In the case of a business secondment or a secondment for the purpose of training or specialisation abroad, the employer shall have the right to unilaterally decide which employee is to be seconded, where and for what period, during which time the employee is entitled to a daily subsistence, travel and accommodation allowances (in addition to their salary), in order to compensate him/her for any inconvenience, suffered in the performance of his/her tasks outside the place of work or residence.
The main regulations governing secondments at home and abroad, are the Bulgarian Labour Code, the Ordinance on secondments and studying abroad and the Ordinance on secondments in the country.
Key requirements and conditions applicable to secondments
Art. 121 of the Labour Code regulates the basic secondment requirements, namely:
- An employer cannot second employees for more than 30 consecutive calendar days without their consent.
- Secondment for a period longer than 30 calendar days is possible only with the written consent of the employee.
- In the event that the period of secondment is longer than 30 calendar days, the employer and employee must agree on secondment under at least the same minimum working conditions as established for employees performing the same or similar work in the host country.
- The total duration of all secondments abroad of a secondee from the departments in a calendar year may not exceed 180 days.
- It is not permitted to combine a secondment or specialisation with private travel.
Secondments are carried out on the basis of a pre-issued written order.
Under special circumstances, when immediate departure is required, it can be done by verbal order of secondment, whereby a written order must be issued within three days (Art. 8 (1) and (2) of the Ordinance on secondments in the country).
The main requisites that must be present are specifically stated in the regulations and in the most common cases are the following :
- Name of the institution or entity that seconded the employee or sent them to specialise;
- Reason for issuing the order,
- The names of the appointee or the person who is sent to specialise, place of work and position;
- Starting date and duration of the secondment or specialisation in calendar days, including travel days, weekends and holidays.
- Country and location, where the person is seconded or sent to specialise;
- Financial terms of the secondment or specialisation - travel and accommodation expenses, passport, visa and other fees and expenses for their business luggage and ways to arrange thereof,
- The task of the appointee or the person sent to specialise.
- Type of vehicle(s) and route;
- Director, who suggested the secondment or specialisation;
- Other circumstances related to the specific conditions of the secondment or specialisation;
- Name, position and signature of person issuing the order and stamp of the department or enterprise;
- Name of the institution or entity bearing the costs related to the secondment.
What are the permissible travel, subsistence, accommodation and other expenses?
I. Travel expenses
The secondment of employees in the country are paid travel expenses for going to the place of performance of the task and vice versa, including the cost of public transport within the place where the employee seconded. The secondment order determines the type of transport to be used. It is allowed for the posted person to use a personal vehicle, in which case they shall be paid travel allowances equal to the equivalent fuel consumption in the most economical mode specified by the manufacturer of the vehicle.
Where employees are seconded abroad, travel expenses are equal to the amount of expenses actually incurred, according to the secondment order by the shortest or most economic route. When travelling by air, seconded employees shall be entitled to an economy-class flight ticket except when performing urgent tasks and traveling with an economy class ticket is objectively impossible. When traveling with a personal or business car, travel costs amount to 50% of the value of the plane ticket for this destination to cover the transport costs by the most advantageous tariff or equivalent fuel consumption at the most economical cost, determined by the manufacturer of the used vehicle. In the travel costs of trips abroad also include supplementary charges, such as road tolls and car parks.
The means of transport for inner city secondments abroad are included in the daily allowance. Where the cost of transfer from the airport to the location of the secondment is more than 30% of the daily allowance, then these costs are borne by the seconding country.
Secondments in the country or abroad do not include travel money or they are usually recognised at a reduced rate if the secondee is entitled to a free transport or uses any discount.
II. Daily allowance
According to Art. 19 (1) of the Ordinance on secondments in the country a secondee left to spend the night at the place of secondment shall be paid a daily allowance of 20 BGN for each day of the secondment. When the employee performs its duties at the majority of working time in another place without spending the night, a daily allowance shall be paid in the amount of 50 percent (BGN 10 per day) of the amount under para. 1. No daily subsistence allowance shall be paid for days during which the secondee returns to his permanent place of work for reports, studies, etc.
In case of secondments abroad the daily allowances are set for each country in accordance with Annex №2 of the Ordinance on secondments and studying abroad. Daily allowance is provided for food, local public transport and other costs.
If the host country pays part of the expenses, the daily allowance is reduced accordingly: lunch - 35%, dinner - 35% and other expenses - 30%.
The full daily allowance amount on secondments is paid for 30 consecutive calendar days. Any days over this daily allowance shall be reduced by 25% of the amounts specified in Annex № 2.
Heads of enterprises may set amounts of daily subsistence allowances other than those specified in Annex № 2, which may not exceed their amount twice. Heads of departments and enteprises may pay subsistence allowances at the actual rates, but not more than twice the rates set out in Annex No 2, in case of participation in major international events and provided that an invitation has been submitted by the organisers containing information on the rates offered by the hotels for participants.
When the secondee stays in two or more countries on the same day, the daily subsistence allowance shall be paid for the country in which the secondee stays longer.
Departments and enteprises are obligated to insure the secondees with medical insurance for the duration of the secondment abroad. Pursuant to Art. 24 (1) of the Ordinance on secondments in the country, a secondee who is ill during the secondment is entitled to a daily allowance for the entire period during which his health condition does not allow them to perform the assigned task or to return to their permanent workplace.
When the condition of the employee needs to be treated at a hospital, a daily allowance is not paid (Art. 24 (2) of the Ordinance on secondments in the country).
When a person is seconded for more than 30 calendar days in the country, they are allowed to return to their permanent workplace once a month during weekends or holidays. He/She shall not be paid daily subsistence allowance for those days.
III. Accommodation costs
For secondments in the country the secondee is entitled to accommodation costs for the night in the place of secondment to the amount actually paid (incl. taxes and fees) upon presenting a document issued by the established order, but no more than the approved amount for one night. Compensation between the separate nights is not provided.
No subsistence allowance shall be paid where free state or public accommodation is used, where the secondment is in the locality where the secondee or his family lives, and in the case referred to in Art. 24(2) of the Ordinance on secondments in the country).
For secondments abroad accommodation expenses are recognised in certain amounts according to the specific country ivolved, according to Annex №2 of the Ordinance on secondments and studying abroad.
IV. Accountability and control
Pursuant to Art. 29 (1) of the Ordinance on secondments in the country within three days after returning from a secondment, the secondee is obliged to submit a report on the work done. Managers are obligated to provide feedback on the report in five days.
The report is based on documents justifying the costs incurred by the secondee. NSKSCH provides a general procedure and type of reporting documents. Thus the daily allowances are reported according to the actual stay in the countries and the journey time is determined by the data from stamps and bookmarks in the passport for entry and exit. In the absence of such stamps and bookmarks, the data of the transport document are accepted.
The accommodation allowance is recorded by a document issued by the hotel. Registration fees of the seconded person in congresses, conferences, symposia and others are evidenced by a document issued by the organisers. In addition to the documents indicated above, the secondee must also submit a report on the spending and currency (in a form approved by the Minister of Finance) within 14 days of returning from their secondment.
V. Tax treatment
In order to be tax deductible, travel and accommodation costs must be documented by a primary accounting document (invoice, report, boarding pass, receipt or quittance for highway and other tolls paid, waybill, travel book).
According to Art. 33 CITA, for tax purposes are recognized the following accounting expenses for travel and stay of individuals where the travel and subsistence costs have been incurred in connection with the activities of the taxable person:
1) the cost of travel and stay of individuals who are in employment with the taxable person or hired thereby under non-contractual relations, including managers, members of management or supervisory bodies of the taxpayer;
2) the expenses incurred by a sole trader for the travel and stay of:
- the natural person - owner of the sole trader, and
- persons who are employed by a sole trader or hired thereby under a non-contractual relationship.
The accounting costs of travel and stay of the shareholders when they travel and work in their capacity as shareholders or associates are not recognised for tax purposes.