The Bulgarian payroll process: monthly cycle, tax and deadlines

Bulgarian payroll runs on a one-month lag. Salary for a given month is calculated and paid on the date the contract sets, and the social security contributions and income tax that belong to that month are declared to the National Revenue Agency (NRA, НАП) and paid a month later, on or before the 25th. So January’s payroll is settled with the state by 25 February, and so on through the year.

Within each cycle the employer works through the same sequence:

• add up gross pay for the month, including any supplements, overtime and employer-paid sick days
• work out employee and employer contributions on pay up to the monthly ceiling
• withhold 10% income tax on gross pay after the employee’s contributions
• pay the employee the net amount
• file the monthly declarations electronically with the NRA and transfer contributions and tax by the 25th

Two institutions are involved, and they do different jobs. The NRA collects all contributions and withheld tax. The National Social Security Institute (NSSI, НОИ) uses the insurance data to pay benefits such as sickness, maternity and pensions. The employer deals with the NRA every month; the NSSI matters mostly when an employee claims a benefit.

Gross pay is the basic salary stated in the contract plus every supplement and premium earned that month. Since 2026 all of it is expressed in euro.

The most common addition is the length-of-service bonus (клас прослужено време, “klas”), owed by law to anyone with at least a year of recognised experience. Because it attaches only to time actually worked in the main job, a month that includes unpaid leave produces a smaller klas line. Overtime hours carry statutory uplifts under Labour Code Art. 262, rising from 50% on an ordinary working day to 75% on a rest day and 100% on a public holiday.

Sickness changes the month in a specific way. A sick note splits into two parts: its first 2 working days go through payroll at 70% of average daily gross pay, and every later day is the NSSI’s to pay straight to the employee. Our guide to sick leave pay in Bulgaria covers the calculation.

Maternity is handled differently again. For the 410 days of maternity leave the NSSI covers the mother at 90% of her average daily insurable income and the employer pays nothing, so those days carry no salary on the payslip. The same goes for the 15 days of paternity leave after the birth, which the NSSI also pays.

Bonuses and any year-end or 13th salary, which is common but not required by law, go through payroll like ordinary pay. They are taxed at 10% and insured up to the monthly ceiling, which for higher earners often means no extra contributions at all.

For a typical employee born after 1959, the employee share of contributions in 2026 totals 13.78% and the employer share 18.92%, split across six funds:

• pensions (employer 8.22%, employee 6.58%)
• general sickness and maternity (employer 2.10%, employee 1.40%)
• unemployment (employer 0.60%, employee 0.40%)
• work accident and occupational disease (employer alone, between 0.40% and 1.10% depending on activity; we assume 0.40% for software)
• supplementary pension paid into a universal pension fund, or UPF (employer 2.80%, employee 2.20%)
• health insurance (employer 4.80%, employee 3.20%)

Every fund, health insurance included, stops at the maximum monthly insurable income. The 2026 budget for state social security was only adopted in July, so the ceiling changed mid-year: it was €2,111.64 from January to July and has been €2,300 since 1 August 2026, as the NSSI guidance for employers confirms. Above €2,300 a month, the employer pays at most €435.16 and the employee at most €316.94, however high the salary.

There is also a floor. However low the pay, contributions are calculated on at least the minimum insurable income fixed for that activity and occupation; where none is fixed, the €620.20 minimum wage serves as the base. Older employees, those born before 1960, pay nothing into a UPF; their pension rate is higher instead, which leaves both totals unchanged.

The work accident rate deserves a check before the first run. It is set each year by the social security budget according to economic activity, and for 2026 it follows the new KID-2025 classification. A wrong rate repeats in every month’s figures until someone spots it, so confirm the activity code for each employer at the start.

The employer withholds income tax every month at a flat 10% of taxable income, which is gross pay minus the employee’s own contributions. An ordinary employee has no personal allowance or standard deduction, so the calculation has no bands and no thresholds. The same rate applies to residents and to non-residents working in Bulgaria.

Here is how it works for a software developer in Sofia earning €40,000 a year, or €3,333.33 a month, in 2026:

• January to July: employee contributions are 13.78% of €2,111.64, or €290.98; tax is 10% of the remaining €3,042.35, or €304.24; net pay is €2,738.11
• August to November: employee contributions are 13.78% of €2,300, or €316.94; tax is 10% of €3,016.39, or €301.64; net pay is €2,714.75
• employer contributions: €399.52 monthly through July, rising to €435.16 once August begins, so the monthly cost goes from €3,732.86 to €3,768.49

Across the year that gives net pay of approximately €32,740.57 and a total employer cost of approximately €44,972.46. Payroll software rounding can move these by a few cents. The full annual picture is in our article on employer cost in Bulgaria, while Bulgaria’s flat tax and the ceiling get a piece of their own.

A bonus month shows the ceiling at work. If the same developer receives a one-off €2,000 bonus in a month when salary already exceeds €2,300, contributions do not change at all; the bonus simply adds €200 of tax and €1,800 of net pay.

The 25th is the fixed point: by that day the employer files the declarations for the previous month with the NRA and transfers the contributions and withheld tax. The declarations are electronic: one set carries the insurance data for each person, such as days worked, insurable income and the contributions on it, and another states the amounts due. The NSSI later relies on that per-person data when it calculates sickness, maternity or pension benefits, so an error in March can resurface years later in a pension file.

The monthly filing is separate from the employment register (регистър на заетостта). Every new contract must be on the register before the employee’s first day and no later than 3 days after signature, every change to a contract within 3 days, and every termination within 7 days. A raise agreed in June therefore needs a register entry in June as well as the higher figure in June’s payroll.

Timing matters at both ends. A new hire who starts on 20 March appears in March’s payroll for eleven days of work, and the declarations for that month are due by 25 April. A leaver’s final payroll includes pay for any unused annual leave (Art. 224), together with any compensation the termination triggers. We describe how the first of these cycles lines up with the start date in our guide to the EOR timeline in Bulgaria.

Getting the register wrong is more expensive than a late payroll correction. Labour Code Art. 414 fines the employer per breach of the contract and registration rules, with a separate fine for the responsible manager, so the register entry is handled before the payroll for a new starter is even calculated.

The employer that is a person’s only employer at 31 December reconciles their income tax for the year, and has until 31 January to do it. With one rate and no allowances, that step rarely changes anything for someone employed all year by one company: the monthly withholding already matches the annual bill, and no return is needed.

Employees with other income, two employers during the year, or reliefs they want to claim file an annual return themselves by 30 April. Filing electronically by 31 March earns a 5% discount on the tax still due, capped at €255.65.

For the employer, the reconciliation doubles as an annual check on twelve months of withholding, and it only comes out clean if the monthly data was right. It is also the moment to confirm the next year’s rates and ceiling before January’s run. In 2026 the important change came in August rather than January, when the ceiling rose to €2,300 after the social security budget was adopted in July, so do not assume the figures move only at New Year.

Since 1 January 2026 the euro has been Bulgaria’s currency, with the lev locked at 1.95583 to the euro, and every 2026 payslip, contract and declaration is in euro. Leva now matter only when you read contracts and payslips from before the changeover; dual circulation ended on 31 January 2026, after which the lev stopped being legal tender. Our article on euro payroll in Bulgaria covers what changed for existing contracts.

A foreign company without its own Bulgarian company has two practical ways to cover all of this: form one and hire an accountant or payroll bureau, or have an employer of record employ the staff. If you choose Employer of Record Bulgaria, our name goes on the contract as employer, we calculate gross-to-net every month, file the declarations and pay the NRA by the 25th, and handle register entries when contracts start, change or end. The same monthly invoice that carries salary and employer contributions shows our fee, charged from €599 per employee per month.

Payroll is one part of the job. The rest of the EOR role in Bulgaria, from contracts to leave records, is covered separately, and our full list of services shows what each month includes.

Q01When are Bulgarian payroll taxes and contributions due?+

A.On the 25th, one month in arrears: March pay is declared and paid by 25 April. That same date is when the NRA must receive both the declarations and the money: contributions plus the tax held back from pay.

Q02How high does the contribution ceiling go in 2026?+

A.It changed mid-year. From January through July 2026 it stood at €2,111.64 a month; from 1 August it is €2,300. Every fund, health insurance included, stops at that figure.

Q03How is income tax calculated on a Bulgarian salary?+

A.Start from gross pay, take off the 13.78% the employee contributes on pay up to the ceiling, and apply 10% to the remainder. Ordinary employees get no personal allowance.

Q04Who pays sick pay in Bulgarian payroll?+

A.Both share it. Payroll carries only the opening 2 working days of a sick note, at 70% of average daily gross pay; the NSSI covers the rest of the absence outside payroll.

Q05Does the employee have to file a tax return?+

A.Usually not if they had a single employer on 31 December, because the employer makes the annual reconciliation by 31 January. Others file by 30 April.