Social Security in Bulgaria: the definitive guide

The definitive guide of Bulgaria Social Security, with details and examples on how to calculate social security contributions.

Bulgaria has become an attractive country for freelancers, especially for professionals in the field of technology and IT and related businesses. Among the many strategies freelancers have at their disposal to expand their business and maximize income, relocating is one that many consider, especially due to tax schemes. 

Bulgaria has an interesting financial position in Europe, with a straightforward and simplified flat tax rate system that has positioned Bulgaria as a tax haven. But for freelancers, we should also mention the advantageous Bulgaria social security. And that is what we are going to dive into in this article.

There is no doubt that Bulgaria is an attractive destination for freelancers and self-employed professionals to settle and exploit the many benefits at their disposal, it is also clear that in order to best take advantage of the financial environment and for freelancers to grow their business, they need to count with the services of a reliable accounting company.

Accountancy Bulgaria not only has the most experienced professionals that can advise you each step of the way, from company registration in Bulgaria, to very specific needs your business may have, including everything related to social security in Bulgaria, all with deep insight in the industry and the best customer care. 

Social Security for Freelancers in Bulgaria 

Freelancers are obliged to pay social security contributions based on the Bulgarian Social Security Code (SSC). An insured person will receive benefits in the case of injury for disability due to general sickness, old age and death. Additionally, thay may add insurance for general disease and maternity leave. The declaration for social security must be done no more than 7 days after the start of the activities, and can be modified each year before the end of January.

Self-insured workers must pay the contributions by the 25th of the month following the month on which they relate. 

• Learn more about How to become a freelancer in Bulgaria: taxation and company form

Who has to pay social security in Bulgaria?

We are going to detail the different cases where Bulgaria social security must be paid, concentrating on the case of freelancers, as for employees social security is calculated by the employer and partly paid by them. 

The category of freelancers falls into a wider definition of self-insured professionals. 

Self-insured professionals must register with the National Revenue Agency at the start of their business activities, as well as register the finishing or cessation of such activities.

Self-insured persons, including freelancers, are insured for disability due to general sickness, old age, and death. However, if desired, they can add optional insurance for general disease and maternity leave. While the first insurance is compulsory and general for all self-employed professionals, the decision to opt for the additional insurance is declared at the time of registering within seven days of the start or resuming of business activities.

How are Bulgaria social security contributions calculated for freelancers?

For people born after 1959, Bulgaria social security contributions are calculated as follows:

• Social Security Funds: 14.80%. This percentage can go up to 18.30% if the person chooses for total coverage, including general sickness and maternity leave. 
• Additional mandatory pension insurance fund within the Universal Pension Fund: 5.00%
• Health Insurance: 8.00%

To calculate Bulgaria social security contributions, freelancers will need to calculate the average gross income received monthly. Out of this total, 25% is deducted as general expenses, resulting in 75% of their total gross income per month being subject to Bulgaria social security and income tax afterward.

• All you need to know about Self Employed tax in Bulgaria: how much you pay?

Example of Bulgaria Social Security

We are going to discuss an example of how Bulgaria social security is calculated.

The total percentage of the compulsory Bulgaria social security contributions comes to a total of 27.8% (without the optional coverage for general disease and maternity leave). As an example, if a person has a gross monthly income of 4.000 BGN, the income that is insurable is only 75% of that, meaning 3.000 BGN. So 3.000BGN * 27.8% results in social security contributions of834 BGN. 

The income tax for freelancers (a 10% flat rate) is applied only to the remaining 2.166 BGN. So 2.166 * 10% results in 216,60 on taxes a freelancer must pay.

If we want to do an example with the full Bulgaria social security coverage, including general disease and maternity leave, the numbers are as follows.

Out of the gross monthly income of 4.000 BGN, 25% is deducted as general expenses, resulting in 3.00 BGN which is the base for social security deductions.

On this total, Bulgaria social security contributions, including the optional coverage, come to a total of 31.3%. So 3.000 BGN * 31.3% gives us a total of 939 BGN as social security contributions. If we deduct this number from the 3.000 BGN, we are left with 2.061 BGN as taxable income, to which we apply the 10% flat rate income tax, resulting in 206,10 BGN on taxes. 

Conclusion

Bulgaria social security is easy to understand with the provided examples. There is general insurance, with the option to add extra coverage. 

The best choice any self-employed professional can make is to engage the services of a trustworthy accounting company, just like Accountancy Bulgaria. They will take care of your Bulgaria social security, tax reports, and audits and will be there every step of the way, making sure you can concentrate on growing your business.