Social Security and Personal Income Taxation in 2021

Social security income

Effective 1 January 2021, the minimum working salary and monthly social security income are increased from BGN 610 to BGN 650. The maximum monthly social security income remains BGN 3,000.

Social security income20202021
Minimum working salaryBGN 610BGN 650
Minimum monthly social security income for self-insured personsBGN 610BGN 650
Мaximum social security incomeBGN 3,000BGN 3,000

The health insurance contributions for unpaid leave and for temporary work disability, pregnancy and childbirth, and raising a child are also increased and determined on the basis of the minimum monthly amount of the insurance income for self-insured persons.

Social security income for determining health insurance contributions20202021
For persons on unpaid leave (*)BGN 305BGN 325
For persons on leave due to temporary work disability, pregnancy and childbirth and raising a small childBGN 610BGN 650

(*) The contribution is determined on half of the minimum insurance income for the self-insured persons.


Social security contributions in 2021

The social security and health insurance burden for 2021 is 32.3% plus the percentage for “Accident at work and occupational disease fund”. These are split between the employer and the employees as follows:

Social Security and Health Insurance Contributions for 2021, employees of Labor Category III, all insurance risks

FundsTotal % of contributions (%)At the expense of the employerAt the expense of the employee
Social security contributions, Additional mandatory pension insurance24.3% +
Percentage for “Accident at work and occupational disease fund”*
13.72% +
Percentage for “Accident at work and occupational disease fund”*
10.58%
Health insurance8%4.8%3.2%
Total32.3% +
Percentage for “Accident at work and occupational disease fund”(*)
18.52% +
Percentage for “Accident at work and occupational disease fund”(*)
13.78%

(*)The contribution for the “Accident at work and occupational disease fund” ranges between 0.4% and 1.1% depending on the group of main economic activities the company falls into according to the National Classification of Economic Activities.

In 2021, no contributions will be made to the “Guaranteed receivables of the workers and employees” fund, as it was also in 2020.


Monetary benefits paid by the state social insurance

  • Benefits for temporary work disability

In 2021, the monetary benefits for the first three days from the temporary work disability will continue to be at the expense of the insurers and will be calculated as 70% from the average daily gross remuneration for the month in which the disability has occurred.

  • Childcare benefits

The childcare benefit for raising a child aged 1 to 2 years remains BGN 380.

  • Unemployment benefits

From 1 January 2021, the daily minimum amount of unemployment benefits will be BGN 12, and the maximum amount remains at BGN 74.29.

  • One-off benefit in case of death of an insured person

In 2021, the amount of the one-off benefit in case of death of an insured person will be BGN 540.


Important changes in the labor and social security legislation effective from 2021

  • Additional remuneration for night work

From 1 January 2021, the additional remuneration for night work will now be tied to the minimum working salary and becomes 0.15% of it for each night hour worked or for part of it.

  • Unpaid leave used in 2021

Unpaid leave at the initiative of the employee (Art. 160, Para. 1 of the Labor Code) up to 60 working days, used in 2021, will be considered as work experience.

In 2021, the used unpaid leave of up to 60 working days will be considered as insurance length of service, as it was in 2020.

  • Interruption of the benefits’ payment by the state social insurance

A term is introduced for interruption of benefits payment for temporary work disability, accident at work, pregnancy and childbirth, and raising a child up to two years of age when there is a need for inspection by competent authority regarding circumstances relevant to the right or the size of the benefit – up to the end of the inspection, but for not more than six months.


Amendments to the Personal Income Tax Act (PITA) effective from 2021

  • Tax relief for children

The tax relief for children for the income acquired in 2021 is significantly increased.

The amount, that individuals entitled to tax relief for children will deduct from the annual tax base, shall be increased as follows:

Amount that is deducted from the annual tax base20202021
One childBGN 200BGN 4,500
Two childrenBGN 400BGN 9,000
Three or more childrenBGN 600BGN 13,500
Children with disabilitiesBGN 2,000BGN 9,000
  • Tax relief in connection with repairs and improvements

A new tax relief is introduced for individuals who will be able to deduct from the total annual tax base the labor payments made during the year in connection with improvements and/or repairs of a real estate in the total amount of up to BGN 2,000 applied to income earned in 2021.

  • Three important deadlines for employers, insurers and individuals in 2021

31 January 2021• Reporting of overtime work for 2020 to the General Labor Inspectorate (GIT)
• Calculation of the annual tax base and determination of the annual amount of the tax on the income
from employment agreements acquired in 2020 by employers who as at 31 December 2020 are
employers under the main employment agreement
• Written notification of employees of the paid annual leave they are entitled to use in the calendar
year 2021, including carried forward or unused paid leave from previous calendar years
28 February 2021• Submission of references under Art. 73, Para. 1 and Para. 6 of the Personal Income Tax Act for
incomes paid to individuals in 2020.
30 April 2021• Annual declaration for 2020 for the working conditions under Art. 15, Para. 1 of the Health and
Safety at work Act by employers who have employees under employment relations. In case there is
no change in the declared circumstances, no declaration is due.
• Submission of a reference under Art. 73a, Para. 5 of the PITA for employment income accrued
and/or paid in 2020 in favor of foreign individuals, tax residents of another EU Member State.
• Submission of an annual tax return by individuals for income earned in 2020 and payment of the due
tax. Upon submission by March 31, 2021, individuals are entitled to a 5% discount on the tax due,
but not more than BGN 500.

In 2021, there will be no change in the main deadlines related to payroll and HR administration:

  • The term for registration of employment agreements remains up to 3 calendar days from the date of their conclusion/ amendment.

  • The term for registration of termination of employment agreements remains up to 7 calendar days from the date of termination.

  • Payroll reporting declarations – Declaration 1 “Details of the insured person” and Declaration 6 “Social security and health insurance contributions, and personal income tax due under Art. 42 of the PITA” are due by the 25th day of the month following the month to which the data relates. In cases where the remuneration for the month is accrued and paid after this term – the submission takes place by the end of the month in which the remuneration has been accrued or paid, as well as until now.

The Payroll practice of EY Bulgaria has extensive experience in providing payroll and HR administration services for a large portfolio of multinational and local companies. Our consulting teams provide comprehensive advice on social security, labor law and tax issues related to staff remuneration.


Contacts:

Naiden Kostadinov, FCCA, CPA
Partner, Tax Service Line Leader, EY Bulgaria
Accounting and payroll services
[email protected]

Milena Blagoeva, ACCA
Associate partner,
Accounting and payroll services, EY Bulgaria
[email protected]