How does social insurance work in Bulgaria?
Bulgarian social and health insurance totals approximately 32.7% of gross insurable income, split between employer (18.92%) and employee (13.78%). Self-employed individuals and directors pay contributions on a minimum insurable income of BGN 933 per month (2024), capped at BGN 3,750 per month. Contributions fund the state pension, sick pay, and health insurance.
Detailed Explanation
Bulgaria operates a mandatory social insurance system administered by the National Social Security Institute (NSSI, Natsionalen osiguritelen institut) and the National Health Insurance Fund (NHIF, Natsionalna zdravnoosiguritelna kasa). All employed individuals, self-employed persons, and company owner-directors must be insured.
Social insurance rates (2024)
The total social and health insurance burden is approximately 32.7% of gross insurable income, split as follows:
Employer contributions (approximately 18.92% of gross salary): - State social insurance (pension, sickness, maternity, accident): approximately 14.12% - Health insurance: 4.80%
Employee contributions (approximately 13.78% of gross salary): - State social insurance: approximately 10.58% - Health insurance: 3.20%
Note: specific rates are adjusted periodically by the annual Social Insurance Budget Act. The figures above reflect 2024 rates. Check the current NSSI website for the latest rates each year.
Insurable income limits
- Minimum insurable income for employees: the national minimum wage (BGN 933 per month in 2024). Contributions must be calculated on at least this amount regardless of the actual salary paid.
- Maximum insurable income: BGN 3,750 per month. No contributions are due on income above this ceiling. This caps the maximum monthly employer plus employee contribution at approximately BGN 1,226.
Directors and owner-directors
A director of a Bulgarian company who receives a management salary is treated the same as an employee for social insurance purposes. Contributions apply at the employee and employer rates above, with the same minimum and maximum bases.
However, if a director is also the sole owner of an EOOD, they are considered a self-insured person (samoosigureto litse) for the purposes of their own insurance. The same minimum base (BGN 933/month in 2024) and maximum ceiling apply, but the full contribution (both the employer and employee portions) is paid by the individual, not split between company and individual.
Self-employed individuals
Self-employed individuals (sole traders, freelancers, and similar) must register with the NSSI and pay contributions on at least the minimum insurable base. The full contribution rate (employer plus employee, totalling approximately 32.7%) applies on the chosen insurable income between the minimum base and the ceiling.
For a self-employed person choosing to insure on the minimum base of BGN 933: monthly contributions are approximately BGN 305 (32.7% of BGN 933). This covers state pension accrual, sickness, and maternity entitlements.
What does social insurance cover?
- State pension: contributions fund a work-based pension (the first pillar). The pension amount at retirement depends on the number of years of contribution and the level of insurable income.
- Temporary disability (sick pay): from the fourth day of illness, the NSSI pays temporary disability benefit (approximately 80-90% of the daily insurable income).
- Maternity and parental leave: Bulgarian maternity benefit is paid for up to 410 days per child, at a rate of 90% of the average insurable income.
- Health insurance: NHIF contributions cover state healthcare. Without active NHIF contributions, individuals must pay for state healthcare services out of pocket.
Monthly declaration and payment
Employers file a monthly social insurance declaration (Form 1/6, Opisanie 1/6) for all employees by the 25th of the following month. The declaration lists each employee's insurable income and contributions. The corresponding payments are due on the same date.
Self-insured persons file an annual social insurance return and pay contributions in advance on a provisional monthly basis.
Taking only dividends: social insurance implications
An owner who takes only dividends and no salary from the company does not pay social insurance on those dividends. This is legal but means no state pension accrual, no entitlement to sickness benefit from the NSSI, and (if NHIF contributions are not made through another route) potential issues with accessing state healthcare. Many owner-directors insure themselves on the minimum base even if they take no formal salary, paying contributions of approximately BGN 305 per month to maintain coverage.
Source: nap.bg
Real-World Examples
Director taking salary at the minimum insurable base
An EOOD owner pays himself a gross monthly salary of BGN 933. Employee contributions (13.78%): BGN 128.60. Net take-home: BGN 804.40 after contributions and 10% PIT (BGN 93.30). Employer contributions (18.92%): BGN 176.42. Total company cost: BGN 1,109.42 per month. The director maintains full social insurance coverage including pension accrual, sick pay eligibility, and state health insurance.
High-earning employee at the maximum cap
A senior developer employed by a Bulgarian OOD earns BGN 8,000 gross per month. Social insurance contributions are calculated only up to the BGN 3,750 cap. Employer contributions: BGN 3,750 x 18.92% = BGN 709.50. Employee contributions: BGN 3,750 x 13.78% = BGN 516.75. PIT at 10% on the full BGN 8,000 gross: BGN 800. Net take-home: approximately BGN 6,682. The cap means contributions stop at BGN 3,750, regardless of the actual BGN 8,000 salary.
Owner-director taking only dividends and self-insuring
An EOOD owner takes no salary and distributes profits as dividends. She registers as a self-insured person with the NSSI and pays monthly social insurance contributions on the minimum base of BGN 933: approximately BGN 305 per month (32.7% of BGN 933). This costs approximately BGN 3,660 per year but provides full pension accrual, sick pay rights, and NHIF health cover.
Common Mistakes to Avoid
- Not registering for social insurance when starting as a self-employed or owner-director: the NSSI imposes fines and back-contributions for uninsured periods, and the individual has no social safety net.
- Calculating contributions on less than the minimum insurable base: even if the actual salary paid is below BGN 933 per month, contributions must still be calculated on the BGN 933 minimum.
- Forgetting that NHIF contributions are separate from NSSI pension and sickness contributions: both streams make up the total 32.7% rate, and both must be paid for full coverage.
- Missing the 25th monthly deadline for the Form 1/6 declaration and payment: late contributions attract penalties and interest from the NSSI, and the employer is personally liable for any employee contributions not remitted.
Frequently Asked Questions
Do I pay social insurance on dividends from my Bulgarian company?
No. Dividends are not subject to social insurance contributions in Bulgaria. Only salary income (including director's management fees processed through payroll) is subject to NSSI and NHIF contributions. This is one of the reasons dividends are more tax-efficient than salary for owner-directors.
What happens if I stop paying social insurance contributions?
If NHIF contributions lapse for more than three months, you lose entitlement to state healthcare and must pay state medical costs out of pocket until you re-register and clear the arrears. NSSI contributions affect pension accrual: periods without contributions count as non-insured time and reduce your eventual pension entitlement. The NSSI may also charge penalties for underpayment.
What is the minimum insurable income for self-employed in Bulgaria?
The minimum insurable base for self-employed individuals and self-insured owner-directors is BGN 933 per month in 2024. This is equal to the national minimum wage and is updated periodically. The maximum insurable ceiling is BGN 3,750 per month. Contributions on income above BGN 3,750 are not required.
How is Bulgarian maternity benefit calculated?
Bulgarian maternity benefit is paid for up to 410 days per child (135 days before and after birth, then 275 days of parental leave). The daily benefit is 90% of the average daily insurable income over the last 24 months. To qualify, you must have at least 12 months of NSSI contributions. The benefit is paid by the NSSI directly to the insured person.
Are employer social insurance contributions deductible from Bulgarian corporate tax?
Yes. Employer social and health insurance contributions (approximately 18.92% of gross salary) are a fully deductible employment cost for corporate income tax purposes. They reduce the company's taxable profit, effectively saving 10% of the contribution amount in CIT.
Practical Tips
- If you take no salary from your Bulgarian company, register separately as a self-insured person with the NSSI and pay contributions on the minimum base: the annual cost of approximately BGN 3,660 buys full social insurance protection and pension accrual.
- Check the minimum insurable base at the start of each year: it is updated annually by the Social Insurance Budget Act and has been rising steadily. Your payroll calculations must reflect the new minimum from 1 January.
- File the monthly Form 1/6 social insurance declaration by the 25th and ensure the corresponding payment clears the NSSI bank account by the same date: direct debit or bank transfer initiated a day early is the safest approach.
- Use an accredited Bulgarian payroll provider or accountant for employee payroll: the monthly declarations, individual contribution ledgers, and year-end reconciliation are complex and the penalties for errors are significant.
Ask Finn your Bulgaria accounting questions
Finn knows National Revenue Agency (NRA / ΠΠΠ) rules and your specific business numbers. Get instant answers in plain English.
Try free for 14 days