Hire employees in Bulgaria using an Employer of Record

Your competitor just hired three developers in Bulgaria last month while you're still trying to figure out if you need a local business entity. They're paying 60% less than Western European salaries for the same talent level, and their team is already shipping code.

Bulgaria's become the go-to spot for international hiring in Eastern Europe, and it's not hard to see why. You've got a highly educated workforce (especially in tech and engineering), EU membership for easy market access, and labor costs that won't make your CFO faint. Plus, the time zone works perfectly if you're managing teams across Europe.

Here's how most companies approach hiring there:

Option 1: Set up your own Bulgarian entity

• Cost: €15,000-40,000 upfront, €8,000-15,000 annual maintenance

• Timeline: 4-6 months minimum

• Complexity: Full tax registration, payroll system, legal compliance, HR infrastructure

• Makes sense when: Hiring 20+ people long-term, permanent market presence

Option 2: Hire contractors

• Cost: None upfront, but limited control

• Timeline: Immediate

• Risks: Misclassification fines (€5,000+), back taxes, legal disputes

• Makes sense when: Short projects (< 6 months), specialized skills

• Note: Hire with Columbus also handles contractor agreements and payments

Option 3: Use an employer of record (Recommended for most)

• Cost: $179/month per employee

• Timeline: 2-3 days to hire

• Complexity: None - we handle everything

• Makes sense when: 1-50 employees, testing markets, multi-country teams

The math is pretty straightforward. If you're hiring 1-5 people, entity setup costs more than 4+ years of EOR fees ($179/month = $2,148/year per employee). An EOR like Hire with Columbus handles employment contracts, payroll, taxes, benefits, and compliance updates so you can focus on actually running your business instead of deciphering Bulgarian labor law.

Ready to hire in Bulgaria without the legal headaches? Get started with Hire with Columbus today.

What employment types can you use?

You've got three ways to bring someone onboard in Bulgaria, and honestly, most companies pick the wrong one first. Here's how to choose without burning through your budget or waiting months to hire.

How can you hire in Bulgaria?

Let's break down your options with real numbers, because "it depends" doesn't help when you need to hire next month.

Set up your own entity

You're looking at €15,000-25,000 just to get started, plus 4-6 months of paperwork. Then there's ongoing compliance costs - payroll software, accounting, legal fees, HR infrastructure. This adds up to €3,500+ monthly for a small team.

The math works when you're hiring 20+ people long-term and know you'll stay in Bulgaria for years. Otherwise, you're spending more on setup than salaries.

Hire contractors/freelancers

Fast? Yes. Risky? Also yes. Bulgaria's labor authorities don't mess around with misclassification - you could face fines up to €15,000 per worker, plus back taxes and social contributions.

The real test: if you're setting work hours, providing equipment, or treating them like employees, they probably are employees. Use this for genuine project work under 6 months.

Note: Hire with Columbus also handles compliant contractor agreements and payments if you need the flexibility without the legal headaches.

Use an employer of record (Recommended)

Here's where most smart companies land. Hire with Columbus becomes the legal employer in Bulgaria while you manage the day-to-day work. Your employee gets a proper Bulgarian employment contract, full benefits, and local payroll.

Cost breakdown for 5 employees:

• Hire with Columbus: $895/month ($179 per employee)

• Entity setup alternative: €25,000 upfront + €3,500/month ongoing

• ROI timeline: You break even in about 8 months, then save €2,600+ monthly

We handle employment contracts, payroll processing, tax filings, social security contributions, and compliance updates. You focus on managing performance and growing your team.

Employment contract types in Bulgaria

Once you've decided how to hire (and if you're smart, you picked the EOR route), you need to choose the right contract type. Bulgaria offers several options, each with specific rules you can't ignore.

Permanent employment contracts

This is your go-to for core team members. No end date, full job security protections, and the most straightforward option for both sides.

Use permanent contracts when you're hiring for ongoing roles - developers, marketing managers, customer success reps. Bulgarian employees actually prefer the security, and it shows you're committed to the market.

Hire with Columbus sets these up with standard Bulgarian terms: 6-month probation period, proper notice requirements, and full benefits from day one.

Fixed-term contracts

Maximum 3 years total, including renewals. After that, the contract automatically converts to permanent - whether you planned it or not.

You can use these for:

• Maternity leave coverage

• Seasonal work

• Specific project roles with clear end dates

• Testing out a role before making it permanent

Just don't try to chain multiple fixed-term contracts for the same role. Bulgarian courts see right through that trick, and you'll end up with a permanent employee anyway.

Part-time contracts

Part-time employees get the same protections as full-time workers, just prorated. They're entitled to vacation days, sick leave, and social security contributions based on their hours.

Popular for customer support roles covering specific time zones or specialized consultants who work with multiple companies. Just make sure the reduced hours genuinely match the workload.

Internship agreements

Separate category with lighter regulations, but only for genuine learning experiences. You can't use internships to replace regular employees or for routine operational work.

Maximum 6 months, and you'll need a proper training program. Many companies skip this route entirely - it's easier to hire junior employees on permanent contracts.

The bottom line? Most international companies hiring in Bulgaria start with permanent contracts through an EOR. It's the clearest path legally, employees prefer the security, and you avoid the complexity of managing contract renewals and conversions.

Hire with Columbus handles all the contract drafting, local language requirements, and regulatory filings regardless of which type you choose. Your new hire gets proper Bulgarian employment terms, and you get someone productive without the legal homework.

How does payroll and taxation work?

Hiring in Bulgaria will cost you about 35-40% more than the base salary once you factor in all employer contributions and taxes. That's actually pretty reasonable compared to some EU countries, but the payroll mechanics can trip you up if you're not careful.

The good news? Bulgaria has a flat 10% personal income tax rate, which keeps things relatively simple. The bad news? The social security contributions are where things get complicated, and missing deadlines will cost you.

Tax structure

Bulgaria keeps personal income tax straightforward with a flat 10% rate on most employment income. No progressive brackets to calculate, which makes payroll processing easier than countries with multiple tax tiers.

There's also a minimum tax base that applies regardless of actual salary. For 2025, this minimum is BGN 933 per month (about €477), so even if you pay someone less, you'll still need to calculate social contributions on this minimum amount.

Social security contributions

Here's where your real employment costs add up. Bulgaria splits social security contributions between employer and employee, and you're looking at significant percentages on both sides.

The workplace accident rate depends on your industry - office work gets the lowest rate at 0.4%, while construction or manufacturing can hit 1.1%.

Payment schedule and timing

Bulgarian employees expect their salary by the 10th of the following month. So January's salary must be paid by February 10th. This isn't just custom - it's legally required, and late payments trigger penalty interest of 0.1% per day.

Most companies pay monthly, though you can technically pay more frequently if you want. There's no 13th or 14th month salary requirement in Bulgaria, unlike some neighboring countries.

You'll also need to handle these payroll deadlines:

• Monthly tax and social security filings: Due by the 10th of the following month

• Annual tax returns: Due by March 31st for the previous year

• Social security reconciliation: Annual filing due by February 28th

Total employment cost example

Let's say you want to hire a software developer in Sofia at €60,000 per year (about BGN 117,300). Here's what you'll actually pay:

Employee receives:

• Gross salary: €60,000

• Employee social contributions: €11,880 (19.8%)

• Income tax: €4,812 (10% on gross)

• Net take-home: €43,308

Your total cost:

• Gross salary: €60,000

• Employer social contributions: €10,800 (18% average)

• Total employment cost: €70,800

So that €60k developer actually costs you €70,800 - an 18% markup on the gross salary. Factor in vacation coverage, equipment, and other costs, and you're looking at closer to €75-80k total.

Payroll cycle mechanics

Bulgarian payroll runs on a pretty standard European cycle, but the timing matters more than you might think. Here's how it typically works:

Monthly cycle:

1. Calculate gross pay and deductions by month-end

2. Submit social security declarations by the 10th

3. Pay employee salaries by the 10th

4. Transfer taxes and contributions to authorities by the 10th

5. File detailed payroll reports by the 15th

Miss any of these deadlines and you're looking at penalties starting at BGN 500 (about €255) per violation, plus daily interest charges.

Common payroll mistakes

The biggest mistake? Miscalculating the minimum insurance income. Even if you pay someone BGN 800 per month, you still owe social contributions on BGN 933. Companies mess this up constantly and get hit with back-payments plus penalties.

Another trap: not registering employees with the social security office before their first day. You have until the day before they start working, not after. Miss this deadline and face fines up to BGN 5,000.

Double-taxation is also tricky if you have employees working between Bulgaria and other countries. Bulgaria has tax treaties with most EU countries, but the paperwork to claim treaty benefits needs to be filed upfront, not during tax season.

Setting up Bulgarian payroll yourself costs:

• Local accounting firm: €300-500/month per employee

• Payroll software: €50-100/month

• Compliance risk: Fines up to €2,500 for errors

• Local HR expertise: €40k+ salary for someone who knows the rules

With Hire with Columbus: $179/month per employee, fully compliant, zero penalty risk, and we handle all the deadline juggling so you don't have to worry about missing that critical 10th-of-the-month filing.

What benefits and leave are required?

Bulgarian employees get 20 days of paid vacation minimum, but that's just the start. You'll also handle sick leave, parental leave, 12 public holidays, and mandatory social insurance contributions that can catch you off guard if you're not prepared.

The good news? Bulgaria's benefit system is pretty straightforward once you understand the basics. The potentially expensive news? Getting it wrong can result in fines up to €10,000 plus back payments to employees.

Annual vacation leave

Every Bulgarian employee gets at least 20 working days of paid vacation per year. That's the legal minimum, but many companies offer 25-30 days to stay competitive.

Vacation days accrue monthly at 1.67 days per month (20 days ÷ 12 months). Employees can use vacation as soon as they've earned it - no waiting periods required.

Here's where it gets interesting: employees can carry over unused vacation to the next year, but only until June 30th. After that, you must either let them take the days or pay them out at their current salary rate. No "use it or lose it" policies allowed.

When someone leaves, you're legally required to pay out all unused vacation days. Calculate this at their final daily salary rate, not what they earned when the vacation was accrued.

Sick leave entitlements

Bulgarian sick leave works on a split-payment system that confuses a lot of international companies. For the first three days, you pay 70% of the employee's average daily salary. From day four onward, the National Insurance Institute takes over and pays 80% of their salary.

Employees need a doctor's certificate for any sick leave longer than three days. For shorter absences, they can self-certify, but many companies still require medical documentation to avoid abuse.

There's no annual limit on sick leave days - employees can take as much as they're medically certified for. The social insurance system covers extended illnesses, which protects both you and your employees from financial hardship.

Parental leave breakdown

Maternity leave: 58 weeks total, split into prenatal (45 days) and postnatal (410 days). The first 42 days are paid at 90% of average salary, then it drops to a flat rate of about €380 per month for the remainder.

Paternity leave: 15 days within two months of birth, paid at 90% of average salary. Fathers can also take an additional 6 months of the maternity leave if the mother returns to work early.

Adoption leave: Same entitlements as biological parents, starting from when the child joins the family.

The tricky part? You advance these payments and then get reimbursed by social insurance. This creates cash flow challenges for smaller companies, especially with the lengthy reimbursement process.

Public holidays in 2025

Bulgaria observes 12 public holidays in 2025. When a holiday falls on a weekend, it typically doesn't roll over to Monday - employees just lose that holiday.

If employees work on public holidays, you must pay them double their regular rate or give them a compensatory day off plus 50% extra pay.

Mandatory social insurance contributions

Bulgaria requires both employer and employee contributions to social insurance, and the rates are higher than many Western European countries expect.

These contributions are calculated on gross salary up to a maximum of €3,400 per month in 2025. High earners don't pay social insurance on income above this threshold.

You'll also pay a 10% flat income tax on employee salaries, which you withhold and remit monthly.

Health insurance requirements

All employees must have health insurance through the National Health Insurance Fund. The contribution rate is 8% of gross salary (split 60% employer, 40% employee), capped at the same €3,400 monthly maximum.

This covers basic medical care, but many companies offer private health insurance as a competitive benefit. Private insurance typically costs €500-1,500 per employee annually, depending on coverage level.

Competitive benefits beyond legal minimums

To attract talent in Bulgaria's competitive market, most companies offer:

Additional vacation: 25-30 days instead of the legal minimum 20 days 13th month salary: Common bonus equal to one month's salary, usually paid in December Meal vouchers: Tax-advantaged benefit worth up to €200 per month Transport allowances: Monthly public transport passes or fuel allowances Private health insurance: Covers services not included in public healthcare Flexible working: Remote work options became standard post-2020

Common benefit administration mistakes

Mistake #1: Not tracking vacation accrual properly. Bulgarian labor inspectors check this closely and fine companies that miscalculate employee entitlements.

Mistake #2: Paying sick leave incorrectly. Remember, you pay 70% for the first three days, then social insurance takes over at 80% from day four.

Mistake #3: Missing social insurance payment deadlines. Contributions are due by the 25th of the following month, and late payments incur 20% annual interest plus penalties.

Mistake #4: Incorrect holiday pay calculations. Double-time for public holiday work is mandatory - you can't negotiate this away in employment contracts.

Mistake #5: Not providing proper meal break facilities. If employees can't leave the workplace for lunch, you must provide meal vouchers or cafeteria facilities.

Administering these benefits correctly requires local expertise that most international companies don't have in-house. You're looking at hiring a local HR specialist (€35,000+ annually), plus benefits administration software (€300+ monthly), plus ongoing legal compliance monitoring.

Hire with Columbus handles all benefit administration, social insurance filings, and compliance monitoring for $179/month per employee. We ensure your Bulgarian employees get everything they're entitled to while keeping you compliant with local labor law.

What are the compliance requirements?

Employment contracts must be signed within three days of the employee's start date in Bulgaria. Miss this deadline and you're looking at fines starting from €500, plus the contract could be deemed invalid. The good news? Unlike some EU countries, Bulgaria doesn't require contracts to be registered with government authorities.

But most companies trip up on this: every employment contract must be written in Bulgarian. Even if your employee speaks perfect English, the law requires Bulgarian language contracts. You'll also need specific mandatory clauses that many international companies forget to include.

Employment contract requirements

Bulgarian employment contracts must include way more detail than you might expect. The mandatory clauses aren't just box-checking. Miss one and the entire contract becomes invalid.

Required contract elements include:

• Employee's full name, address, and personal identification number

• Employer's complete legal name and registration details

• Specific job position and detailed job description

• Workplace address (can't just say "remote" - need a legal address)

• Start date and contract duration (if fixed-term)

• Working time schedule and rest periods

• Base salary amount and payment schedule

• Annual leave entitlement

• Notice periods for both parties

• Applicable collective bargaining agreement (if any)

The contract must also specify which Bulgarian labor laws apply. This isn't optional language. It's a legal requirement that protects both you and the employee.

Probation periods

Standard probation periods in Bulgaria run six months for most positions. You can't extend this or create multiple probation periods for the same employee. During probation, either party can terminate with just three days' written notice.

The catch: probation periods must be explicitly stated in the employment contract. Forget to include this clause and you lose the right to use the shorter notice period. The employee immediately gets full termination protection from day one.

For senior management positions, you can't use probation periods at all. Bulgarian law considers these roles too important for probationary arrangements.

Working time regulations

The standard work week is 40 hours across five days. Employees can work a maximum of 8 hours per day, with mandatory breaks of at least 30 minutes for shifts over 6 hours.

Overtime rules are strict:

• Maximum 150 overtime hours per year per employee

• Overtime pay at 150% of regular hourly rate

• Alternative: compensatory time off at 150% rate

• Weekend work requires 200% pay or double compensatory time

You must maintain detailed working time records for every employee. These records need to show daily start/end times, breaks, and any overtime worked. Labor inspectors can request these records at any time, and missing documentation results in automatic fines.

Notice periods

Notice periods depend on how long the employee has worked for you:

Notice must be given in writing. Verbal notice doesn't count, even if the employee confirms they received it. The notice period starts from the day after written notice is delivered.

Termination process

You can't just fire someone in Bulgaria, even with valid cause. The termination process requires specific steps and documentation.

For termination with cause, you need:

1. Written warning describing the violation

2. Employee's written response (they have 5 days to respond)

3. Investigation period if the violation is disputed

4. Final termination letter with specific legal grounds cited

For redundancy terminations, the process gets more complex:

• 45-day consultation period with employee representatives

• Detailed justification for the redundancy

• Selection criteria documentation

• Retraining opportunity assessment

• Government notification within 7 days

Skip any of these steps and the termination becomes invalid. The employee can demand reinstatement plus back pay for the entire period.

Severance pay

Severance pay requirements vary based on the reason for termination:

Severance must be paid on the employee's last working day. Late payment triggers additional compensation equal to the employee's daily wage for each day of delay.

Data protection

Employee data protection in Bulgaria follows GDPR rules plus additional local requirements. You need explicit written consent to process employee personal data beyond what's required for employment.

Key requirements include:

• Data processing consent forms in Bulgarian

• Employee privacy notices explaining data use

• Secure storage of personnel files

• Right to data portability when employment ends

• Appointment of Data Protection Officer if processing over 5,000 employee records annually

Employee monitoring (emails, computer usage, cameras) requires specific consent and must be proportionate to business needs. Blanket surveillance isn't allowed.

Common compliance mistakes

Most international companies make these expensive errors:

Invalid employment contracts: Missing mandatory clauses or using English-only contracts. Result: €500-2,000 fine plus contract void, requiring back payments and corrections.

Wrong termination process: Skipping consultation periods or missing documentation. Result: €2,000-5,000 fine plus potential reinstatement order and back pay.

Improper working time records: Missing or incomplete time tracking. Result: €1,000-3,000 fine plus overtime back payments.

Late salary payments: Paying after the 15th of the following month. Result: Daily penalty payments to employees plus €500-1,500 administrative fine.

Penalties for violations

Bulgarian labor authorities take compliance violations seriously. Here are the specific fine amounts for common errors in 2025:

• Employment contract violations: €500-2,000 per violation

• Working time violations: €1,000-3,000 per employee affected

• Improper termination: €2,000-5,000 plus compensation

• Late wage payments: €500-1,500 plus daily penalties

• Data protection breaches: €2,000-20,000 or 4% of annual revenue

• Health and safety violations: €1,000-10,000 depending on severity

Repeat violations within 12 months automatically double the fine amounts. Labor inspectors can also order immediate cessation of business activities for serious violations.

Real costs of compliance failures in Bulgaria:

• Invalid employment contract: €2,000 fine + contract void + back payments owed

• Wrong termination process: €5,000 fine + legal fees + potential reinstatement order

• Missing mandatory clauses: Contract deemed invalid, all employment terms must be renegotiated

• Improper dismissal: €2,000-10,000 in compensation + reinstatement + back pay for entire period

Hire with Columbus ensures every contract and termination follows Bulgarian law exactly. We handle all the mandatory clauses, proper Bulgarian translations, and termination procedures so you never face these penalties. At $179/month per employee, it's much cheaper than dealing with compliance violations after the fact.

What has changed recently?

Bulgaria's been busy updating its employment rules in 2025, and some of these changes will definitely affect how you hire there.

The biggest shift? Minimum wage jumped to €760 per month as of January 2025, up from €710 in 2024. That's a 7% increase that caught some employers off guard, especially those hiring entry-level positions. If you're budgeting for Bulgarian hires, factor this in—it affects not just salaries but also social security calculations.

New remote work protections

Bulgaria finally codified remote work rights in early 2025. Employees now have the legal right to request flexible work arrangements, and employers need a "substantial business reason" to refuse. The law also clarifies who pays for home office equipment (spoiler: it's usually the employer) and sets limits on after-hours communication.

This isn't just feel-good legislation—it comes with real compliance requirements. You'll need written remote work agreements that specify work hours, equipment responsibilities, and data security measures. Miss these details and you could face fines up to €25,000.

Tax changes that actually matter

The personal income tax structure got a small tweak for 2025. The tax-free threshold increased to €11,693 annually (up from €11,500), which means slightly lower tax burdens for your employees. It's not huge, but every bit helps with retention.

Bulgaria also introduced new rules around stock options and equity compensation. Foreign companies can now offer equity packages more easily, but you'll need proper documentation and tax withholding procedures. The Bulgarian tax authority wants transparency on all equity grants—they're pretty strict about this stuff.

Holiday calendar updates

Bulgaria added May 24th (Cyrillic Alphabet Day) as a mandatory public holiday starting 2025. That brings the total to 12 official holidays, and yes, you'll need to pay for this additional day off. Plan your project timelines with this in mind—May tends to be pretty fragmented for work now.

Social security contribution adjustments

The maximum monthly salary subject to social security contributions increased to €3,400 in 2025. If you're hiring senior-level employees, this cap affects how much you'll pay in employer contributions. For high earners, your total employment costs just got a bit more predictable.

When you're working with an EOR like Hire with Columbus, these changes get handled automatically. We track all the regulatory updates and adjust payroll calculations so you don't have to monitor Bulgarian employment law changes yourself or worry about missing compliance deadlines.