Bulgaria Economy Overview

Currency

Bulgarian lev BGN

Working hours

40 hours/week

Public/bank holidays

11 public holidays

Capital

Sofia

Languages

Bulgarian

Population

6.6 million

Minimum hourly salary

BGN 933

Tax year

1st Jan – 31st Dec

Date format

DD/MM/YYYY

Misclassification penalties

Fines of BGN 100 (around EUR 51) to BGN 20 000 (around EUR 10 226) for non-compliance with Labour laws. Employees working without an employment agreement can be fined triple the amount due for the mandatory social and health insurance contributions.

Fun fact

Bulgaria has an official day of the alphabet, celebrated on May 24th.

The Republic of Bulgaria is a small Southeast European country bordering Greece, Turkey, Serbia, North Macedonia, and Romania. While it was the center of its own empire in the past, it has also come under Ottoman and Soviet rule, giving the country a complex history. 

Now a member of the European Union (EU), Bulgaria has developed into a high-income country with a per capita GDP of $16,940 this year. The country’s economy has seen a steady, high rate of growth since the 1990s, reaching $101.61 million in 2023, with 3.1% growth expected for 2026. With this continued growth, Bulgaria is in need of more workers to continue to power its economy. 

If you’re thinking about doing business in Bulgaria, this is a great time to get into this market. Learn more about the pros and cons of setting up a business in Bulgaria below.

Overview of Bulgaria’s Economy

At present, Bulgaria currently uses its currency, the Bulgarian lev, though it is aiming to join the EU economic zone and start using the Euro by 1 January 2025. Political changes in the country may delay this change, but it’s certain to happen eventually.

Bulgaria’s Currency Plans

  • Current currency: Bulgarian lev
  • Goal: Join the EU economic zone and adopt the Euro by 1 January 2025
  • Lev’s value: Approximately half a Euro

Bulgaria’s economy has been going strong for decades and shows little sign of slowing down. Over 70% of GDP is accounted for by the private sector, though the public sector is still a major employer.

Key Economic Sectors
Energy Machinery
Mining and metallurgy Telecommunications
Iron and steel Agriculture
Glass Tourism

The economy is driven by energy, mining and metallurgy, iron and steel, glass, machinery, telecommunications, agriculture, and tourism. Bulgaria exports refined fuel, machinery, clothing, and steel products, along with its world-famous yogurt.

While the economy has grown for decades, wages in Bulgaria are still low. In 2023, the average monthly salary was just 2,072 leva (about 1,146 USD) and was the lowest in the EU.

The minimum monthly salary in the country, as of 1 January 2024, is only 933 BGN (about 515 USD). This makes it clear that while the country has developed a strong economy, workers here are still quite affordable. 

Foreign direct investment in Bulgaria was 591.3 million EUR in the period of January – May 2024, down considerably from past years. This investment came largely from Belgium, Austria, and the Netherlands. Larger net outflows showed Bulgarian companies investing in Russia and Germany.

Bulgaria’s economy continues to experience growth, having bounced back well after the global pandemic and despite lowered foreign direct investment due to regional instability. Unemployment is steady and low, and workers are in high demand across many industries.

Taxes

Employer Tax: 18.92% – 19.62%

Social Insurance

18.92% – 19.62%, which includes 8.22% pension contribution and 4.8% health insurance

Employee Tax: 23.78%

Social Security

13.78%

Income Tax

a flat 10% tax

Personal Income Tax Rates

A flat tax rate of 10% applies to all personal income, with some exceptions.

Business Regulation in Bulgaria

As in any foreign country, starting a business in Bulgaria can be challenging. However, compared to many of its neighbors in Europe and Asia, Bulgaria’s regulatory environment is quite average. There are lots of legal protections for workers, but also to protect and stimulate business growth. 

If you’re thinking about doing business in Bulgaria, here are some of the most important points of legal regulation for you to be aware of:

Registration and Compliance

To register any kind of business in Bulgaria, an application must be made to the Registry Agency to the Ministry of Justice. Applications must be made in Bulgarian or in another EU language with an official Bulgarian translation.

Possible entities include limited liability companies, joint stock companies, general partnerships, limited partnerships, partnerships limited by shares, or branches of foreign enterprises. Once entered into the commercial register, an entity must register with the National Revenue Agency to obtain a value-added tax (VAT) number.

Entities also need premises and bank accounts in Bulgaria. All companies need to prepare annual financial statements, including their balance sheet, profit & loss account, and notes, and should publish them in the Commercial Register.

Taxes and Investments

Any business doing an annual turnover of 50,000 BGN (about 27,666 USD) or more must charge a VAT of 20% on its goods and services. The corporate tax rate in Bulgaria is quite low at just 10%. At the same time, employers must contribute between 18.92% and 19.65% of their employees’ gross salaries to social security.

Dividends are subject to just a 5% withholding tax for Bulgarian citizens and foreign shareholders. There are also no foreign exchange controls or capital duties in Bulgaria.

Employment Laws

Workers in Bulgaria are protected by robust local laws as well as EU statutes. Employees in Bulgaria work eight hours a day and 40 hours per week. They should receive two consecutive days of rest per week and an annual paid leave of 20 business days. 

Paid maternity leave is granted for up to 410 days, and paternity leave for 15 days. Employers pay for the first 3 days of sick leave, while long-term sickness is covered by social security. Notice periods of 30 days, as well as 30 days’ severance pay, are generally necessary for terminations of employees except in cases of gross misconduct.

As a former Soviet Bloc country, Bulgarians’ right to unionize is respected, and collective agreements are common in many industries.

Intellectual Property

In general, intellectual property rights are well-respected in Bulgaria via its domestic laws and EU statutes. Trademarks can be registered for ten years and then renewed for ten-year periods. Copyrights last 70 years, and patents last 20 years.

Benefits of Doing Business in Bulgaria

If you want to do business in Bulgaria, it’s important to be aware of the advantages and disadvantages involved. The benefits of setting up shop in Bulgaria include:

  • Low corporate tax rate of 10% and low dividend tax rate of 5%.
  • Consistent, sustained growth of the economy over several decades.
  • Access to the EU common market and other regional neighbors, as well as the Black Sea.
  • Low wages and some of the most affordable workers in the EU.
  • Skilled, motivated workers who are highly adaptable. 
  • Relatively low cost of living.
  • Ability to buy land and hold property in the country.

Downsides of Doing Business in Bulgaria

There are, however, downsides to doing business in Bulgaria as well. These include:

  • Relatively high social security contributions for employers (18.92% and 19.65%).
  • Political unpredictability.
  • A slow court system and inefficient bureaucracy, especially for processing taxes and permits.
  • Lack of information, documents, and support in foreign languages.
  • Corruption at certain levels of government and in some industries.

International Expansion Into Bulgaria

If you’re looking to expand into Bulgaria, you have several options as a foreign-based company. These are the most common ways that companies expand into the Bulgarian market.

Bulgaria Employer of Record (EOR)

An Employer of Record (EOR) is an employment organization that can hire employees in Bulgaria on your behalf. The EOR can hire employees through an entity it already owns, saving you time and money in your own registration. 

It will then manage your Bulgarian employees’ needs long-term while you manage their day-to-day work.

LEARN MORE

Recruitment Agencies

Recruitment agencies in Bulgaria help businesses expand by connecting them with skilled local talent across various industries.

Remote People provides recruitment solutions that simplify hiring and ensure compliance with Bulgarian labor laws.

For businesses looking to grow in Bulgaria, Remote People offers the expertise and resources needed to build a local workforce quickly and effectively, making it a practical solution for market expansion.

LEARN MORE

Bulgaria Professional Employer Organization (PEO)

Partnering with a professional employer organization (PEO) allows companies to employ local staff in Bulgaria without the need to establish a legal entity. This approach is quicker and less expensive, making it ideal for businesses testing the Bulgaria market or those with limited operations. PEOs handle administrative tasks and ensure that companies comply with Bulgaria regulations, reducing the complexity and risk associated with hiring local employees.

LEARN MORE

Subsidiary Incorporation

One option that many foreign companies choose is to set up a subsidiary in Bulgaria. This is normally a wholly-owned or majority-owned daughter company owned by your foreign enterprise. A subsidiary is able to do its own business deals, own its own assets, and take on its own debts; however, so there is limited liability involved for the parent company.

In Bulgaria, the most common business structures for subsidiaries are a joint-stock company (JSC), essentially a corporation or public limited company, and a limited liability company (LLC). For a JSC, you’ll need a limited capital investment of 50,000 BGN (about 27,666 USD) and to create a 1-tier or 2-tier management system.

For an LLC, each partner must contribute at least 1 BGN (0.55 USD) in capital. These subsidiaries are essentially independent companies that can do business on their own but are owned by your company.

Branch Registration

You can also open a branch office in Bulgaria, which is not considered an independent business. Instead, a branch office is simply a local extension of the parent company, and the parent has full liability for its activities. 

It can, however, do business on behalf of the parent company in a limited capacity. It must still keep its own books and prepare its own annual financial statement.

Business Opportunities in Bulgaria

Bulgaria offers a range of attractive business opportunities for investors and entrepreneurs, thanks to its strategic location, competitive labor costs, and ongoing efforts to improve its business environment.

As a member of the European Union, Bulgaria provides access to a large single market and benefits from EU funding for various projects. Some of the most promising sectors for investment include:

Business Opportunity Reason
IT and Outsourcing Bulgaria’s highly skilled and cost-competitive IT workforce, combined with its strong technical education system, make it an attractive destination for software development, business process outsourcing, and IT services.
Manufacturing Bulgaria’s relatively low labor costs, strategic location, and access to EU markets create opportunities for manufacturing industries, particularly in the automotive, electronics, and machinery sectors.
Tourism and Hospitality Bulgaria’s diverse landscapes, rich cultural heritage, and affordable prices offer potential for investments in hotels, resorts, and tourism services, especially along the Black Sea coast and in mountain ski resorts.
Agriculture and Food Processing With its fertile land, favorable climate, and long-standing agricultural traditions, Bulgaria presents opportunities for investments in modern farming techniques, organic production, and food processing.
Renewable Energy As Bulgaria aims to increase its share of renewable energy sources, there are growing opportunities for investments in solar, wind, and hydropower projects, supported by government incentives and EU funding.

Bulgaria’s economy continues to grow annually despite regional and global challenges. If you’re looking to gain a foothold in Europe, Bulgaria’s low wages and strong economy make it an attractive place to set up shop.