Can Bulgarian Company Owners Be Employees

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Can Bulgarian Company Owners Be Employees in Their Own Company? | 2025 Guide

One of the most common and confusing questions for entrepreneurs is this: Can the owner of a Bulgarian company also be an employee? The answer is not the same for everyone, as it depends on how the company is structured. In this guide, we’ll go step by step through the rules, options, and practical consequences.

The Short Answer

The law makes a clear distinction between a company with a single owner (EOOD) and a company with two or more owners (OOD). If you are the sole owner, you cannot employ yourself. If you share ownership with others, you can become an employee or a manager under certain conditions. Understanding this difference is crucial to avoid invalid contracts and future legal or financial issues.

Sole Owner (EOOD)

When you own 100% of the company’s capital, you are considered both the employer and the employee. This makes it legally impossible to sign an employment contract with yourself. The same applies to a Management & Control Contract (ДУК). In practice, there is no second party to validate the agreement.

Instead, the law provides a different path: registering as a self-insured person (самоосигуряващо се лице / SOL). This approach ensures you contribute to Bulgaria’s social security system and receive coverage for pension, healthcare, and other rights.

Here is what this means in practice:

• You declare your status as self-insured through your company.
• You choose the monthly income on which to base your contributions, within the legally set minimum and maximum thresholds.
• You are responsible for submitting monthly declarations and paying contributions on time.

For many sole owners, this solution is efficient, as it provides flexibility. However, it also requires discipline, because late or missing contributions can lead to penalties and gaps in your insurance history.

Co-Owners (OOD)

When there are two or more shareholders, the situation changes significantly. In this case, other shareholders can legally appoint you either as an employee or as the company’s manager. This works because the contract is signed between the company (represented by the General Assembly or another authorized person) and you personally.

You have two main options:

• Employment Contract – if you perform real operational work in the company (e.g. sales manager, developer, driver, accountant). The position must correspond to actual activities, otherwise the contract can be challenged by the authorities.
• Management & Control Contract (ДУК) – if you are appointed as the company’s manager. This is often the preferred solution for executive responsibilities.

Comparison: EOOD vs OOD

Why This Matters

Getting this wrong has serious consequences. If you sign a contract with yourself as a sole owner, it will not be legally valid. This may also affect your eligibility for social benefits, pensions, and healthcare. The authorities may impose fines or disregard your contributions.

For foreign entrepreneurs, the stakes are even higher. In many cases, the type of contract you hold is directly linked to your eligibility for a residence permit or work permit in Bulgaria. A wrongly structured company can therefore block your ability to stay or work in the country.

Practical Examples

• Example A: You are the sole owner of a consultancy firm. You cannot appoint yourself under an employment contract. The correct approach is to register as a self-insured person and pay contributions monthly.
• Example B: You and a partner establish an OOD. The General Assembly votes to appoint you as Sales Director under an employment contract. This is legal, provided you actually perform the role.
• Example C: A foreign investor sets up an OOD with a local partner. The investor is appointed as the company manager under a Management & Control Contract. This contract is later used to apply for a residence permit in Bulgaria.

Common Mistakes to Avoid

• Signing invalid contracts: Sole owners who attempt to employ themselves create documents that have no legal effect.
• Underreporting contributions: Choosing unrealistically low insurance income may reduce costs in the short term but leads to lower pension and healthcare rights later.
• Ignoring compliance: Failing to declare self-insured status or late payments can trigger audits and fines.
• Overlooking residence rules: Foreign entrepreneurs often underestimate the link between contracts and immigration status.

Best Practices

To ensure your company is structured correctly from the start, follow these guidelines:

• Always consult with a professional accountant or legal advisor before deciding on your contract type.
• Document the decision of the General Assembly when appointing managers or employees in OOD companies.
• Keep accurate records of all contributions and declarations.
• Review your setup annually, as legislation and minimum thresholds change regularly.

The rules are clear but often misunderstood:

• Sole owners (EOOD) cannot employ themselves. They must register as self-insured persons.
• Co-owners (OOD) can become employees or managers, if appointed by other shareholders.

At ASB Accounting Services Bulgaria, we guide entrepreneurs through every step of company formation and compliance. By setting things up correctly from the beginning, you avoid costly mistakes and protect your long-term interests.

If you are considering starting a company in Bulgaria, contact us today for expert support tailored to your business goals.