Bulgaria | Employment Tax | Income tax and social security changes as of 1 January 2024

Employment Tax

Bulgaria | Income tax and social security changes as of 1 January 2024

Summary
The bulletin summarizes the key personal income tax and social security changes that have been implemented as of 1 January 2024 in Bulgaria.

The Detail

Main amendments to the Bulgarian Personal Income Tax Act (PITA)

1. Change in the scope of income that employers should report in the Annual personal income statement and Declaration Article 73, Paragraph 6 of PITA
The scope of non-taxable income that employers are required to report in the Annual personal income statement has been extended. The employers should now also report:

• business trip daily allowances when the total amount paid to an employee exceeds BGN 1,000 per annum;
• social expenses, up to BGN 60 BGN per month for each insured employee, for premiums for voluntary pension, health and life insurance;
• other specific monetary funds and aids provided under specific Bulgarian acts.

Employers should also report such types of non-taxable income in the declaration under art. 73, para 6 of PITA due for filing by 28 February.

2. Change in the scope of income that income payers are required to report in the tax declaration under art. 73, para 1 of PITA
In the new template of this declaration, the income payers should now report additionally:

• capital gains distributed to individuals in the form of company shares or other equity including equity in the form of increase of the nominal value of existing shares;
• scholarships paid to individuals for their education in-country or abroad; business trip daily allowances when the total amount paid to an individual exceeds BGN 1,000 per annum;
• income from rent of agricultural land when the total amount received exceeds BGN 3,000 per annum.

3. Tax benefits update for financial instruments
As of the 1 January 2024, individuals that earn income (capital gains) from the sale or exchange of financial assets can deduct 10% statutory expenses when calculating their tax base from these sources.

4. Recognizing the virtual currencies as a financial asset
Virtual currencies are now explicitly recognized as a type of financial asset, which means that as of 1 January 2024 they must be separately reported in the Bulgarian personal income tax return. Thereby, the transactions from their sale can be more effectively monitored and analyzed by the tax authorities.

5. A new tax relief for individuals registered as agricultural producers
With the adoption of this tax relief the registered agricultural producers can reduce the annual tax base by the amount of the subsidy received during the year up to certain limits.

6. Introduction of an alternative tax for a specific income category
Introduction of an alternative tax on the income from the activity of collecting wild mushrooms and fruit for individuals who are not merchants.

7. Clarification of the taxation of income from immovable property
A clearer provision clarifies the taxation of income derived from the rent/lease of immovable property, synchronizing it to the same in the Corporate Income Tax Act.
Now it is clearly stated that taxable as Bulgarian source is the rental/lease income derived from immovable property, which is located on the territory of Bulgaria, regardless of the tax residency status of the owner.

Amendments in the area of social security as of 1 January 2024

• The minimum monthly salary and the minimum social security threshold (for employees and freelancers) increased from BGN 780 to BGN 933.
• The maximum social security threshold increased from BGN 3,400 to 3,750 BGN.
• Adjustments have been made to the contributions for the occupational disease and professional accident fund across various primary economic activity groups, while keeping the minimum and maximum limits in place (0.4 to 1.1%).
• There is a change in the number of days in sick leave covered by the employer. The employer will only pay the initial 2 days (instead of 3 so far) of sick leave compensation. If the sick leave is longer than 2 days, the rest of the days will be compensated by the National Social Security Institute.
• The criteria for retirement are as follows:
  o for men – 64 years and 7 months of age (previously 64 years and 6 months) and 39 years and 6 months of insurance coverage.
  o for women – 62 years and 2 months of age (previously 62 years) and 36 years and 6 months of insurance coverage.

Contact us
For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively:

Mina Kapsazova
Director

Ekaterina Arnaudova
Senior Manager

Further information on Vialto Partners can be found on our website: www.vialtopartners.com

For additional alerts, please visit: www.vialtopartners.com/regional-alerts

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Vialto Partners (“Vialto”) refers to wholly owned subsidiaries of CD&R Galaxy UK OpCo Limited as well as the other members of the Vialto Partners global network. The information contained in this document is for general guidance on matters of interest only. Vialto is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. In no event will Vialto, its related entities, or the agents or employees thereof be liable to you or anyone else for any decision made or action taken in reliance on the information in this document or for any consequential, special or similar damages, even if advised of the possibility of such damages.

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Further information on Vialto Partners can be found here: www.vialtopartners.com

Vialto Partners (“Vialto”) refers to wholly owned subsidiaries of CD&R Galaxy UK OpCo Limited as well as the other members of the Vialto Partners global network. The information contained in this document is for general guidance on matters of interest only. Vialto is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. In no event will Vialto, its related entities, or the agents or employees thereof be liable to you or anyone else for any decision made or action taken in reliance on the information in this document or for any consequential, special or similar damages, even if advised of the possibility of such damages.

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