Cash remuneration from abroad
Cash remuneration from abroad
Question:
Hello!
I work for a UK company, but I have returned permanently to Bulgaria and my employer has agreed to transfer me to a contract as a consultant. Which would be better for me - to register as a company or a self-employed person? What documents do I need to submit in Bulgaria and within what time frame? I also have a student loan in England - should I pay it separately or through the company I work for? I am also interested in what account you would recommend for reporting the money - should I use a Bulgarian account in BGN or can they transfer my salary to an account like Revolut? How should I declare my income in Bulgaria - on a monthly basis and against monthly invoices? Do these invoices need to be translated into Bulgarian?
Thanks in advance!
Answer:
Hello,
Whether it is better to work through a company or as a self-employed person (freelancer) cannot be determined unambiguously. There are differences both from a tax and insurance perspective, and from an administrative perspective.
From a tax perspective:
- in the case of a freelancer, you declare the amount of income for the year. From the amount thus obtained, you deduct 25% of legally recognized expenses and the insurance contributions paid during the year, and you owe 10% tax on the amount received.
- in the case of an EOOD, you declare the amount of income and expenses related to your activity. If the income is more than the expenses, then you realize a profit and this profit is taxed with a 10% tax.
From an insurance perspective, things are as follows:
- in the case of a freelancer, you insure yourself monthly, and you must declare and pay insurance contributions every month. The minimum social security income is currently 1077.00 BGN, which means minimum social security contributions of 300.00 BGN per month, and the maximum 4130.00 or social security contributions of 1150 BGN. At the end of the year, when submitting an annual tax return, an adjustment is made based on the income earned during the year. If its amount exceeds the amount on which you were insured, you must pay social security contributions on the difference. The amount on which social security contributions are paid on an annual basis cannot be higher than 49560.00 BGN for 2025.
- with an EOOD, social security contributions can be paid on an amount between the minimum social security income for the year - 1077.00 BGN and the maximum - 4130.00 BGN, the difference being that there is no annual adjustment and you actually choose what amount to be insured on. I.e. you can choose to insure yourself with the minimum social security income and owe social security contributions in the amount of 300.00 BGN / month
To assess which is more economically advantageous for you, you need to predict what income you expect to receive and what expenses you would have.
Apart from the differences from a tax and social security point of view, there are also several purely functional differences:
- the money you earn as a freelancer is actually your money and you can "spend" it whenever and for whatever you want. With an EOOD, the money the company earns remains with the company. If you want, as the owner, to dispose of this money, there are several options - to give yourself a salary, to give yourself a loan or after the financial year has expired and if the company has made a profit, you will be able to distribute a dividend (and you will have to pay an additional 5% dividend tax on this amount).
- if you exercise your activity as a freelancer, you will not be obliged to issue a cash receipt when receiving cash. For an LLC, this requirement does not apply and if you receive money in cash, you will need to have a cash register.
- to register as a person practicing a freelance profession, you need to provide a diploma or some other certificate in addition to the set of documents (application and declaration) that certifies your competence to provide the services you will perform. The registration itself is carried out by the Bulstat Register within 24 hours, with a state fee of 10.00 BGN. To register an LLC, the procedure is a little longer and more complicated. A set of documents is prepared (constituent act, minutes of the constituent meeting, management agreement, several declarations and a sample signature). Some of the documents are certified by a notary. Then you must open a savings account in a bank of your choice, into which you can deposit the initial capital. The minimum is 2.00 BGN. The import note for the paid-in capital, together with the other prepared documents, are submitted to the Commercial Register no later than 7 calendar days from the date of the founding act, and the registration is carried out within 7 working days. The state fee is 110.00 BGN. The notary fee is 8.00 BGN, and the bank fee depends on the bank you choose, and it varies from 30.00 - 50.00 BGN.
In terms of administrative commitments in both cases, you will have them on a monthly, quarterly and annual basis, related to submitting various declarations regarding your social security contributions and taxes.
Regarding the student loan - in any case, it is appropriate that it be paid through your personal account. That is, when working through a company, you can transfer the profit made as a dividend or remuneration to your personal account and repay the loan from there.
The bank account can be in any bank or online payment platform (including Revolut). The only drawback of online payment platforms is that organizing the payment of taxes and social security contributions to the National Revenue Agency is only possible online with a debit/credit card.
Income declaration is done in different ways depending on the type of work / company / freelance, amount of income, possible VAT registration, etc./ There may be a requirement for monthly/quarterly and annual declaration of income.
The invoices that you issue to your client must in any case also have a version in Bulgarian. It does not prevent them from being bilingual or having a second version in English or another language.
We hope we have been helpful!
Greetings!
