{"id":127540,"date":"2026-02-05T14:04:47","date_gmt":"2026-02-05T14:04:47","guid":{"rendered":"https:\/\/my.legal500.com\/guides\/?post_type=comparative_guide&#038;p=127540"},"modified":"2026-02-05T14:04:47","modified_gmt":"2026-02-05T14:04:47","slug":"bulgaria-employee-incentives","status":"publish","type":"comparative_guide","link":"https:\/\/my.legal500.com\/guides\/chapter\/bulgaria-employee-incentives\/","title":{"rendered":"Bulgaria: Employee Incentives"},"content":{"rendered":"","protected":false},"template":"","class_list":["post-127540","comparative_guide","type-comparative_guide","status-publish","hentry","guides-employee-incentives","jurisdictions-bulgaria"],"acf":[],"appp":{"post_list":{"below_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Dinova &amp; Rusev Law Office<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2018\/11\/drp-new-logo_small.jpg\"\/><\/span><\/div>"},"post_detail":{"above_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Dinova &amp; Rusev Law Office<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2018\/11\/drp-new-logo_small.jpg\"\/><\/span><\/div>","below_title":"<span class=\"guide-intro\">This country specific Q&amp;A provides an overview of Employee Incentives laws and regulations applicable in Bulgaria<\/span><div class=\"guide-content\"><div class=\"filter\">\r\n\r\n\t\t\t\t<input type=\"text\" placeholder=\"Search questions and answers...\" class=\"filter-container__search-field\">\r\n\t\t\t<\/div>\r\n\r\n\t\t\t\r\n\r\n\r\n\t\t\t<ol class=\"custom-counter\">\r\n\r\n\t\t\t\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What kinds of incentive plan are most commonly offered and to whom?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Bulgarian law does not expressly regulate or distinguish specific types of employee incentive plans. In practice, the most commonly offered incentive mechanisms are annual performance-related cash bonus schemes. These are typically linked to a combination of quantitative and qualitative performance targets, with the final determination and approval of the bonus amount usually remaining within the employer\u2019s discretion.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What kinds of share option plan can be offered?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Bulgarian law does not expressly provide for specific types of employee share option plans. As a result, share-based incentive arrangements are still relatively uncommon among local Bulgarian companies.<\/p>\n<p>This regulatory status allows Bulgarian subsidiaries that are part of multinational groups to implement a wide range of share option plans commonly used in other jurisdictions. In practice, however, certain plan structures\u2014such as restricted stock units (RSUs)\u2014are less attractive in Bulgaria due to adverse personal income tax implications for employees.<\/p>\n<p>The situation is expected to evolve following the introduction, in 2023, of the new flexible corporate form\u2014the variable capital company (VCC). The VCC is primarily designed for start-ups and small enterprises, particularly those engaged in high-tech and innovative activities. It offers a simplified legal framework that facilitates the issuance of equity-based incentives, including share option plans, to employees.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What kinds of share acquisition\/share purchase plan can be offered?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Bulgarian law does not explicitly provide for specific types of share acquisition\/purchase plans. Thus, all types of share acquisition\/purchase plans existing in other jurisdictions could be introduced to the employees of a Bulgarian subsidiary, part of a multinational group of companies. For this reason, in practice the types of acquisition\/share purchase plans offered in Bulgaria depend on the jurisdiction in which the particular multinational corporation and company issuing the shares is located and on its preferences.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What other forms of long-term incentives (including cash plans) can be offered?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There are no specific regulations under Bulgarian law with this regard. Any types of long-term incentives not violating Bulgarian law can be implemented. The most common alternative used in Bulgaria are annual cash plans representing an option for receiving cash payments related to the company\u2019s profits but not representing share subscription. Such incentives are usually reviewed annually and depending on the individual contribution of the respective employee or achievement of pre-determined quantitative and qualitative targets.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any limits on who can participate in an incentive plan and the extent to which they can participate?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There are no statutory limits on who can participate in an incentive plan or the extent to which they can participate. Such limits might be unilaterally introduced by the employer or mutually agreed with the employee. Usually, such plans are offered to executives, high-level managers or senior employees directly contributing to the financial results of the company and are limited for employees in probation and termination notice period.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Can awards be made subject to performance criteria, vesting schedules and forfeiture?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There is no formal limitation of the terms and conditions for granting the awards. Usually, the awards are subject to performance criteria and vesting schedules. However, vesting schedules and other such aspects may have an impact on the tax and social security treatment of the award.<\/p>\n<p>On the other hand, Bulgarian law forbids any pecuniary penalties in the employment relations as well as unilateral withholdings against due payments.<\/p>\n<p>Thus, such terms and conditions should be revised and carefully drafted in compliance with the law before implementation.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Can awards be made subject to post-vesting and\/or post-employment holding periods. If so, how prevalent are these provisions both generally and by reference to specific sectors?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Awards can be made subject to post-vesting and\/or post-employment holding periods but it is not common practice.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How prevalent malus and clawback provisions are and both generally and by reference to specific sectors?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>As discussed in the answer to Question 6 Bulgarian law forbids any pecuniary penalties in the employment relations as well as unilateral withholding (clawback) against due payments. Penalties are considered void and clawback is unenforceable without the explicit written consent of the employee.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the tax and social security consequences for participants in an incentive plan including: (i) on grant; (ii) on vesting; (iii) on exercise; (iv) on the acquisition, holding and\/or disposal of any underlying shares or securities; and (v) in connection with any loans offered to participants (either by the company operating the incentive plan, the employer of the participant (if different) or a third party) as part of the incentive plan.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p><strong>(i) on grant;<\/strong><\/p>\n<p>Generally, no tax and social security obligations arise on the grant of the incentive, since there is rarely any payment to, or receipt of any benefit by, the employee, or that benefit does not have an identifiable value until the exercise date.<\/p>\n<p>The income of the incentive might be taxable and subject to social security obligations in accordance with general Bulgarian tax and social security laws if, for example:<\/p>\n<ul>\n<li>The shares\/options are transferrable and have a grant price (or such a price can be determined).<\/li>\n<li>The shares\/options are granted for consideration (such as under plans where small amounts of the employee&#8217;s salary are regularly allocated to the purchase of options\/shares).<\/li>\n<\/ul>\n<p><strong>(ii) on vesting;<\/strong><\/p>\n<p>It is possible, although unlikely, for Bulgarian tax and social security obligations to arise from compliance with the vesting conditions, especially if the incentive is transferrable and funded by the employer (see the previous point in this Question 9). After vesting, an incentive may qualify as a benefit-in-kind. The tax and social security basis may be difficult to calculate, especially if the associated cost is not directly funded by the Bulgarian subsidiary employer.<\/p>\n<p><strong>(iii) on exercise;<\/strong><\/p>\n<p><strong>(iv) on the acquisition, holding and\/or disposal of any underlying shares or securities; and<\/strong><\/p>\n<p><strong>(v) in connection with any loans offered to participants (either by the company operating the incentive plan, the employer of the participant (if different) or a third party) as part of the incentive plan.<\/strong><\/p>\n<p>Bulgarian tax and social security obligations are likely to arise on the exercise of the incentive, especially when ownership of the shares is transferred to the employee on exercise (acquisition, holding or disposal of shares). When the share acquisition is funded by the employer, on exercise, the share transfer qualifies as a benefit-in-kind. Therefore, depending on the particular terms, conditions, and features of the incentive, the benefit-in-kind may be subject to accounting for tax\/social security in the same manner as other payments to the employee (or senior manager). The tax rate on employment compensation is a flat 10% rate, based on gross employment remuneration less social security contributions payments. No favourable tax treatment is available.<\/p>\n<p>The most common aggregate social security rate for 2026 is 32.3% distributed between the employer (18.52%) and the employee (13.78%). Contributions are calculated on the basis of the employee&#8217;s monthly remuneration and all employment benefits received for the respective month, subject to a maximum social security base of EUR 2,111.64 per month (full monthly income, including salary payments).<\/p>\n<p>The tax and social security basis may be difficult to calculate, especially if the associated cost is not directly funded by a Bulgarian subsidiary employer, or if the shares are not listed.<\/p>\n<p>If costs related to the grant, vesting, or exercise of incentives are not allocated to the Bulgarian employer, reporting and withholding obligations are the employee&#8217;s direct obligation. Incentive plans often provide for assistance to employees in these cases.<\/p>\n<p>Beneficial tax treatment is available on exit, as capital gains realised from on-exchange transactions in shares listed on a regulated market within the European Economic Area (EEA) are exempt from taxation (Bulgarian Personal Income Tax Act). This exemption can be enjoyed without any further conditions by the employee. If the regulated market is a major European (therefore, a non-Bulgarian) stock exchange, it may be advisable for the employer\/grantor of the incentives to procure for the employees sufficient evidence of meeting the exemption condition.<\/p>\n<p>When the tax exemption for transactions on regulated markets does not apply, the employee pays income tax at the rate of 10% on the capital gain realised on sale.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the tax and social security consequences for companies operating an incentive plan? (i)\ton grant; (ii) on vesting; (iii) on exercise; (iv) on the acquisition, holding and\/or disposal of any underlying shares or securities; (v) in connection with any loans offered to participants (either by the company operating the incentive plan, the employer of the participant (if different) or a third party) as part of the incentive plan.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>After determining when tax and social security obligations apply for the respective incentive following the general rules in Question 9, generally the employer is obliged to administrate, withhold and report the due personal income tax and social security contributions. The income tax is at the employee expense. The most common aggregate social security rate for 2026 is 32.7% distributed between the employer (18.92%) and the employee (13.78%). Contributions are calculated on the basis of the employee&#8217;s monthly remuneration and all employment benefits received for the respective month, subject to a maximum social security base of EUR 2,111.64 per month.<\/p>\n<p>If the costs related to the option are borne by the Bulgarian employer, the administration of tax and possibly social security withholding obligations described above are also borne by the employer. If these costs are centralised at group level outside Bulgaria, the employees themselves must administer tax returns and file and pay taxes.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the reporting\/notification\/filing requirements applicable to an incentive plan?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>On settlement of the incentive, the employee owes income tax, social security, and health insurance contributions for the received benefit.<br \/>\nIf the award income is included in the employee&#8217;s monthly salary, the local employer must withhold, report and pay income tax (at the flat rate of 10%) and the mandatory social security and health insurance contributions, on behalf of the employee (see Question 9).<\/p>\n<p>If the income on exercise of the award is granted by a non-Bulgarian group company that is not the employer of the Bulgarian employee, the income is subject to reporting in the employee&#8217;s annual tax return and the tax is payable by the employee.<\/p>\n<p>The employee must also report capital gains realised on sale of shares in their tax return. There is a tax exemption for capital gains realised from an on-exchange transaction on an EEA regulated market (see Question 9). Otherwise, the applicable Bulgarian tax rate is 10%, subject to any applicable double tax treaty.<\/p>\n<p>Bulgarian resident employees (including non-nationals, subject to certain domicile criteria) must file an annual return for statistical purposes (due by 31 March for the preceding year) to the Bulgarian National Bank for any bank accounts opened with foreign banks outside Bulgaria and any investments in securities (including shares) made without the intermediation of a local financial broker, if the amount of the deposited funds or investments exceeds EUR 25,000.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Do participants in incentive plans have a right to compensation for loss of their awards when their employment terminates?  Does the reason for the termination matter?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There are no legal requirements to compensate for loss of awards on termination of employment, or other situations that may cause loss. All such rules are regulated in the respective incentive plan\/policy\/agreement.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Do any data protection requirements apply to the operation of an incentive plan?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The rules of the GDPR and the Bulgarian Personal Data Protection Act for lawful processing of employees personal data apply to any personal data processed with regards and for the purposes of the incentives. This includes special rules for lawful data transfers outside the EU if the provided incentives, are issued and\/or administrated by a non-EU company.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any corporate governance guidelines that apply to the operation of incentive plans?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Promoting corporate governance principles and encouraging their adoption by public companies is part of the Bulgarian Stock Exchange\u2019s (BSE-Sofia) long-term policy aimed at enhancing the confidence of both domestic and international investors.<\/p>\n<p>Pursuant to the Rules and Regulations of BSE-Sofia, issuers seeking admission to trading on the BSE Main Market, Premium Equities Segment are required to conduct their activities in compliance with the National Corporate Governance Code approved by the BSE. For companies listed on other markets or market segments, adoption and implementation of the Code is recommended but remains voluntary.<\/p>\n<p>The National Corporate Governance Code does not, however, contain specific provisions addressing employee share or equity-based incentive plans. In practice, Bulgarian listed and non-listed companies that implement such plans typically follow established good practices derived from the jurisdictions of foreign-listed parent or group companies. At present, no specific regulatory approvals, disclosure obligations, or reporting requirements apply in Bulgaria in relation to the implementation of employee share plans.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any prospectus or securities law requirements that apply to the operation of incentive plans?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Bulgaria applies the Prospectus Regulation. Public offerings in Bulgaria usually require the filing of a prospectus with the Bulgarian Financial Supervision Commission (Commission). A notice of the offering must be published on the issuer&#8217;s website and on the website of the investment firms involved in the offering at least seven days before the initial offering (the beginning of the sale). The date of publication of the notice is considered the beginning of the public offering.<\/p>\n<p>Securities offered by foreign issuers to Bulgarian employees and others also fall within the regulations on public offering.<\/p>\n<p>There is no need to publish a prospectus for public offerings of securities in Bulgaria with a total value of less than EUR 8 million, calculated over a 12-month period. If the offering is not subject to other legislative exemptions, the issuer will only need to prepare \u0430 document for public offering, provide it to the Commission for review and publish it on the issuer&#8217;s website.<\/p>\n<p>If the prospectus requirement applies, the company must pay a state fee for the prospectus confirmation by the Commission.<\/p>\n<p>A prospectus authorised in another EU member state may be passported into Bulgaria without an approval of the Commission.<\/p>\n<p>The most commonly used exemptions in the context of employee share plans are those applicable to:<\/p>\n<ul>\n<li>Offers of securities to less than 150 persons (different from qualified investors) per EU member state.<\/li>\n<li>Securities offered, allotted, or to be allotted to existing or former directors or employees by their employer or by an affiliated undertaking, provided that a document is made available containing information on the number and nature of the securities and the reasons for, and details of, the offer or allotment.<\/li>\n<\/ul>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Do any specialist regulatory regimes apply to incentive plans?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Company Act introduces rules that allow VCCs to offer share options to their employees (see Question 2). Unlike other types of Bulgarian companies, a VCC is not required to publish its share capital and its shareholders in the Commercial Register. A VCC&#8217;s shareholders&#8217; meeting or management body can establish employee share purchase\/option plans. The company and plan participants (employees, managers, freelancers, and other persons hired by the VCC) must enter into bilateral agreements under a plan. The main rules regarding share options include the following:<\/p>\n<ul>\n<li>The shares must be the VCC&#8217;s own shares.<\/li>\n<li>The right to acquire shares is not transferable (unless vesting occurred before the death of the title holder).<\/li>\n<li>The transfer of shares acquired on the exercise of share options can be restricted for up to five years.<\/li>\n<li>Only individuals hired by the VCC can participate in the company&#8217;s share option plan.<\/li>\n<li>The maximum value of shares over which options can be granted is 15% of the VCC&#8217;s share capital.<\/li>\n<\/ul>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any exchange control restrictions that affect the operation of incentive plans?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Bulgarian Currency Law provides that natural persons can transport unlimited amounts of cash across national borders. Transportation of cash amounts exceeding EUR 10,000 (or its equivalent in another currency) to or from third countries (that is, outside the EU and the EEA) must be declared to the customs authorities. Transport of cash exceeding EUR 10,000 within the EU may require a customs declaration on request of the customs authorities. Cross-border transport of cash amounts exceeding c. EUR 15 338,76 (or its equivalent in another currency) involving third countries is subject to additional regulations.<\/p>\n<p>Bulgarian resident employees (including non-nationals, subject to certain domicile criteria) must file an annual return for statistical purposes (due by 31 March for the preceding year) to the BNB for any bank accounts opened with foreign banks outside Bulgaria and any investments in securities (including shares) made without the intermediation of a local financial broker, if the amount of the deposited funds or investments exceeds EUR 25,000.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What is the formal process for granting awards under an incentive plan?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There is no restriction on the discretionary offer of incentive plans to employees. The employer must explicitly stipulate the conditions for participation in the incentive plan complying with the applicable antidiscrimination rules. Payments under an incentive plan are usually considered as an additional employment benefit. When a Bulgarian employer grants an incentive plan, the general criteria for determination of eligible employees must be set out in the company&#8217;s internal salary regulations or attached to them.<\/p>\n<p>The fair value of shares granted to employees is determined by the market price of the company&#8217;s shares (or an estimated market price if the company&#8217;s shares are not publicly traded), adjusted to reflect the terms on which the shares are granted.<\/p>\n<p>In many cases, market prices do not exist for incentives granted to employees as options because the incentives granted are subject to conditions that do not apply to traded options. If there are no traded options with similar terms, the fair value of the options granted is determined by applying an option pricing model. The entity selects the valuation model to approximate the fair value of the incentives.<\/p>\n<p>The employer should also ensure tax and social security compliance at grant and any other stage of the incentives\u2019 provision.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Can an overseas corporation operate an incentive plan?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes, typically companies granting incentive plans in Bulgaria are non-Bulgarian listed companies or other specialised entities that are part of a multinational corporate group of which the Bulgarian employer is a subsidiary.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Can an overseas employee participate in an incentive plan?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There are no explicit restrictions with this regard. VCC may provide share options only to its own hires (employees or other contractors).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How are share options or awards held by an internationally mobile employee taxed?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The income of share options or awards is taxable in Bulgaria if they are provided for labour exercise in Bulgaria. Each separate option\/award plan should be subject to a specific assessment case-by-case in order to determine the specifics related to the taxation rules that should apply, such as:<\/p>\n<ul>\n<li>The grant value of the options\/awards.<\/li>\n<li>The consideration for which they are granted.<\/li>\n<li>Their market or fair value.<\/li>\n<\/ul>\n<p>If the costs related to the option are borne by the Bulgarian employer (Bulgarian tax resident), the administration of tax and possibly social security withholding obligations are also borne by the employer. If these costs are centralised at group level outside Bulgaria, the employees themselves must administer tax returns and file and pay taxes.<\/p>\n<p>If the shares are issued by a non-Bulgarian issuer, a double tax treaty may also regulate aspects of Bulgarian taxation; the withholding tax rates may differ depending on the applicable treaty.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How are cash-based incentives held by an internationally mobile employee taxed?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>On settlement of the cashed-based incentives, the employee owes income tax, social security, and health insurance contributions for the received benefit.<\/p>\n<p>If the incentive income is included in the employee&#8217;s monthly salary, the local employer must withhold and pay income tax (at the flat rate of 10%) and the mandatory social security and health insurance contributions, on behalf of the employee (see Question 21).<\/p>\n<p>If the income on exercise of the incentive is granted by a non-Bulgarian group company that is not the employer of the Bulgarian employee, the income is subject to reporting in the employee&#8217;s annual tax return and the tax is payable by the employee.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What trends in incentive plan design have you observed over the last 12 months?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In Bulgaria, recent trends in incentive plan design are driven by the need for talent retention amid a competitive labor market. Key trends include moderate salary increases, the widespread adoption of comprehensive benefits, and a focus on individualized compensation models. The focus on retention and design of incentive plans is still mainly for the senior and experienced employees from the high level management.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the current developments and proposals for reform that will affect the operation of incentive plans over the next 12 months?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In 2025 the pace of growth of salaries and provision of new incentives was slowing down significantly compared to previous years. In 2026 after Bulgaria became part of the EURO zone we do not expect significant changes in this trend.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\r\n<div class=\"word-count-hidden\" style=\"display:none;\">Estimated word count: <span class=\"word-count\">3623<\/span><\/div>\r\n\r\n\t\t\t<\/ol>\r\n\r\n<script type=\"text\/javascript\" src=\"\/wp-content\/themes\/twentyseventeen\/src\/jquery\/components\/filter-guides.js\" async><\/script><\/div>"}},"_links":{"self":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide\/127540","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide"}],"about":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/types\/comparative_guide"}],"wp:attachment":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/media?parent=127540"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}