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How to Declare a Bonus Payment to Employees in Bulgaria – A Complete Guide
Rewarding your employees is key to building loyalty and driving performance. One of the most effective methods is offering bonuses. In Bulgaria, however, these payments come with legal and tax responsibilities. This guide will show you exactly how to declare a bonus payment to employees in Bulgaria — clearly, correctly, and in compliance with all regulations.
What Is a Bonus Payment?
A bonus payment is any financial amount paid to an employee in addition to their monthly salary. Companies offer bonuses for several reasons. For example, employees may receive performance-based incentives, annual or holiday rewards, or one-time recognition bonuses. No matter the reason, bonuses are considered taxable income under Bulgarian law.
Declaring a Bonus Correctly
To declare a bonus payment the right way, you must treat it as part of the payroll process. This ensures accuracy and transparency. Follow these four key steps:
Include It in Payroll for the Month of Payment
You should process the bonus along with the regular salary for the month it is paid. This step guarantees that the amount is recorded in official reports and contributes to social security payments.
Submit Forms 1 and 6 to the NRA
- Form 1 – Used to declare income and contributions for each employee.
- Form 6 – Declares the total taxes and contributions due for the company.
By submitting these forms on time, you demonstrate compliance and avoid administrative penalties.
Provide an Updated Payslip
Employees must receive a payslip showing the bonus amount. This builds trust and provides clarity. Moreover, it supports your internal recordkeeping.
Record the Bonus in Employment Documents
Depending on your company’s internal procedures, the bonus should be documented through a management decision, memo, or annex to the contract. Doing so ensures legal traceability and internal control.
When Are Taxes Due?
The deadline to pay taxes on bonus amounts is the 25th of the following month. This deadline is the same as for regular payroll taxes. It’s important to plan your cash flow accordingly, so your business remains in good standing with the National Revenue Agency.
Are There Tax Exemptions?
Unlike some fringe benefits, bonuses are not tax-free. Every bonus payment is subject to:
- 10% Personal Income Tax (PIT)
- Social security and health insurance contributions (both employee and employer shares)
Because of this, employers should calculate bonus-related costs in advance. This helps maintain budget control and ensures payroll compliance.
Can You Minimize Costs Legally?
Some companies aim to reduce payroll burden without breaking the law. If you’re among them, consider alternative incentives such as:
- Non-cash benefits (e.g., meal vouchers or gym memberships)
- One-time service contracts (where applicable)
- Company-paid training programs
However, always consult a licensed accountant before using these strategies. They will help you stay within the legal framework.
Documentation Checklist
Good documentation protects your company in case of an audit. Therefore, each bonus payment should be supported by:
- A decision or resolution by management
- A full list of employees receiving bonuses
- Payroll records showing the amount and date of each bonus
This paperwork provides a complete audit trail and shows that the company follows labor and tax rules strictly.
Bonuses are excellent tools for motivation. However, they come with strict responsibilities. Declaring a bonus payment in Bulgaria requires accurate reporting, timely tax submission, and proper internal documentation. If you skip any of these steps, the company could face financial penalties and damage to its reputation.
That’s why many companies rely on professional partners. At ASB Accounting Services Bulgaria, we support businesses with payroll, tax declarations, and HR compliance. We know Bulgarian regulations inside and out, so you don’t have to worry about costly mistakes.
Get Expert Support
Need help with declaring bonus payments or improving your payroll system? Contact ASB Accounting Services Bulgaria today. We’ll make the process smooth and stress-free.
Contact our team at ASB Accounting Services Bulgaria for a personalized consultation. We’re here to simplify your accounting and help your business grow.