Hiring in Bulgaria: A Complete Guide for International Employers

Bulgaria has become a prominent destination in the global talent market, especially for companies seeking skilled professionals in IT, engineering, and business services. Its workforce is highly educated, multilingual, and known for strong technical expertise. 

Bulgaria’s strategic location in Southeast Europe, EU membership, and robust digital infrastructure further enhance its appeal for international hiring.

For foreign employers, Bulgaria offers several advantages:

• Access to a deep pool of skilled, cost-effective talent.
• A business-friendly environment with government incentives for foreign investment.
• Streamlined processes for remote and hybrid work.
• A time zone that bridges Western Europe and Asia, supporting global collaboration.

These factors make Bulgaria a smart choice for US-based companies looking to expand their teams internationally.

How to Hire Employees in Bulgaria

Assess Your Hiring Needs

Before hiring in Bulgaria, clarify your objectives:

• Full-time vs. Project-Based Support: Decide if you need permanent employees or flexible, project-based contractors. Full-time staff provide continuity, while contractors offer agility for short-term needs.
• Local Compliance Requirements: Bulgaria’s labor laws require written contracts, minimum wage adherence, and digital reporting (via UEER from June 2025). Ensure your hiring plan aligns with these regulations.
• Onboarding Speed vs. Long-Term Control: Using an Employer of Record (EOR) enables rapid onboarding (as little as 1-2 days), while setting up your own entity gives you direct control but takes more time and resources.

Hiring Options in Bulgaria

You have two primary options for hiring in Bulgaria:

• Set Up a Legal Entity: Establishing a local subsidiary allows you to hire directly and manage all HR processes. This option is best for companies planning significant, long-term operations in Bulgaria.
• Partner with an Employer of Record (EOR): An EOR acts as the legal employer, handling contracts, payroll, compliance, and benefits. This is ideal for companies seeking quick market entry or testing the Bulgarian talent pool without heavy investment.

EOR vs. Legal Entity: Side-by-Side Comparison

Feature	Employer of Record (EOR)	Legal Entity Setup
Setup Time	1–2 days (after documentation)	Weeks to months
Upfront Cost	Minimal	High (registration, legal, etc.)
Compliance	Managed by EOR	Your responsibility
Payroll & Benefits	Fully administered by EOR	Must be set up and managed
Local Presence Needed	No	Yes
Long-Term Control	Limited	Full
Best For	Fast entry, pilot teams, flexibility	Large, permanent operations

EOR vs. Legal Entity—Choosing the Right Hiring Model for Bulgaria

Here’s a Employer of Record: Complete Guide for Global Employers.

Understanding Worker Classification

Employees vs. Contractors in Bulgaria

Correctly classifying your workers is critical to compliance and cost control. Here’s how employees and contractors differ in Bulgaria:

Aspect	Employee	Contractor
Contract Type	Written employment contract (mandatory)	Service contract
Work Control	Employer controls hours, tasks, tools	Contractor controls work process
Benefits	Entitled to statutory benefits	Not entitled to employee benefits
Payroll Taxes	Employer withholds taxes, social security	Contractor handles own taxes
Termination	Strict notice and legal protections	Easier to terminate, fewer rights

Key Differences Between Employees and Contractors in Bulgaria

Legal Implications and Misclassification Risks

Bulgarian law imposes strict penalties for misclassifying employees as contractors. Misclassification can result in:

• Retroactive payment of taxes, social security, and benefits.
• Fines and legal action by authorities or workers.
• Reputational damage and business disruption.

To avoid these risks, ensure roles, contracts, and actual work arrangements match the correct classification. 

Must-Read: Freelancers, Independent Contractors, and Consultants: Exploring Opportunities and Challenges.

Hiring Costs and Payroll

Hiring Costs Overview

Hiring in Bulgaria is cost-effective compared to Western Europe and the US. Key cost factors include:

• Minimum Wage: BGN 1,077/month (approx. €551) as of 2025.
• Employer Payroll Taxes: 18.92%–19.62% on top of gross salary.
• Employee Payroll Taxes: 13.78% deducted from salary.
• Flat Income Tax: 10% for all employees.

Additional costs may include recruitment fees, onboarding, and optional benefits.

Payroll Setup Steps

To run payroll compliantly in Bulgaria:

1. Register as an employer (or use an EOR).
2. Draft and sign written employment contracts.
3. Collect employee tax and social security details.
4. Calculate gross-to-net pay, including all contributions.
5. File payroll reports electronically (UEER system from June 2025).
6. Pay salaries and remit taxes/social security by statutory deadlines.

Know How Tarmack Streamlines Global Payroll and Compliance for Enterprise Growth.

Income Tax Rates

Bulgaria applies a flat 10% income tax for individuals, regardless of income level. Social security contributions are split between employer and employee, with specific rates for health insurance and pensions.

Payment Methods

• Direct Deposit: Most common; salaries paid into local bank accounts.
• Bank Transfers: For cross-border payments or contractors.
• EOR Payroll: EORs handle all payments, deductions, and reporting.

Using Global Payroll Services

Global payroll providers or EORs automate compliance, filings, and payments. This reduces administrative burden and risk, especially with Bulgaria’s digital payroll reporting requirements.

Learn about  Reducing Payroll Costs in Global Operations.

How to Properly Hire and Pay Contractors

• Use a detailed service contract outlining deliverables, timelines, and payment terms.
• Ensure the contractor is registered for tax and social security (if applicable).
• Pay via bank transfer or approved payment platforms.
• Avoid controlling work hours or processes to maintain contractor status.

Here are the Best Ways to Pay International Independent Contractors.

Compliance Risks

Incorrect Payroll Contributions

Failing to calculate or remit the correct payroll taxes and social security can lead to:

• Fines and penalties.
• Retroactive payments and audits.
• Employee dissatisfaction.

Stay updated on rates and deadlines, especially with the UEER system’s mandatory digital reporting.

Permanent Establishment Risk

Hiring directly in Bulgaria (without an EOR or legal entity) may trigger “permanent establishment,” exposing your company to corporate tax and local compliance obligations. Using an EOR mitigates this risk.

Learn more about Compliance Challenges When Establishing an Entity Overseas.

Statutory Benefits

Employers must provide:

• Paid annual leave (20 days minimum).
• Maternity/paternity leave.
• Sick leave and health insurance.
• Pension contributions.

Failure to provide statutory benefits can result in legal claims and back payments.

Misclassification Risks

Misclassifying employees as contractors can result in:

• Retroactive payroll taxes and benefits.
• Legal penalties and backdated employment rights.
• Increased scrutiny from Bulgarian authorities.

Check out the  Employee Misclassification Guide.

Provincial/Regional Law Variances

Bulgarian labor laws are mostly national, with little regional variation. However, always check for local ordinances or collective agreements that may apply to your sector or location.

Overview of Main Intellectual Property Rights

Employers should address IP rights in employment and contractor agreements. Key types include:

• Copyright: For software, documents, and creative works.
• Patents: For inventions developed on the job.
• Trade Secrets: Confidential business information.
• Trademarks: For branding and company assets.

Include clear IP assignment clauses to ensure your company owns work created by employees and contractors.

Learn about Managing Intellectual Property (IP) Through EOR: Key Considerations.

Onboarding Process

Before Their First Day

• Collect personal and tax details.
• Prepare a written employment contract (mandatory).
• Register the employee with the Bulgarian authorities (or EOR does this).
• Set up payroll and benefits enrollment.

On Day 1

• Provide company policies and job description.
• Ensure access to necessary equipment and software.
• Conduct orientation on workplace safety and company culture.

During Their First 90 Days

• Monitor performance and provide feedback.
• Complete any probationary reviews (up to 6 months allowed).
• Confirm benefits enrollment and statutory leave entitlements.

Check out the Top Eight Best Practices for Onboarding International Employees.

Offer Letter Essentials

• Job title and description.
• Salary and payment details.
• Working hours and location.
• Leave entitlements.
• Notice periods for termination.

NDAs and Confidentiality

Include NDAs in employment contracts to protect sensitive business information and IP.

Running Background Checks

Background checks are permitted with candidate consent. Ensure checks comply with Bulgarian privacy laws and only collect relevant information.

Remote Employee Management

Managing remote employees in Bulgaria requires clear processes and robust digital infrastructure.

• Computer and App Access: Provide secure laptops and access to essential business applications. Use VPNs and endpoint security to protect company data.
• IP Protection: Use contracts to assign IP rights to the company. Implement access controls and regular audits.
• Types of IP Rights: Cover copyrights, patents, trade secrets, and trademarks in all agreements.
• Best Practices:
  • Set clear remote work policies, including working hours and communication expectations.
  • Ensure compliance with Bulgaria’s “right to disconnect” for remote staff.
  • Regularly review security protocols and employee access.

Understand How to Manage Employees Remotely and Globally.

Labor Law Compliance

Key Working Condition Requirements

• Working Hours: 40 hours per week, 8 hours per day.
• Annual Leave: Minimum 20 days paid leave.
• Sick Leave: Paid, with employer and social security contributions.
• Maternity/Paternity Leave: Generous entitlements, with social security coverage.
• Minimum Wage: BGN 1,077/month (2025).

Working Conditions by Employment Type

• Full-Time Employees: Entitled to full statutory benefits and protections.
• Contractors: Fewer protections, no statutory benefits, but must be genuinely independent.

No At-Will Employment

Bulgaria does not recognize at-will employment. Termination must follow legal grounds and notice periods as per the Labor Code.

Trade Unions and Collective Bargaining

Trade unions are active in Bulgaria. Some sectors may have collective agreements that set higher standards for pay, leave, or benefits.

Read More: Employment Compliance and Its Importance

Termination Guidelines

Acceptable Termination Reasons

Employment can be terminated for:

• Mutual agreement.
• Expiry of fixed-term contract.
• Redundancy or downsizing.
• Employee misconduct or poor performance.
• Other legal grounds specified in the Labor Code.

Immediate dismissal is only allowed for serious misconduct, and must be documented.

Notice Periods and Legal Protections

• Notice Period: Typically 1 month, but can vary by contract or collective agreement.
• Severance: Required for redundancy, liquidation, or retirement (1–6 months’ salary depending on tenure).
• Process: Written notice to employee and authorities, with reasons clearly stated.
• Protections: Employees on leave (e.g., maternity, sick) have additional protections against dismissal.

Learn about Severance Regulations Across Countries

Benefits of Hiring in Bulgaria

• Skilled Talent Pool: High education levels, strong technical and language skills.
• Cost Efficiency: Lower salaries and employer costs than Western Europe or the US.
• Time Zone Advantage: Overlaps with both European and Asian business hours.
• Modern Infrastructure: Reliable internet, digital payroll, and business-friendly regulations.
• Government Support: Incentives for foreign investment and streamlined visa/work permit processes.
• Remote Work Readiness: Legal frameworks and digital tools support distributed teams.

Tap Into Bulgaria’s Growing Talent Pool

Bulgaria offers a compelling environment for international hiring, combining a skilled workforce, cost advantages, and robust compliance frameworks. Whether you need to scale quickly or establish a long-term presence, understanding local labor laws, payroll requirements, and compliance risks is key to success. 

Using an Employer of Record or working with a global partner like Tarmack can simplify your entry and ongoing operations in Bulgaria, ensuring you stay compliant and competitive.

Ready to hire in Bulgaria? Let Tarmack simplify your global expansion with expert hiring, payroll, and compliance solutions. Learn more about our Employer of Record services NOW.

For further reading on global hiring and compliance, check out:

• The Need for EOR, PEO, and AOR for Global Expansion
• How to Manage Employees Remotely and Globally
• Top 20 Countries Where You Definitely Need an EOR Service
• Struggling to Manage a Distributed Workforce? How Can an EOR Partner Help?
• Employer of Record: Complete Guide for Global Employers

For additional information on employment law and working conditions in Europe, visit EURES Living and Working Conditions.