What contributions do freelancers owe?

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As highlighted in our article “How Bulgarian law treats “modern professions”?” (the full text of the article can be read here), Bulgarian law refers to freelancers as “self-employed professionals” or as persons carrying out “patent activity”. Further, the article “Tax Treatment of Freelancing” (the full text of the article can be found here) outlines the main obligations for declaration and payment of taxes for freelancing, as well as the mandatory registrations applicable to freelancers. This article, emphasizes another key aspect of freelancers’ activities, namely the social security contribution regime, or in other words, the freelancers’ insurance.

What cases is social security contributions payment mandatory for? What about voluntary insurance?

Due to the fact that freelancers are (mostly) tax-treated as “self-employed professionals”, it is mandatory to pay social security contributions for:

  • disability due to general illness (locally competent expert medical commission);
  • elderhood (pension social contribution);
  • death (inheritance pensions and supplementary payments thereto);
  • health insurance (access to hospital, pre-hospital and out-of-hospital healthcare).

Optionally (voluntarily) freelancers might also be insured for:

  • maternity (pregnancy, childbirth and child allowance);
  • general illness (sickness).

In order to benefit from social security rights, a freelancer must have an insurance booklet issued by the National Social Insurance Institute.

How to pay social security contributions?

Further on, due to the fact that freelancers are referred to as “self-employed professionals”, the amount of monthly insurable income on which contributions are changeable is voluntarily indicated by the declarant (freelancer). As there might be discrepancies between the income declared in advance and the income actually generated subsequently, the annual tax return amount under the Personal Income Tax Act is used to reconcile the contributions and tax amount due for the taxable income accumulated during the year.

When are social security contributions payable?

Every freelancer is obliged on a monthly basis to declare and pay the social security contributions due on the income indicated before the 25th of the month following the relevant month.

It is important to underline that payment of social security contributions is due only if freelancing is carried out. If there is no activity conducted, no social security obligations arise. However, declaration should be submitted with the National Revenue Agency for suspension of (ceased) activity. Subsequently, when the freelancing activity is resumed, re-continuation of activity should be also declared.

 

This series of topical articles and current materials aims to address the practical and legal aspects related to the gradual entry of “modern professions” in the Bulgarian employment market. In line with the more general tendency of modern law to form a regulative framework and instruments for its practical application afterwards, i.e., after the actual emergence of regulated social relations, the same trend is observed with “modern professions”. Thus, with the progressive development of technology, the entry of blockchain technologies and social networks, unconventional new professions – independently carried out, on full responsibility of the provider, completely or partially within an online environment – are emerging in the state for the first time.

This series of informational materials aims to regularly inform readers – consumers and service providers – about the contemporary implementation matters related to the provision of services by freelancers, influencers, bloggers/vloggers, dropshippers, and others, as well as the main issues that users of such services face.

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