How to Declare a Bonus to Salary in Bulgaria?
Giving a bonus to an employee’s salary is an effective way to show appreciation and further motivate your team. However, it is important to know that this type of payment must be officially declared in compliance with Bulgarian legislation. In this guide, we’ll explain exactly how to declare a bonus to salary and outline the steps employers need to follow.
What Is a Bonus?
A bonus is an additional amount paid on top of the base salary. It can be awarded for achieved results, as a holiday incentive, for referring a new employee, or as a one-time recognition. Regardless of the reason, bonuses are considered income and are subject to taxes and social security contributions, just like any other employment income.
How to Properly Declare the Bonus?
To ensure full compliance with the law, follow these key guidelines:
Include It in the Monthly Salary
The bonus should be processed together with the salary for the month in which it is paid. This ensures proper accounting and accurate calculation of social security contributions.
Declarations to the National Revenue Agency (NRA)
- Declaration Form 1 – provides information about the employee’s income and social security contributions.
- Declaration Form 6 – summarizes the total taxes and contributions due from the employer.
These declarations are mandatory and must include the bonus amount.
Issuing a Salary Slip
Each employee receiving a bonus must get an updated salary slip showing the bonus clearly. This ensures transparency and builds trust.
Documenting the Bonus in Employment Records
Bonuses must be documented through an internal order, an annex to the employment contract, or another administrative basis depending on the company’s internal policies. This provides legal protection when needed.
Deadlines for Taxes and Social Security Contributions
Taxes and contributions on bonuses are due by the 25th of the following month, just like standard salaries. Meeting this deadline is crucial to avoid interest charges and penalties.
Are There Tax-Exempt Bonuses?
In Bulgaria, all bonuses are treated as taxable income and are subject to:
- 10% personal income tax
- Social security contributions – both for the employee and the employer
It’s advisable for employers to calculate all related costs before awarding bonuses.
Optimization Opportunities
Some employers explore legal ways to reduce the tax and social security burden. Possible alternatives include:
- Non-cash benefits – meal vouchers, sports cards, gift vouchers
- Short-term service contracts – where applicable
- Covering training or certification costs
Before considering such options, always consult with an experienced accountant.
Required Documentation
Each bonus must be supported by clear and verifiable documentation, including:
- A decision by the manager or governing body
- A list of employees and bonus amounts
- Updated payroll and salary slips
Proper documentation is essential in case of audits by tax authorities.
Bonuses are a great way to motivate your team, but they also involve administrative challenges. To avoid mistakes and potential penalties, it’s important to declare bonuses accurately and on time, supported by proper documentation and within set deadlines.
T&G Consulting offers professional assistance with payroll preparation, filing declarations, and comprehensive accounting services. If you need help declaring bonuses, our team is ready to support you quickly and efficiently.
Contact us today and ensure peace of mind for your business!
For more useful information, follow our partners’ channel!