Self-insured persons within the meaning of the Bulgarian Social Security Code (SSC) are:
- persons registered as freelancers and/or craftsmen,
- persons exercising business activity,
- sole traders, owners or partners in companies, and
- individuals - members of unincorporated associations; and duly registered farmers and tobacco growers (Art. 4 (3), item 1, item 2, item 4 SSC).
The social security obligation of self-insured persons in Bulgaria arises from the day of commencement or resumption of their activity and continues until its cessation or termination (Art. 1 (1) of the Regulation on Social Security for Self-Insured Persons, Bulgarian Citizens Working Abroad and Seafarers - the Regulation).
The self-insured persons in Bulgaria must register the start date of their activity through submitting a declaration in standard form to the competent territorial directorate (TD) of the National Revenue Agency (NRA), where the person has their permanent address registration within seven days of its start. The interruption, cessation or resumption of the activity shall also be established by a declaration submitted within seven days of the occurrence of the given circumstance (Art. 1 (2) of the Regulation).
Self-insured persons in Bulgaria are insured for disability due to general sickness, old age and death (Pension fund). At their discretion, they might additionally insure themselves for general disease and maternity (Art. 4 (3) and (4) of the SSC). The type of social security shall be declared by the self-insured person themselves by submitting a declaration in standard form to the competent TD of the NRA within 7 days of the commencement or resumption of the work activity. If this declaration is not submitted within 7 days, the self-insured person will be insured only for disability due to general disease, old age and death (Art. 1 (3) of the Regulation).
By the end of January each year, self-insured persons may change the type of their social security for the relevant calendar year. The type of social security cannot be changed during the year, even in cases where the self-insured persons interrupt and resume their activities or start performing new activities as self-insured persons (Art. 1 (3) and (4) of the Regulation) .
Self-insured persons who have been granted pensions insure themselves only voluntarily (Art. 1 (6) of the Regulation). The law does not define the exact type of pension one must receive to be exempt from paying the social security contributions. Therefore, all persons receiving pensions in Bulgaria - personal, survivors, disability and others - can insure themselves only voluntarily when they exercise their activities as self-insured persons.
Self-insured persons must submit monthly Declaration № 1 "Details of the insured person" and must pay their advance social security contributions until the 25th day of the month following the month to which they relate.
The monthly installments can be paid on selected income, whose amount should not be less than the minimum and not more than the maximum monthly insurable earnings. The amounts of these earnings are determined annually by the State Social Security Budget Act (SSSBA) - Art. 6 (2) of the SSC.
From 1st of August 2023 the minimum insurance income for self-insuring people and for partners in trade companies has increased as well.
Self-insured persons performing activities on various grounds, make advance payments on one of those grounds, at the person’s discretion (Art. 2 (3) of the Regulation).
When self-insured persons perform employment activities on different grounds and are remunerated accordingly, the social security contributions for these employment activities are due on the sum of the income received. The monthly insurable earnings on which the social security contributions are paid in such cases must not exceed the statutory maximum monthly insurable earnings, determined for the respective year under the SSSBA, which for 2023 is BGN 3400.
The minimum insurable earnings for self-insured farmers and tobacco growers in Bulgaria who carry out only farming activities from 01.08.2023 are BGN 780.
If the self-insured persons also work under employment contracts, their social security contributions are due on the sum of their income in the following order:
- Income under the employment contract;
- Selected income as a self-insured person. In this case the monthly insurable earnings should not exceed the statutory maximum monthly insurable earnings of BGN 3.400 (Art. 4 (2) of the Regulation).
In the case of payment of income for work without an employment relationship to self-employed persons, the employers do not pay social security contributions and do not withhold them from the remuneration of the self-insured person. These earnings are included in the final amount of the insurance income, regardless of the activity for which the self-insured person is registered. The sum of income on which the social security contrbutions are due may not be less than the minimum monthly insurable earnings as defined under Art. 6 (2), item 2 of the SSC (Art. 11 (1) and (2) of the Regulation).
Social security contributions are not due by self-insured persons who are insured for general sickness and maternity for the period during which they receive cash benefits for temporary disability, pregnancy/childbirth/raising a child/adoption of a 2- to 5-year-old child, for the periods of temporary incapacity for work, as well as for the period during which they were not entitled to a cash benefit (Art. 3 (3) of the Regulation).
Persons only insured for disability due to general disease, old age and death owe social security contributions for the periods of temporary disability, pregnancy/childbirth/raising a child/adoption of a 2- to 5-year-old child.
Once a year, the self-insured person must submit Declaration № 6 "Data related to the outstanding social security contributions" by 30 April of the calendar year following the year to which the contributions relate. The final amount of the monthly insurable earnings is determined for the period of employment in the preceding year based on the data declared in the statement enclosed to the annual tax return under the Personal Income Tax Act (PITA) and it may not be less than the minimum monthly income determined by SSSBA for the year and higher than the maximum monthly insurable earnings. The amount of insurable earnings on which contributions are paid additionally is calculated as the difference between the amounts on which contributions are due and those which have already been paid. (Art. 6 (80 of the SSC; Art. 2 (4) of the Regulation).
The final amount of insurable earnings for 2023 is established on the basis of the data, declared until 30th of April 2024 with the submission of the statement enclosed to the annual tax return under Art. 50 Personal Income Tax Act (PITA) for 2023. If the declared insurable earnings are higher than the advance contributions, the person should make additional payments in instalments of the difference between the amount due to the Pension fund also for the additional pension insurance in the amounts for the „General Sickness and Maternity Fund“ for self-insured persons who have decided to be insured in this fund by the deadline for submission of their tax returns (the change in Article 6(8) of the CSR is effective from 01.01.2016).
The social security contributions of self-insured persons born after 1959 are as follows:
- State Social Security Funds-14.80 % and if the insured person has chosen to provide for all contingencies including the General sickness and maternity fund, which includes insurance for temporary disability, temporarily reduced capacity and maternity, the amount of insurance for the SSS funds is 18.30 %.
- Additional mandatory pension insurance fund within the Universal Pension Fund - 5.00%
- Health insurance fund - 8.00%.
We will consider in detail two examples with earned income below the maximum social security income and above the maximum social security income, which for 2023 is BGN 3.400.
With an annual income of BGN 48.000 and compulsory social security contributions excluding the „General Sickness and Maternity Fund“
It is necessary to calculate the average income received per month, i.e. 48.000 / 12 = 4.000 BGN monthly gross income. Self-employed persons have 25% statutory expenses, i.e. only 75% of gross income is subject to social security contributions and then tax. In this example the insurable income is 4.000 * 75% = 3.000 BGN. The total rate of compulsory contributions is 27.8%, i.e. the amount of social security contributions is 3.000 * 27.8% = 834 BGN. The tax base is calculated after deducting the amount of social security contributions 3.000 - 834 = 2.166 BGN, i.e. the tax due is 2.166 * 10% = 216,60 BGN. The net monthly income is BGN 4.000 - 834 - 216,60 = BGN 2.949,40 from which it follows that with an annual gross income of BGN 48.000, the net income is BGN 2.949,40 * 12 = BGN 35.392,80.
With an annual income of 160.000 BGN and compulsory social security contributions excluding the „General Sickness and Maternity Fund“
It is necessary to calculate the average income received per month, i.e. 160.000 / 12 = 13.333,34 BGN monthly gross income. Self-employed persons have 25% statutory expenses, i.e. only 75% of gross income is subject to social security contributions and then tax. In this example the insurable income is 13.333,34 * 75% = 10.000 BGN. The total rate of compulsory contributions is 27.8%, but it should be borne in mind that for 2023 the maximum social security income is 3.400 BGN, i.e. the amount of social security contributions is 3.400 * 27.8% = 945.20 BGN. The tax base is calculated after deducting the amount of social security contributions 10.000 - 945,20 = 9.054,80 BGN, i.e. the tax due is 9.054,80 * 10% = 905,48 BGN. The net monthly income is 13.333,34 - 945,20 - 905,48 = 11.482,66 BGN, from which it follows that with an annual gross income of 160.000 BGN, the net income is 11.482,66 * 12 = 137.791,92 BGN.
Self-employed persons shall be insured during the year on a selected monthly social security income which is not less than the minimum social security income, which is currently BGN 710. At the end of the year, after the sample calculations above, the amounts paid during the year for tax and social security contributions are deducted. The annual differences should be paid when submitting the annual tax return.