Recruitment of a foreigner under an employment contract in Bulgaria in 2024

Detailed guide for hiring and appointing a foreigner on an employment contract in Bulgaria - justification of the request, fixed-term contract, employment book, civil contract and everything you need!
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Recruitment of a foreigner under an employment contract in Bulgaria in 2024
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In the context of an increasingly integrated global labour market, the possibility of employing foreigners is becoming an increasingly valuable asset for Bulgarian enterprises. This not only enables employers to access a wide range of skills and experience, but also contributes to cultural diversity and innovation in the work environment. Although the hiring process may seem daunting due to the numerous regulatory requirements, with proper preparation and understanding, it can be manageable and successful.

The inclusion of foreign workers not only expands the range of skills and knowledge in the enterprise, but also helps to create a multicultural work environment that stimulates creativity and innovation. This practice can also improve the international competitiveness of companies by connecting them to new markets and customers around the world.

The effective employment of a foreigner begins with an understanding of the legal framework in Bulgaria, including visa requirements, work permits and the registration of employment contracts. This process also requires the preparation of the necessary documents and their submission to the relevant state institutions.

Choosing the right type of employment contract with foreigners is essential for ensuring flexibility and compliance with Bulgarian legislation. Employers need to understand the differences between employment and civil contracts, as well as the specific conditions that may apply to foreign workers from third countries or those with humanitarian status.

Focusing on these key areas, we at Elan Consulting present to your attention a deep and comprehensive study on the topic of the employment of a foreigner under an employment contract in Bulgaria in 2024. In the following sections, we will examine in detail the procedures for registration in the NRA, the requirements for different types of contracts, as well as strategies for effective management of international labor relations.

What does the term “foreigner” mean in the meaning of the Bulgarian labor legislation?

In the context of the Bulgarian labor legislation, the concept “foreigner”It covers any person who He is not a Bulgarian citizen. Moreover, in most of the hypotheses provided by law, Foreigners who do not have access to the labour marketThey are the ones who do not have the status of temporary, permanent, long-term or long-term residencein Bulgaria. Such statuses are usually associated with the issuance of Visa D(or the so-called long-term residence visa, immigrant visa and work visa), which is issued by the Bulgarian diplomatic and consular missions, after a positive opinion from the Employment Agency. It is important to note that in Bulgaria there are different procedures for hiring a job depending on whether it is:

  • Citizens of the European Union (EU);
  • Third-country nationalswith which Bulgaria (or the EU) has or does not have an international agreement;
  • Refugees.

For citizens of EU Member States, as well as for citizens of countries party to the Agreement on the European Economic Area (EEA) and the Swiss Confederation, the rules for free movement of workers. This includes the right to equal treatment with citizens of the host country and does not require a special work permit.

However, third-country nationalscan work in Bulgaria only if they reside on a legal basis and have the necessary residence and/or work permits issued by the Ministry of the Interior or the Employment Agency. These individuals face significantly more restrictions on access to the labour market than EU citizens, which reflects the EU's overall policy to protect the national labour market and prevent the potential threat of employment of third-country nationals to the detriment of EU citizens.

EmployersThose who want to hire foreigners must comply with the provisions of Law on Foreigners in the Republic of Bulgaria (ZHRB), Labour Migration and Labour Mobility Act (ZTMTM)and their respective applications. They are obliged to notify the Executive Agency “General Labour Inspectorate” (IA GIT) about the posting of workers from third countries to Bulgaria, and this notification must be made before the start of the provision of services.

Therefore, the concept of “foreigner” in Bulgarian labor law is associated with specific legal requirements and procedures that distinguish the rights and obligations of different categories of workers depending on their nationality and residence status.

First steps for hiring a foreigner to work in Bulgaria

When hiring a foreigner to work in Bulgaria, the employer must take several important steps to ensure the legality of the process. First, must make sure that for the position to which he plans to appoint the foreigner, There is no requirement for Bulgarian citizenship. This is particularly important as some items may have specific national restrictions.

SecondThe employer must study the labor marketin Bulgaria, taking into account the state, development and public interests, to ensure that the hiring of a foreigner meets current needs and requirements.

Third, it is important to ensure that the foreigner owns the necessary specialist knowledge, skills and professional experiencerequired for the position. This ensures that the appointment contributes to the quality and efficiency of the work.

Fourth, you have to Ensure equal working conditions and payfor foreigners, comparable to those for Bulgarians employed in the same or similar position. This is required in order to avoid discrimination and ensure fair treatment.

Fifth, if the foreigner is a third-country national and does not apply for an EU Blue Card, the employer must verify that in the last 12 months the number of employed foreigners does not exceed 20%(or 35% for small and medium-sized enterprises) of the total number of employees. This restriction helps to balance the labor market and prevent the substitution of the local workforce.

Finally, it is critical to make sure that the foreigner legally residing in the territory of Bulgaria, having the necessary documents for residence, which is a prerequisite for their legal employment in the country. Compliance with these steps is essential to ensure the successful and lawful employment of foreigners in Bulgaria.

How is an employment contract concluded with a foreigner, an EU citizen?

The conclusion of an employment contract with a foreigner who is a citizen of the European Union (EU) is regulated by the Bulgarian labor legislation, which provides for certain benefits and conditions in comparison with the employment of third-country nationals.

Work from a fixed place of work in the Republic of Bulgaria

In order to conclude an employment contract with an EU citizen who will work in Bulgaria (and not remotely), it is the person must have a residence address in Bulgaria. Proof of this can be a housing lease agreement. In addition, the worker must take out Foreigner's business numberfrom the National Revenue Agency (NRA), a condition that applies even when working remotely. The employer can extract this identification number for the worker only with expressly notarized power of attorney. If the person already owns Foreigner's personal number (LNN), then this number is used before the NRA, and the service number is deleted.

One of the main benefits of hiring EU citizens is that no work permit required, as well as certificate A1on the applicable social security legislation.

Remote work

When concluding an employment contract for remote work, i.e. when the employment contract is concluded with a clause on “remote work” under Art. 107b or Art. 107z of the Labor Code and the foreigner is located outside the territory of the Republic of Bulgaria, the contract must specify as applicable Bulgarian Labour Law. This means that the employment contract must meet the requirements of the Labor Code, and the employer must draw up organization of carrying out remote work, which is specified in the employment contract and the internal rules of the enterprise. In addition, it is necessary the issuance of a service number from the NRAand the submission of notification of the concluded employment contract to the NRA.

The employment contract can be concluded remotely using system for creating and storing electronic documents, which meets the regulatory requirements and is part of the employee's electronic employment record.

Thus, the process of concluding an employment contract with an EU citizen provides flexibility for both the employer and the worker, while at the same time ensuring compliance with Bulgarian legislation and the rules for remote work.

Securing and posting of an employee - EU citizen working for a Bulgarian company

When a Bulgarian company enters into an employment contract with an EU citizen, the process of providingand postingthe employee follows certain rules which are based on the principles of European labour and social legislation.

Securing a foreigner

When hiring an EU employee, social and health insurance, as well as taxes, are paid according to the Bulgarian legislationif the employee works in the Republic of Bulgaria. However, this changes when the employee works remotely and does not reside on the territory of Bulgaria. In such cases, there is no requirement and no basis for payment of insurance and taxes in Bulgaria. Therefore, insurance can be carried out in country of residenceof the employee, since there is his “center of vital interests” (GI), which is determined based on various factors such as the place of work, family and property of the person.

For the Bulgarian company, this means the need to register as a foreign insurerin the country of residence of the employee in order to withhold and pay the necessary taxes and insurance in accordance with local law.

Business trips

When a Bulgarian company posts an employee, a citizen of the EU, the posting regime follow the same rules as for Bulgarian citizens, thanks to the principle of non-discriminationin the European labour market. This means the implementation of the Labor Code and the Ordinance on the conditions and procedure for posting and sending workers and employees for the provision of services. Important is the amount of labor remuneration and working conditions not lower than those established in the host country, and to be described in an additional written agreement for the period of posting.

So, at the provisionand the postingSpecific rules apply to an employee who is an EU citizen working for a Bulgarian company, which reflects the principles of free movement of labour and non-discrimination within the European Union.

Summary - what is the most important for hiring foreigners, EU citizens

When hiring citizens of the European Union (EU) by Bulgarian employers, the process is considerably facilitated compared to hiring persons from third countries. Here are some of the most importantAspects to consider:

General terms and conditions of rental

EU citizens can be appointed by Bulgarian companies No additional administrative requirementsand are treated in the same way as Bulgarian citizens. This means that no special permits required for workfor EU citizens who wish to work in Bulgaria.

Insurance and tax aspects

For tax and insurance purposes, if foreigners, EU citizens, do not have any status in Bulgaria, they should be disclosed lot in the NRA. This is done by submitting an application, where personal data and address in Bulgaria are indicated, if any. This process is necessary for the declaration and payment of taxes and insurance.

Remote work

When working remotely, EU citizens can secure themselves in their country of residence, as this is where their “centre of vital interests”. This reflects the principles of Regulation 883/2004 (EC), according to which insurance is normally due in the country of the employer or where the work takes place subject to the availability of an A1 certificate.


For payroll tax, are applied Treaties for the avoidance of double taxation(SIDO) or the rules of private international law in the absence of such an agreement. The general rule is that tax is due where the labor is laid, with exceptions depending on tax rates and the definition of taxable person.

It is important for employers to be aware of these aspects in order to ensure the correct and efficient recruitment and administration of EU citizens in accordance with Bulgarian and European legislation.

Employment of a foreigner, a third-country national (non-EU country)

In order for a foreigner from a country outside the European Union to work under an employment contract in Bulgaria, it is necessary to comply with specific conditions and go through a certain procedure for obtaining a work permit. This procedure is regulated in the Law on Labour Migration and Labour Mobility, the Regulations for its implementation and the Law on Foreigners in the Republic of Bulgaria and includes the following main steps:

Conditions for concluding an employment contract with a foreigner from a third country

The basic conditions and procedures for concluding an employment contract with third parties are regulated and generally similar to those for the employment of EU citizens. The key difference and main difficulty in hiring citizens from non-EU countries is the requirement of legal residence of these persons on the territory of Bulgaria and the presence ofRight of access to the labour market.

Types of work permits for third-country foreigners

The legislation provides for various types of work permits, including:

These permits are issued depending on the type of employment to be exercised by foreigners in Bulgaria.

They have the right to access the labour market andmost foreigners with the status of temporary (i.e. prolonged) residence in the Republic of Bulgaria, those with permanent residence, as well as foreigners granted the status of temporary, humanitarian or international protection (known as refugee status).

Which foreigners, third-country nationals (non-EU countries) have the right to access the labour market in Bulgaria?

Citizens of third countries (non-EU countries) who wish to conclude an employment contract with a company in Bulgaria must meet certain legal requirements in order to have the right to access the labor market in the country.

Residence and work permits

Foreigners must obtain a residence permit (long-term residence) or a residence and work permit issued by the Ministry of Internal Affairs, which includes a positive opinion from the Executive Director of the Employment Agency. This opinion is based on a person's right to access the labour market through Single Residence and Work Permit (SSP), Seasonal Worker Permit (SSP)or Permit for the relocation of a person by means of an intra-corporate transfer (VCT), as well as an EU Blue Card type permit.

Term of the authorisation: All permits are issued with a maximum term of up to 3 years, with the exception of the EU Blue Card, which is issued for a period of 5 years. If the employment contract is for a shorter period, the permit is issued for the period of the contract.

Work permits with the subsequent issuance of a residence permit

The Bulgarian legislation also provides for hypotheses in which The Executive Director of the Employment Agency first issues a work permit or a permit to engage in freelance activity, on the basis of which the Ministry of Internal Affairs issues a residence permit.

There are also some peculiarities:

  • The requirements do not apply for persons with a long-term or permanent residence permit, persons granted the right of asylum or international protection in Bulgaria, as well as when concluding an employment contract for seasonal employment of up to 90 days.
  • Employer-specific: In most types of residence and work permits, with the exception of the EU Blue Card, the employment of third-country nationals is permissible, provided that their total number with a long-term residence permit with the respective employer for the last 12 months does not exceed 20% of the total number of employees and 35% for small and medium-sized enterprises.
  • Employers have an obligation to obtain permission or notify the competent authorities in accordance with the requirements of
  • Labour Migration and Labour Mobility Act (ZTMTM). Otherwise, upon detection of unauthorized hiring of a foreigner, the employer is subject to a penalty.

How to draw up a sample of justification of the request for the employment of a foreigner? - example

The question of the justification of the request to hire a foreigner is an essential element of the process of applying for a work permit for foreigners in Bulgaria. This justification is a free text in which the employer must state and justify his motivation for hiring this particular employee, as well as indicate the reasons why he did not want or could not hire Bulgarian citizens or foreigners with equal rights with the requested profession, meeting the requirements specified in the job advertisement.

The justification must be supported by evidence of the efforts undertaken by the employer to find suitable candidates among Bulgarian citizens or foreigners with a status equivalent to that of Bulgarian citizens. This usually includes copies of job advertisements published in local and national mass media, as well as on the Internet.

The justification shall also be accompanied by all documents which may serve as evidence of the employer's allegations, including, but not limited to, replies from the employment offices/labour office proving the absence of suitable candidates in the database of the employment office, as well as any other correspondence or documentation relating to the search for suitable staff.

It is important to note that the justification of the request is not a formality, but a key element of the process of assessing the need to hire a foreigner for a particular position. It must be carefully prepared and well documented, as it will be considered by the competent authorities when processing the application for a work permit.

Preparation of the justification of the claim is the most important element for the successful hiring of a foreignerand issuing a residence and work permit, especially because it isthe most subjective requirement that the law imposes! Just one mistake or incompleteness can lead to unnecessary delays or refusal on the part of the Migration Directorate at the Ministry of Interior or the Employment Agency!

Which laws regulate the labor mobility of foreigners from third countries?

All the necessary legal regulations for the employment of foreigners are mentioned in the Law on Foreigners in the Republic of Bulgaria (ZHRB), the Law on Labour Migration and Labour Mobility (MLMTM) and the Regulations on its Adoption (PPZTMTM). These normative acts establish different regime and procedures for access to the labour market in Bulgaria, depending on the nature of the intended employment.

It is important to note that although they are not members of the EU, the citizens of Norway, Liechtenstein, Iceland and Switzerland, as members of the European Economic Area (EEA), enjoy a relaxed regime similar to that of the EU Member States, guaranteeing them equal access to the Bulgarian labour market and equal treatment.

In this light, the process of hiring employees from non-EU countries turns out to be not only a mandatory necessity for many Bulgarian employers in search of qualified personnel, but also an opportunity to access global talent, stimulated by current legal frameworks and technological innovations.

Why trust Elan Consulting for assistance in hiring a foreigner?

In the process of globalization and the growing need for skilled labor, Bulgarian employers are increasingly turning to hiring foreign employees. However, this process hides its specifics, legal nuances and requirements that can prove challenging for many. In this context, Elan Consultingis a reliable partner that offers comprehensive solutions and professional assistance in hiring a foreigner to work in Bulgaria. Let's look at the main reasons for this:

  1. Extensive experience and specialized knowledge:Elan Consulting has a team of experts who have in-depth knowledge of Bulgarian and international labour and social security legislation. They can provide up-to-date information and navigate clients through all stages of the hiring process - from the preparation of documentation to the successful integration of the foreign employee.
  2. Individual approach:Every organization and position has its own unique requirements and challenges. Elan Consulting works closely with its clients to develop customized hiring strategies that best fit their specific needs and goals.
  3. Full assistance in the preparation of documentation:It is essential to properly and fully prepare all the necessary documentation for the successful hiring of a foreigner. Elan Consulting provides comprehensive support in the preparation of requests, justifications and other related documents, ensuring that they meet all legal requirements.
  4. Emphasis on legality:It is important to ensure that the hiring process is fully compliant with Bulgarian legislation and international agreements. Elan Consulting helps its clients navigate the complex legal framework, minimizing the risk of possible sanctions or legal disputes.
  5. Transparency and communication:Maintaining open and effective lines of communication with customers is key to the success of any partnership. Elan Consulting is committed to providing clear and accurate information at every stage of the hiring process, ensuring that clients are fully informed about the progress of their applications.

By choosing Elan Consultingas a partner in hiring foreigners, employers receive not only expert knowledge and support, but also the assurance that the entire process is managed professionally, efficiently and with attention to detail.

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Peculiarities of insurance for foreigners, citizens of third countries

Third-country nationals who wish to work on an employment contract in Bulgaria should bear in mind that their provision depends on whether they have a long-term or permanent residence permit in the country. Only for persons with such permission the employer is obliged to bring health insurancein the National Health Insurance Fund (NSOC).

There are exceptions based on bilateral agreements that allow citizens of Republic of North Macedonia, Republic of Serbia, Montenegro and Republic of Albaniabenefit from a special scheme for health insurance.

This underlines the importance of proper residence and work in Bulgaria, ensuring that foreigners are protected under local health insurance laws. Employers should closely monitor these regulations in order to ensure that their employees from third countries are properly insured.

Conclusion of an employment contract for remote work with a foreigner, a citizen of a third country

The conclusion of an employment contract for remote work with a foreigner, a citizen of a third country, represents a modern and flexible solution that allows Bulgarian companies to recruit highly qualified personnel from all over the world. In the context of globalisation and digital transformation, this form of employment offers significant benefits for both employers and employees. Here are some basic steps and tips for the effective conclusion of employment contracts with third partiesto perform remote work:

  1. Definition of the place of work: It is important to clearly state in the employment contract that the work will be carried out remotely, and to define the Bulgarian labor legislation as applicable. This ensures that labor relations will be regulated by the norms of Bulgarian law, regardless of the place of physical presence of the worker.
  2. Compliance with the requirements of the Labor Code: The employment contract must reflect all the mandatory elements specified in the Labor Code, including data on the parties, the nature of the work, the beginning of performance, the terms and amount of remuneration.
  3. Rules for carrying out the work: It is especially important to regulate the conditions of remote work, the order of assignment and accounting of work, as well as other specific aspects of employment.
  4. NRA Service Number Requirement: For foreigners working remotely for a Bulgarian employer, it is necessary to issue an official number from the NRA, which will be used for registration and management of labor and insurance relations.
  5. Notification to the NRA about the concluded employment contract: An important step is also the notification to the National Revenue Agency of the concluded employment contract with a foreigner.

For the successful hiring of foreigners from third countries for remote work, the employer must comply with a number of legal requirements, including obtaining the necessary residence and/or work permits, if the foreigner plans to reside in Bulgaria. In addition, when concluding distance employment contracts with non-EU persons, it is critical to ensure compliance with applicable law, in order to avoid possible legal risks and sanctions.

Appointment of a foreigner with humanitarian status (refugee status) in Bulgaria

The appointment of a foreigner with humanitarian status or refugee status in Bulgaria is a process that facilitates the integration of these persons into society and the labor market. Persons granted refugee or humanitarian status enjoy employment rights on an equal basis with Bulgarian citizens, without the need for additional work permits. This makes the hiring process much simpler and more straightforward for employers.

It is especially important to note that persons who are still in the process of obtaining international protection receive an LNC (Personal Number of Foreigner) from the moment of issuing a registration card to a refugee applicant. Information about them is reflected in for the issuance of a residence document, the data contained in it are entered inAutomated information system “Unified Register of Foreigners” (AIS ERC), which facilitates their registration and official recognition. Persons who have already received status also receive a Unified Civil Number (EGN), which further facilitates their integration and access to various social and administrative services.

An important aspect of the process is that applicants for international protection have the right to work after 3 months of filing an application for international protection. This right allows applicants to actively seek and start a job in Bulgaria while their case is still being decided. This is particularly important for their economic independence and social inclusion.

Persons with humanitarian status can register with the Directorate of Labor at the place of residence, where they have access to a variety of services, such as information on vacancies, vocational guidance, training and inclusion in employment programs. These services are aimed at facilitating their employment and professional development.

All these measures and conditions are designed to facilitate the process of recruitment and work of foreigners with humanitarian status in Bulgaria, while providing a framework for their protection, integration and sustainable development in society.

Validation and recognition of professional qualifications of a person with humanitarian/refugee status in Bulgaria

The processes of validation and recognition of professional qualifications for persons with refugee or humanitarian status in Bulgaria are steps aimed at facilitating their integration into the labour market. These processes are governed by regulations and laws that guarantee equal rights and opportunities for these persons, comparable to those of Bulgarian citizens.

Validationof professional knowledge, skills and competencies is carried out in the order specified in Ordinance No. 2 of November 13, 2014to validate professional knowledge, skills and competences acquired through non-formal training or self-study. The purpose is to establish the compliance of the acquired skills with the state educational requirements for a particular profession and to recognize the degree of professional qualification. Institutions eligible to carry out validation include vocational schools, gymnasiums, colleges and vocational training centres.

On the other hand, recognition of professional qualificationsis regulated by The Act on Recognition of Professional Qualifications. This law regulates the procedures for recognising the right to practise a particular profession on the basis of qualifications acquired in EU Member States or third countries. The process is required only for regulated professions defined in the List of Regulated Professions adopted by Decision of the Council of Ministers.

These procedures are essential for persons with refugee or humanitarian status, as they allow them to prove their qualifications and find suitable work in accordance with their skills and experience, helping their social and professional integration into Bulgarian society.

Fixed-term employment contract with a foreigner

A fixed-term employment contract with a foreigner is a document that regulates the employment relationship between an employer and a foreign worker, a citizen of a third country (a country outside the European Union). This type of contract is extremely important because it provides the legal basis for the legal employment of the foreigner in Bulgaria, while specifying the working conditions, remuneration, rights and obligations of both parties.

The main elements of the fixed-term employment contract include subject of the contract, which determines the nature of the work, the position and the main duties of the worker. The term of the contract is usually specified clearly, as is the place of work, which can be both from a specific workplace in Bulgaria and remotely, if it is a question of remote work.

Working hoursis set as standard at 8 hours a day, but the legislation does not exclude the possibility that the employment contract may also be concluded for a lower hourly rate, and the remunerationis regulated in the contract, indicating the basic monthly salary and the conditions for additional remuneration based on seniority and work experience. The Treaty also contains provisions concerning vacationswhich the worker is entitled to use, as well as the conditions and terms for Terminationof the contract, including the notice period.

Obligations of the employerinclude the provision of safe and healthy working conditions, as well as the payment of the agreed remuneration in the performance of the work. For its part, The worker is obligedto comply with the instructions of the employer, to maintain company secrecy and not to enter into other employment contracts without permission.

For all unregulated issuesthe provisions of the Labour Code and other normative acts of the Bulgarian legislation are applied in the contract.

It is important to note that with a fixed-term employment contract with a foreigner,in most cases, the contract is required to enter into force from the date of issue of a long or permanent residence permit, which is a key condition for the legal employment of the foreigner in the country!

Drawing up a work book of a foreigner in Bulgaria

In Bulgaria, the work book is an important document that certifies the work activity and related circumstances for the worker or employee, regardless of whether he is a foreigner or a Bulgarian citizen. The main points related to the issuance and maintenance of work books include the following key points:

  • Upon entering work: The worker or employee, including a foreign employee, is obliged to present his employment record to the employer.
  • Upon initial entry into employment: The employer is obliged within 5 days to provide a work book to the person who comes to work for the first time.
  • Storage and presentation: The employment record is kept by the worker or employee, who is obliged to present it to the employer upon request to enter new circumstances.

The following data are reflected in the work book:

  • Full names, date and place of birth, address, identity card number or other identity document, uniform civil number, education, profession, specialty, position held, agreed remuneration, dates of entry and termination of employment, reasons for termination, length of service, benefits paid upon termination employment relationship, and other important data.
  • Losing a work book: In case of loss, a new employment book is issued by the Labor Inspectorate, with the employer or the employee/employee himself providing the necessary data for entry.

A significant change comes with the decision that from June 1, 2026, the work book will be replaced by a single electronic labor record stored in a special register of the NRA. This move aims to modernize and simplify the management of labor activity, while maintaining the accuracy and accessibility of the work history of each individual.

Each employer is obliged to complete the layout of the work books of its employees by June 1, 2025 and return them to them. It is envisaged that the new register will store data on employees' names, seniority, positions, remuneration and other essential aspects of working life, and employers will have limited access to some of these data to protect employees' personal information.

Civil contract with a foreigner from a third country - how is it formed?

In the case of entering into a civil contract with a foreigner from a third country, it is important to understand the basic principles and conditions applicable to such a legal relationship, including issues related to insurance, taxation, and treatment of travel and subsistence expenses. These aspects vary depending on the specific circumstances, including whether the activity is carried out within the framework of an employment or non-employment relationship, as well as the location of the employment activity - whether it is in Bulgaria, in an EU country or in a third country.

Definition and scope:A civil contract with a third-country foreigner is usually concluded for the performance of a specific task or project outside the framework of a standard employment relationship. This may include activities such as market research, product presentations and consultations, analysis and sales plans.

Advantages and disadvantages:Civil contracts offer flexibility for both the employer and the contractor. They allow companies to hire specialists for specific projects without creating a permanent employment relationship. The disadvantages include potential complexity in settling insurance, taxation and other administrative aspects, especially when the activity is carried out in different countries.

Content of the civil contract:The content of the civil contract should clearly define the subject of the contract, remuneration, terms and method of performing tasks, as well as the responsibilities of the parties. The inclusion of clauses on covering travel and subsistence expenses, as well as specifying tax and insurance aspects are also critical components of the contract.

The specifics around insurance and taxation depend on various factors, including the location of the activity and the residence of the foreigner. In some cases, when the activity is carried out outside Bulgaria, taxation or insurance may not be required in Bulgaria, but this should be analyzed based on the specific circumstances and applicable legislation.

When it comes to travel and subsistence expenses, it is advisable that these expenses be clearly agreed in the contract in order to avoid disagreements about their coverage and their tax treatment. The formation of such costs as part of remuneration or as separate compensation payments should be considered in the context of the applicable tax and social security regulations.

How does the taxation and civil contract insurance of third-country nationals (non-EU countries) vary depending on where they work under the civil contract?

When hiring foreigners from countries outside the European Union on a civil contract, Bulgarian companies face a number of specific requirements and procedures dictated by both national legislation and international agreements. Now we will consider the basic principles of taxation and insurance under a civil contract of citizens of third countries (non-EU countries) depending on where they work under the civil contract.

Employment in Bulgaria

When third-country nationals work in Bulgaria under a civil contract, they are subject to taxationand providingin accordance with Bulgarian legislation. Income from civil contracts is taxed personal income tax(ZDDFL), the tax rate being 10%. Insurance includes contributions for pension and health insurance, as well as for other social risks defined by the Social Security Code (CSD).

According to Art. 7 of the GDPR, foreign individuals are the bearers of the tax liability for income derived from sources in the Republic of Bulgaria. Article 8 of the same Law defines which income is considered to be acquired from a source in the Republic of Bulgaria. These are:
  • The income that arises frombusiness activity through a specific base on the territory of the Republic of Bulgariaor from disposing of the property on such a specified basis, are from a source in the Republic of Bulgaria.
  • Income from work done on the territory of the Republic of Bulgaria or from services performed on the territory of the Republic of Bulgaria shall be from a source in the Republic of Bulgaria.
  • Income from dividends and liquidation shares from holdings in domestic legal entitiesand non-personified companies, including contracts for joint activities, are from a source in the Republic of Bulgaria.
  • Income from the transfer of an enterprise to a sole trader registered in the Republic of Bulgaria is income from a source in the Republic of Bulgaria, regardless of whether the transferor is a resident.
  • Awards and remuneration for activities carried out on the territory of the country by foreign individuals - public figures, actors of science, art, culture and sports, including where the income is paid/accrued through a third party such as a printing agency, production company and other intermediaries, are from a source in the country.

The following income accrued/paid by local persons, from commercial representations, as well as from a place of business or a specific base in the Republic of Bulgaria:

  1. Penalties and compensation realized instead of or together with other income from a source in the Republic of Bulgaria;
  2. Cash and material prizes from games, competitions and contests not provided by an employer or sponsor;
  3. Remuneration, other than remuneration under employment relations, paid to an employee or to a member of a management or control body of a Bulgarian legal entity, to a branch of a foreign person, an employee in a commercial representation of a foreign person or to another person performing identical or similar functions;
  4. Interest, including interest under a lease agreement;
  5. Income from rent or other provision for the use of movable property;
  6. Remuneration under franchise agreements and factoring;
  7. Royalties and royalties;
  8. Remuneration for technical services;
  9. Remuneration under contracts for the management and control of enterprises;
  10. Scholarships for study in the country and abroad;
  11. Insurance and insurance income.
  • Income from shares, shares, compensatory instruments, investment bonds and other financial assets issued by the State, municipalities, local legal entities, unincorporated companies and other forms of joint activity, as well as from transactions with them, is from a source in Bulgaria.
  • Income from agriculture, forestry, hunting and fishing on the territory of the country is from a source in the country.
  • Income from the use, sale, exchange or other transfer of immovable property, including an ideal part or limited right in rem over it, located in the territory of the country, shall be from a source in the country.
  • Penalties and indemnities of any kind, with the exception of benefits under insurance contracts, charged by domestic legal persons, local sole traders or foreign legal entities and sole proprietors through a place of business or a specific base in the country for the benefit of foreign natural persons established in jurisdictions with preferential tax regimes, are income from a source in the country.

The conditions under which persons working without an employment relationship are subject to state social insurance (LLC) in the Republic of Bulgaria and the social risks insured under the Social Insurance Code are defined in Article 4, paragraph 3, item 5 and item 6 of the CSR - that is, these are the persons who work without an employment relationship and receive monthly remuneration equal to or greater than one minimum wage, after its reduction by the costs of the activity, unless otherwise provided for in the month concerned, and persons engaged in unpaid work legal relationship, which are provided on another basis in the relevant month, regardless of the amount of remuneration received.

It should be borne in mind that only those foreign citizens who are allowed long-term or permanent residence in the Republic of Bulgaria are compulsorily insured in the National Health Insurance Fund (based on Art. 33, para. 1, item 3 of the WHO). If, under the national legislation of Bulgaria, the foreign citizen has the status of an obligated person within the meaning of Article 14 of the DOPC and does not fall within the cases referred to in Article 84, paragraphs 1 and 2 of the Social Security Code, he should be issued an official number by the competent territorial directorate of the National Revenue Agency on the basis of Art.. 84, para. 3 in conjunction with Art. 80 of the DOPP.

It is important to emphasize that the fulfillment of obligations under the Bulgarian legislation in relation to compulsory insurance contributions, in itself, does not exclude the occurrence of obligations under the legislation of the relevant other countries (Russian Federation, USA, China, Indonesia, Nepal, Malaysia and all other third countries) depending on the specifics of the legislation in question. More information in this regard can be obtained from the competent institutions of these countries.

Working in an EU Member State

For third-country nationals working in an EU Member State under a civil contract concluded with a Bulgarian employer, the rules for insurance and taxationof the Member State concerned. It is important to note that in order to avoid double taxation Bulgaria has concluded Double Taxation Avoidance Agreements (SIDDOs)with many countries. Also, when working in the EU, it may be necessary to issue Form A1, which certifies in which country the person is insured.

The applicable legislation is certified by means of a form A1issued by the institution designated by the competent authority of the Member State of the European Union concerned.

The status of the person — “employed” or “self-employed” — in accordance with the provisions of the applicable social security legislation of the Member State is also relevant. In the case of an employed person, an employer whose head office or place of business is situated outside the competent Member State shall fulfil all the obligations arising from the legislation applicable to that employee, in particular the obligation to pay the contributions provided for in that legislation, as if his registered office or place of business were within the competence of the employer. the Member State.

Employment in a third country

When the work is carried out in a third country (outside Bulgaria and the EU), the applicable rules for insurance and taxationdepend on the legislation of the third country concerned, as well as on the availability of Bilateral agreementsbetween Bulgaria and this third country. It is important to check whether there are SIDDOs - Double Taxation Avoidance Agreements or social security agreementswhich may affect the way of taxation and insurance.

Double Taxation Avoidance Agreements (SIDDOs)

Bulgaria has concluded insurance agreementsand SIDDOwith multiple countries, which facilitates the process of taxation and insurance. Some of the main countries with which Bulgaria has such agreements include USA, Canada, Switzerlandand EU Member States.

Form A1

Form A1is issued to certify the applicable social security legislation in the case of cross-border employment. This document is particularly important for people who work in more than one EU Member State, as it sets out where insurance contributions should be made.

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Счетоводна Къща Елан Консултинг - счетоводни услуги в бургас, адвокат данъчно право и данъчен адвокат в България.