Dear clients and partners,
As from 1st of January 2016, there are changes which have been officially announced and implemented in the Bulgarian labour and insurance legislation. Driven by our constant desire to always keep you updated with all the statutory changes in Bulgaria that concern you and can directly influence your operations, we have prepared a brief summary of the relevant amendments and supplements in the payroll and taxation area.
We really hope you will find the provided information useful and of course in case of questions we will be happy to be of assistance.
- The statutory defined threshold for limitation of cash payments is being decreased from 15,000 BGN to 10,000 BGN. This is considered as a measurement for limitation of the grey economy. This limitation is going to be applied also in all cases for payments in foreign currency when the payment equals or exceeds 10,000 BGN at the foreign currency exchange rate of the Bulgarian National Bank for the particular day of payment.
- As of 1st of January 2016 the minimum monthly working salary is increased to 420 BGN and the minimum hourly working salary to 2,50 BGN. This is applicable for an 8 hours working day and 5 days working week.
- The minimum insurance incomes in the different economic activities and professions increase with average of 8,6% in 2016 compared to 2015. This will increase the incomes with around 80 million BGN. The lowest insurance income equals 420 BGN which is actually the minimum working salary in the country as from the beginning of 2016. The amount of the maximum insurance income does not change for all the insured persons – for 2016 it is still 2,600 BGN.
- The period which defines the amount of the compensation in cases of pregnancy, breast feeding or advanced stage of in vitro treatment. Instead of the last 18 months, this compensation amount will be calculated by the insurance income of the persons for a period of 24 calendar months, prior to the month when the insurance event occurred.
- As of 1st of January 2016 all sick leave certificates will be submitted electronically through a qualified electronic signature directly on the National Social Security Institute’s website. Accordingly the deadlines for submission of the sick leave certificates is being amended to the 10th day of the month, following the month in which the employee has presented the necessary documents to his/her employer.
- Until the 14th of February the VAT registered companies are obliged to report the tax for using companies’ assets for personal needs before the NRA. This amendment concerns also the cases when a company’s asset has been purchased for personal needs only and therefore no tax credit has been used. In this case the companies are not expected to calculate VAT on a monthly basis since then haven’t used a tax credit for this purchase. Alternatively, there are the cases when a particular asset is being purchased for both company’s and personal needs.
There are two options here:
– Writing off the tax credit entirely, as VAT is calculated for the personal utilization of the asset
– Using tax credit in the proportion, corresponding the ratio personal – company’s using of the asset.
- The accounting documents can be composed in foreign language in case when the agreed remuneration is in foreign currency. It is not mandatory these to be translated in Bulgarian language unless this is explicitly foreseen in the legislation.
- Companies with income from sales up to 200,000 BGN for the reporting period will no longer be obliged to conduct a mandatory annual inventory of the assets and liabilities.
- Companies for which a mandatory independent financial audit applies are:
The VAT registered companies can create their own mechanism for distribution of the expenses depending on the extent of utilization of the respective good/service for personal needs.
It is important to be noted that companies have the freedom to choose the criteria for the application of this mechanism, but this needs to be done in advance, as the document which regulates the mechanisms for expenses distribution, must be available in cases of tax inspections and checks.
– Those which, as of 31st of December, exceed at least 2 of these three criteria: assets of at least 2 million BGN, income from sales exceeds 4 million BGN, the average number of employees in the reported period is 50 people.
– Companies of public interest
– Companies for which this obligation is defined with a law
– Joint stock companies and limited partnerships with stocks, unless during the reporting period they remained dormant.
– Legal entities with non-for-profit business which as of 31st of December exceed at least 1 of the following criteria: 1,000,000 BGN assets, income from profit and non-profit activities 2,000,000 BGN, total amount of the received in the current year financing and financing, unutilized as of 31st of December of the current year, received during previous reporting periods – 1,000,000 BGN
– Legal entities with non-for-profit purposes, used for practicing community service and mediation in cases of international adoption