If you want to expand your business in Bulgaria, this is the perfect time to do so. Bulgaria has a high-income economy based on open-market policies. This means that the country offers economic freedom and welcomes global businesses. 

The Bulgarian economy dipped during the pandemic, like every other country. However, it has made significant progress in 2024. According to the World Bank, the country’s GDP growth in the first quarter of 2024 exceeded 1.9%, followed by 2% in the second quarter YoY. 

Bulgaria ranks 38th among 133 countries featured in the Global Innovation Index 2024. Significant improvements were recorded in science and innovation investments, technology adoption, and socioeconomic impact. Moreover, the country ranks 11th in terms of labor productivity growth percentage. 

Bulgaria maintains a healthy labor force participation, averaging over 53% during the period 2000-2024. However, it has been maintained above 55% since 2022 Q1, which is a good sign for businesses looking for expansion in Bulgaria. The Balkan labor is the most affordable within Europe, featuring the lowest hourly rates across the EU market.

The average hourly rate in Bulgaria is €3.5, although the wage rate increased in 2024. Meanwhile, Romania has the second-lowest rate, averaging at €4.2. Additionally, the country has the most simple and straightforward tax environment in Europe.

So, it’s an ideal place to expand your business or outsource operations to cut costs. That said, it may not be as smooth as it seems. The Balkan country has strict rules and regulations to safeguard the rights of its citizens.

There may be administrative and HR hurdles that you may not want to face, especially in the initial stages. Therefore, leaving these issues to a PEO in Bulgaria is the best way out. Let’s find out how a PEO in Bulgaria works and whether you should partner with one.

What Do PEOs in Bulgaria Do?

Professional Employer Organizations (PEOs) offer a comprehensive suite of HR solutions to business entities, especially small-medium businesses (SMBs). PEOs are third-party organizations that assist business administrative tasks, such as salary management, tax management, risk management, compliance, staff training, and consulting.

You have the option to outsource these HR tasks to a PEO in Bulgaria. This allows you to spend more time managing and improving your core business. Working with a PEO in Bulgaria is not only a cost-effective solution, but it also improves workforce efficiency.

Moreover, you get access to top-tier talent without investing your time and effort. In Bulgaria, PEOs keep themselves updated with the market dynamics. On top of making your HR functions affordable, they can find you competitive health insurance and retirement plans. 

Businesses operating without professional administrative assistance may face penalties or suspensions resulting from legal violations. PEOs can maintain your reputation by ensuring compliance with the following:

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What Are the Services Offered by PEOs in Bulgaria?

Depending on their expertise and scope, PEOs in Bulgaria can manage all or a few HR-related functions of the company they’re working for. The most common services include:

Human Resource Management

HR management is one of the basic services sought by small to medium businesses in Bulgaria. This is where a licensed PEO in Bulgaria can help in a number of ways, from onboarding new talent, evaluating performance, and training and development to offboarding an employee. 

These organizations ensure top-notch employee performance through constant analysis. They manage the workforce through talent assessments, previous employer reviews, and training programs that each individual has attended. Moreover, PEOs in Bulgaria also offer professional training and development programs, polishing and improving the employee’s skills.    

For businesses, boredom in the workplace may force experienced employees to leave the company. For this purpose, PEOs assist businesses in developing in-house activities and exercises to boost their employees’ motivation.

Payroll Processing

PEOs can handle the complete payroll processing according to the prevailing labor law, ensuring that every company employee gets fair remuneration on time. Their responsibilities include salary and wage calculation, deducting applicable taxes, and calculating social security and other benefits. 

In connection, PEOs in Bulgaria also provide direct deposit services or checks. They can help prepare and file tax returns. Here, calculating National Insurance Contributions (Social Contributions in Bulgaria) and taxes is an important task. 

Since 2008, Bulgaria has been maintaining a 10% flat personal income tax. Whereas the National Insurance Contribution varies between 32.0% – 33.40%, of which 13.78% is deducted from the gross salary and the remaining (18.92 – 19.62%) is paid by the employer.  

These deductions need to be accurate, which is why businesses often hire PEOs to perform this task.

Compliance with Bulgarian Laws

PEOs have the responsibility to ensure compliance with the BG laws pertaining to labor, payroll, and taxes. They also have the expertise to draft hiring contracts and create policies related to: 

  • Working hours
  • Contract termination
  • Overtime
  • Managing disputes, etc. 

PEOs in Bulgaria act as liaisons in employee-related disputes. They liaise with the Ministry of Labour and Social Policy (MLSP) to settle the issue. 

Moreover, the PEO ensures that the company complies with the Labour Code and maintains a good employer-employee relationship to avoid legal punishments.

Employee Recruitment and Staffing

Hiring employees in permanent and temporary positions can be cumbersome for new businesses, especially new businesses with limited funds. They can work with a PEO to get top-notch talent in the country efficiently and effortlessly.

PEOs in Bulgaria provide multiple recruiting and staffing services, including employee sourcing, conducting interviews, screening, handling contracts, and onboarding. PEO or EOR (Employer of Record) services are also available for time-specific projects that require temporary staffing.

Employee Benefits Management

When it comes to employee benefits, there’s no one-size-fits-all package. Nowadays, employees consider jobs that not only cover their basic needs but also support their overall well-being. 

This is where PEOs can help revamp existing benefits strategies or device plans according to the latest trends. They understand the market dynamics and are aware of the prevailing benefit packages, e.g., health insurance rates, retirement rates, financial literacy programs, physical health programs, etc.

Applying for (and Renewal of) Bulgarian Work Permit

A PEO in Bulgaria can help new businesses obtain work permits for their employees as well as renew their permits when needed. In Bulgaria, work permits have a maximum validity of one year. They are to be renewed after one year if the employment conditions remain unchanged. 

After the employees receive their work permits, they must visit the Bulgarian embassy or consulate in their respective countries to apply for a Type D visa.

Health & Safety Compliance

Bulgarian Labour Law emphasizes employees’ health and safety. The Article 275 of the Labour Code compels the employer to “guarantee safe and healthy work conditions”. Non-fulfillment of these obligations may result in legal actions against them.

A reliable PEO in Bulgaria can help businesses adhere to these regulations by conducting periodic risk assessments. They help employers to implement safety protocols to minimize the risk of injuries.

In addition, they implement health and safety programs, such as training on personal protective equipment, fire drills, emergency response drills, etc. PEOs also support employees in case of accidents at the workplace, particularly in the industrial sectors.

How to Pick the Best PEO in Bulgaria?

With so many service providers and online platforms, finding the best PEO can be a daunting task. What’s the right approach? Consider these important factors while choosing the best PEO in Bulgaria:

1

Basic and Additional Services

A reliable PEO should have the competence to provide all the basic services, including:

Apart from these services, PEOs may have expertise in other related areas to help you set up your business in Bulgaria or manage your employees more efficiently.

If you want extra services, highlight them in the contract. You have to pay an extra amount for additional services.

2

Understanding of the Country’s Regulations

Adhering to Bulgaria’s employment law, payroll management, and tax regulations can be daunting for individuals from other countries. So, it would be wise to go to a PEO in Bulgaria.

However, before you choose one, make sure that they’re familiar with the country’s tax, benefits, and payroll, and can provide the right guidance concerning the Bulgarian Labour Law.

3

Customer Support

Regardless of the business, a front-end staff equipped with the right solutions to common customer queries serves as a hook. For a PEO, learned and caring customer support adds to their overall quality of work. You might want to know whether the PEO offers round-the-clock assistance.

Moreover, if they offer a separate representative for individual customers, they value your time and money.

4

Pricing Models

Before choosing a PEO in Bulgaria, you need to understand their pricing model. There are different pricing models, such as:

  • Percentage of Payroll: This approach involves charging a fee based on the percentage of the total payroll of the employees.
  • Flat Fee Per Employee: In this model, the PEO will quote you a fixed fee per employee for all the services you need.
  • Bundled Pricing: Many PEOs also offer bundled services, including payroll processing, taxes, employee benefits administration, and legal compliance. In the Bulgarian market, this approach is more cost-effective than individual service support.
  • Tiered Pricing: Some PEOs use tiered pricing, charging for their services based on the number of services you need or the size of your business.
  • Pay-As-You-Go Model: This approach entails continuous and ongoing support. You only have to pay for the services you require at that particular time. You will be billed directly for the service.

Each method will give you a different figure, so choose the model and contractor that meets your budget.

5

Feedback From Other Customers

Do your proper research on the reputation of the PEO before partnering with them. You can read reviews online or ask for references from businesses that may have already set themselves in Bulgaria. Established PEOs with reliable track records can be your best partner in this journey.

Expand Your Business in Bulgaria with a Reliable PEO

Entering the Balkan market without partnering with a trusted PEO can be a nightmare for any business. From recruiting the right talent to managing the workforce according to the local laws, there’s a lot in between — and only a PEO with the right expertise can get you out of trouble. 

PEOs are experts in payroll management, taxes, compliance, and employment law. They can help you familiarize yourself with the complexities of Bulgarian labor law. More importantly, they take on the co-employer role when hiring new talent. 

The above list must have helped you find your perfect partner to expand your business in Bulgaria. But if you still have concerns, get in touch with the Remote People.

Frequently Asked Questions

‘PEO’ is an abbreviation for Professional Employer Organization. This term is associated with third-party companies that take care of HR functions, compliance, and other legal issues that your business may encounter while setting foot in another country.

The purpose of PEOs is to provide much-needed administrative and HR assistance to new businesses so that they can sustain and flourish in the new region.

It is difficult to provide an exact number because pricing strategies vary from PEO to PEO. Some use a fixed-priced model, while others use a percentage-of-payroll model, bundle pricing, pay-as-you-go model, etc. The final cost depends upon the number of employees hired and the services expected of them.

A quick answer is ‘Yes!’ However, you need to conduct your own research to identify the right professional. In general, PEOs in Bulgaria are fully compliant with the Bulgarian Labour Code.