Setting Up Payroll and Employment Compliance in Bulgaria: A Practical Guide for Employers Without a Local Entity

Hiring one employee in Bulgaria triggers the same registration and reporting obligations as hiring a hundred. There is no simplified regime for a single hire, and no way to pay a Bulgarian employee compliantly through an account held outside the country. Before the first payslip is issued, an employer must be recognised as an employer in Bulgaria's tax and social security system, either by setting up a local entity, registering directly with the National Revenue Agency as a foreign employer, or engaging an Employer of Record that already holds that status.

This guide covers the two routes into Bulgarian payroll, the registrations involved, and what onboarding a first employee looks like in practice.

Local Entity or Employer of Record: Weighing the Two Routes

The decision usually comes down to timeline, headcount plans, and risk appetite rather than cost alone.

Setting up a Bulgarian legal entity, typically a limited liability company (OOD), involves incorporation with the Commercial Register, a company tax number, a corporate bank account, employer registration with the NRA, and the accounting and payroll infrastructure to file monthly and annual returns. This route suits employers expecting a lasting Bulgarian headcount, wanting direct control over contracts and benefits, or planning other local business activity.

Using an Employer of Record means the EOR is the legal employer for tax and social security purposes, while the employee works under the client company's direction. The EOR already holds an established entity and NRA registration, so it issues the compliant contract, runs payroll, withholds and remits tax and social security, and handles filings. This route is generally faster to get an employee working legally, avoids the ongoing cost of a Bulgarian entity, and suits a first hire, a small team, or a market-testing phase.

A middle option exists: registering directly with the NRA as a foreign employer without incorporating locally. This avoids incorporation but still creates direct compliance obligations, including monthly filings and a Bulgarian bank account for contributions, so it suits employers with in-house capacity to manage those requirements.

What Bulgarian Authorities Require Before Payroll Can Run

Whichever structure is used, the employer ends up needing the following in place with Bulgarian authorities.

Registration with the National Revenue Agency, which administers income tax withholding plus social security and health insurance contributions. A foreign company without a local entity applies to the NRA for a service number identifying it in the tax and social insurance system. According to guidance published by Bulgarian legal and accounting advisers, this typically requires an apostilled and translated extract from the company's home-country commercial register, a tax registration certificate, and a VAT certificate where applicable, plus completed application forms and a locally authorised representative to handle filings.

Notification of the employment contract under Article 62 of the Bulgarian Labour Code. Bulgarian law requires every contract to be notified to the NRA, and multiple advisory sources describe a three-working-day window from the conclusion of the contract for this notification. The contract itself must comply with Labour Code requirements, specifying working conditions, remuneration, and other statutory terms.

Ongoing monthly declarations once the employee is registered, reporting remuneration data and calculating social security and health insurance contributions, alongside payment of the withheld tax and contributions. Multiple payroll and legal advisory sources describe these filings and payments as due by the 25th of the following month, though employers should confirm current deadlines with the NRA or a licensed Bulgarian payroll provider.

A Bulgarian bank account through which contributions are paid, so authorities can correctly allocate them to the employer's service number and the employee's social insurance record.

Tax and Social Security Basics Employers Should Know

Bulgaria applies a flat personal income tax rate of 10 percent to employment income, one of the lowest statutory rates in the European Union, according to PwC's Worldwide Tax Summaries. This is withheld by the employer at source each pay period.

Social security and health insurance are funded through combined employer and employee contributions across pension, health, unemployment, and related funds, with the employer generally bearing the larger share. Based on PwC's Worldwide Tax Summaries, the combined rate falls in a range depending on the fund mix and the employer's risk category for the accident and occupational illness fund. Contributions apply within minimum and maximum insurable income thresholds that are revised periodically, so employers should confirm the current thresholds and exact split for their case rather than relying on a fixed figure.

Bulgaria also sets a statutory national minimum wage, reviewed by the Council of Ministers and reported to be increasing again for 2026 by multiple Bulgarian payroll and advisory sources. Employers should verify the exact current figure with the NRA, the Ministry of Labour and Social Policy, or a local payroll adviser before finalising a contract, as it was not independently confirmed on a primary government source for this guide.

Onboarding a First Employee in Bulgaria: A Realistic Step-by-Step

For an employer without an existing Bulgarian entity, a realistic sequence looks like this.

• Decide on structure: incorporate locally, register directly with the NRA as a foreign employer, or engage an Employer of Record
• Prepare corporate documents: gather and apostille the commercial register extract, tax registration certificate, and VAT certificate if entity or direct NRA registration is chosen
• Register with the NRA: apply for a service number, or, where an EOR is used, confirm its existing registration covers the new hire
• Draft the employment contract: prepare a Labour Code compliant contract covering role, remuneration, working hours, notice periods, and other statutory terms
• Notify the NRA under Article 62: file the notification within the required window after the contract is concluded, before the employee's first working day in most cases
• Set up payroll processing: establish monthly payroll covering gross pay, tax withholding, and social security and health insurance contributions, with a Bulgarian bank account for remittances
• Confirm benefits access: ensure the employee's health insurance and social security record is active
• File monthly declarations: submit the recurring NRA declarations and corresponding payments
• Confirm local labour law compliance: check working time, leave, probation, and termination notice rules that apply from day one

Each step carries its own documentation and timing requirements, and missing the Article 62 notification window or a monthly filing deadline can create exposure even where the employment relationship is entirely legitimate. This is why many employers use an Employer of Record for a first Bulgarian hire: the registrations, contract compliance, and monthly filing cycle are already running, so the employee can start without the employer first building a Bulgarian compliance function from scratch.

Nestlers Group supports employers hiring in Bulgaria through Employer of Record services that handle the local employment relationship, payroll, and statutory filings directly, so a first hire can start without the employer registering a Bulgarian entity. For employers who prefer to register directly, Nestlers also assists with tax registration for foreign citizens, tax residency certificates, and A1 certificates for employees who remain socially insured in their home country while working across borders. Our Consultancy tiers give HR and mobility teams direct access to guidance on structuring a Bulgarian hire correctly, while our relocation and settling-in services and broader Global Mobility management support getting an employee and their family established once employment is in place.

Sources: PwC Worldwide Tax Summaries, Bulgaria individual taxes on personal income and other taxes pages, accessed September 2026; Innovires, Foreign Employer Registration Bulgaria 2026, NRA Social Security Procedure guide; Ruskov und Kollegen, Registration of a Foreign Employer in Bulgaria; Eurofast, Bulgaria to Increase Its Minimum Wage from 2026.