In an optimistic and encouraging business environment, with laws that promote the country as a tax haven and encourage ideal business conditions for corporations, Bulgaria has seen exponential growth in its financial system. 

However, another reason that has attracted companies is the workforce in Bulgaria. Not only is it highly educated, trained, and usually multilingual, but it is also a lot more affordable than in other European countries. 

Employers looking to engage a local workforce may even be able to take advantage of certain bonuses and government benefits. And, while your accounting services Bulgaria will be able to do all the payroll and remuneration management, a Bulgarian Salary Tax Calculator may be a useful tool to understand the overall cost of hiring employees. 

Additionally, it is an exceptional tool for employees looking to understand how much money they will actually have available once all deductions and taxes are taken from their income, or for self-employed workers who may consider becoming residents in Bulgaria to take advantage of the Bulgarian tax scheme. 

• Read also: Bulgarian Tax Calculator: here is why you need help

How does the Bulgarian Salary Tax Calculator work?

The Salary Tax Calculator in Bulgaria is a simple form that works by analyzing the information an individual inputs in each category. The algorithm promptly calculates all mandatory deductions for social and health securities and income tax, providing you with a very accurate net salary.

Using the salary calculator is a good first step for anyone interested in understanding their taxes in Bulgaria and compulsory deductions and hoping to see how much of their gross salary ends up being available to them.

Some calculators online also go into detail on the percentage of every deduction based on the year you were born and how many years of experience and practice you may have.

This tool may also prove useful to those interested in company formation in Bulgaria, as they may be considering having employees and it can be estimated how much having an employee costs the company. 

In Bulgaria, as we have often mentioned, there is an educated and efficient workforce that results much cheaper to a company than in other European countries. Many companies have looked into relocating to Bulgaria to take advantage of this aspect, among many others. 

In any case, the Bulgaria Salary Calculator does not replace the expertise and experience of accounting services Bulgaria, but it can be a good indicator for corporations and workers alike.

How is Gross Salary calculated in Bulgaria?

The process of calculating the gross wages for an hourly paid employee or the salary of a monthly contracted employee is similar. 

In both cases, the employee must agree in writing to what the remuneration will be for their work, as well as the type of employment (hourly or per month).

Once this is agreed upon, the accountant in Bulgaria for the said company will consider agreed wages or salaries, bonuses, commissions, extra hours, sick pay, vacation pay, and holiday pay. The combination of all these factors forms the pay rate.

From Gross Salary to Net Salary

Once the gross salary of an employee has been calculated, there are a few more factors that the recipient of this income and the company paying it, need to be aware of.

First of all, there are social and health deductions on the gross salary calculations.

• Pensions Fund
• Common Diseases and Maternity Fund
• Unemployment Fund
• Supplementary Mandatory Pensions Fund
• Health Security Fund

As you can see, these deductions are just over 13% over a portion of the gross salary. After deducting these obligations, the remaining amount will be the taxable part.

And here we are talking about income tax. This is paid by the employee, and it is always a flat rate of 10% of the income after deductions. The final amount is the net salary.

• Read also: Bulgaria Tax Identification Number: Complete Guide

Conclusion

While not necessarily 100% accurate, the Bulgaria Salary Calculator can be a great resource for those trying to understand their salary better or make more educated corporate decisions.