Can I Claim Employee Salaries & Social Insurance as a Business Expense in Bulgaria?
Yes, employee gross salaries and the employer's portion of social insurance (~19%) are fully deductible against Bulgarian Corporate Income Tax. Personal income tax (10%) and employee social insurance are deducted from gross at source.
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What National Revenue Agency (NRA / НАП) says
CITA allows deduction of salaries, employer social security and health insurance contributions, and other ordinary employment costs. The employer reports each insured person on Form 1 and the total contributions and tax on Form 6, both by the 25th of the month after the reporting month. Social insurance is calculated on insurable income, which for 2026 has a maximum of €2,111.64 a month from January to July and €2,300 a month from 1 August. Minimum insurable income depends on economic activity and occupation group. Director compensation paid through formal payroll is deductible.
When you can claim
- Gross salary paid via payroll
- Employer social and health insurance contributions, about 18.92% to 19.62% of gross salary
- Employer share of the supplementary pension contribution
- Statutory benefits such as annual leave and the employer portion of sick pay
- Director pay run through formal payroll with Form 1 and Form 6 filed
When you cannot claim
- Excessive director compensation deemed a disguised distribution
- Personal expenses of employees passed through payroll
- Wages paid to undeclared or informal workers, which carry severe penalties
- Pay above the insurable income cap treated as if it were contributed on, because contributions stop at the cap
- Penalties and late payment interest on contributions
Good to know
Pro tip: Use the monthly Form 1 and Form 6 to the NRA, required by the 25th of the following month. An employer with more than 10 insured persons must file both forms electronically with a qualified electronic signature.
Important: Late or missing declarations carry a property sanction of €255.65 to €2,556.46 for companies and sole traders under Article 355 of the Social Insurance Code. Make sure every worker is on payroll and declared, because undeclared pay is not a safe cost.
Related expenses
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