As a freelance professional in Bulgaria, you are in the driver’s seat with your professional career. You can control who your clients are, what hours you work and how your work-life responsibilities are managed. Before you settle into an exciting career as a freelancer, however, you understandably want to take all reasonable steps to get your new business running profitability as soon as possible. At Xolo, we believe that everyone should have the ability to enjoy the exciting benefits of freelancing in Bulgaria, and we are proud to support you in this endeavor.
Eligibility to Open a Freelance Business in Bulgaria?
Before you do business in Bulgaria, it is important to explore the established rules and regulations. All freelancers in Bulgaria must have a self-employment permit. This is available through the central office at the Employment Agency. This permit will be valid for one year and must be renewed regularly in order to continue to do business in Bulgaria as a freelancer. The purpose of the permit is for the government to verify the impact of the business on the economy.
If you are an expat, you will also need a Type D visa, which is available through your country’s embassy. Once you arrive in Bulgaria to start working as a freelancer, you also need to contact the Migration Directorate for a Residence Permit.
Register to Work as a Freelancer in Bulgaria
Regardless of whether you are a Bulgarian resident or an expat, there are a few steps required to obtain the necessary self-employment permit. To become a freelancer in Bulgaria, you must first prepare a detailed plan that outlines your freelance work activities. This must be provided to the Employment Agency along with proof of your education and related qualifications. You must provide a Level B1 certificate that provides your fluency in the Bulgarian language. To obtain a work permit, you also need to prove at least two years of prior and related work activities and show that you have enough financial resources necessary to be successful in your endeavor. Keep in mind that you must provide this information each year when you renew your request for a self-employed worker’s permit.
Legal Obligations for Freelancers in Bulgaria
If you have a permanent residence in Bulgaria, you are required to pay a personal income tax. The personal income tax rate for self-employed individuals is 10%. You will also be responsible for paying VAT, or value added tax. The VAT rate will depend on the country that each of your clients is located in.
For clients in Bulgaria, you are responsible for VAT of 20%. This rate is based on the income that was produced by offering your goods or services to the client or customer. However, a reduced VAT of between zero and 9% may be applied based on the types of goods and services that you offer. Be aware that the VAT rate is different for each country, and it is the freelancer’s job to keep track of VAT owed.
The process for signing up for VAT varies based on whether you are a citizen or an EU non-resident freelancer. Registration can be completed online through the National Revenue Agency.
How to Invoice Your Clients as a Freelancer in Bulgaria
When you do business in Bulgaria as a freelancer, you must prepare a separate invoice for the goods and services that you sell. Each invoice must be in compliance with the VAT invoice requirements issued by the EU VAT Directive. Invoices must be issued for each service provided and should be filed away for at least 10 years.
All Bulgarian invoices issued by freelancers must have a date of issuance and a unique invoice number. The invoice should clearly display the freelancer’s VAT number as well as the customer’s Bulgarian or BULSTAT VAT number. You also need to show both the freelancer’s and customer’s address and a description of the services or goods that the customer purchased. For goods, you must include the number of items sold and their unit prices. If the date of delivery is different from the invoice date, the date of delivery must be displayed. The invoice needs to show the product’s or service’s net taxable value. Other information that must be shown on the invoice includes the VAT rate, any reason for a VAT exemption, the margin scheme and the gross value for the invoice.
How to Manage Your Expenses and Income as a Freelancer in Bulgaria
Managing your finances will undoubtedly play a major role as you do business in Bulgaria as a freelancer. You must actively track each expense. Keeping up with this task on a daily basis enables you to always see your bottom line. It also enables you to make savvy business decisions based on the current financial state of your business. At the same time, you must create and track invoices. While some freelancers collect payments on the spot when goods are sold or services are rendered, others accept payments at a later date. Tracking accounts receivable and accounts payable enables you to monitor inflows, follow up on outstanding invoices in a timely manner and stay on top of your bottom line.
You can see that managing your finances will likely require daily oversight and effort. However, you understandably want to focus most of your attention on serving your customers with your goods or services. You can dramatically simplify your freelance business’s financial management needs through Xolo Leap by which you run your EU business of one from anywhere with the help of our accounting and tax experts.
How to Market Services and Find Clients as a Freelancer in Bulgaria
The marketing strategies that you use while freelancing in Bulgaria will directly depend on your business activities. Digital marketing is effective for many activities. It includes email marketing, search engine optimization, online ads, social media marketing and more. There may also be opportunities for you to connect with potential clients through networking. Established clients may spread the word about your freelancing business through word-of-mouth advertising. There are also more traditional ways to market your business, such as through radio and newspaper spots, flyers, postcards and more.
Insurance for Freelancers in Bulgaria
Bulgarian freelancers are required to pay for their own insurance under the Code of Social Insurance. Through participation in the social security system, individuals are provided with coverage for unemployment, diseases, work-related accidents, old age and more. This compulsory insurance is payable each month. It is broken up as 8% of gross salary or income for health insurance, 5% for pension insurance and 17.3% for basic social security. Typically, the employer pays 60% of the cost of this insurance, but self-employed individuals must pay the full amount.
Open a Freelance Business in Bulgaria
Becoming a freelancer in Bulgaria comes with many exciting opportunities and the ability to improve your quality of life. However, there are many responsibilities associated with freelancing. Likewise, the process of opening a freelance business in Bulgaria can be laborious. What does it take to open your freelancing business?
- Obtain the necessary work permit through the Employment Agency. Expats must also apply for a residence permit and a visa.
- Register to pay VAT in Bulgaria.
- Learn more about social security insurance in Bulgaria. Develop an internal system for making contributions in a timely manner.
- Develop an invoicing system.
- Prepare an income and expense management system.
- Create a marketing plan. Take into account the methods that are most likely to put you in front of your target audience and that are suitable for your budget.
- Ensure that you are fully ready to serve your customers, such as by having the necessary resources and supplies available.
You can open a freelance business in Bulgaria from anywhere in the world. Through Xolo Leap, you can have your Estonian e-resident business registered and hence operate your business going forward regardless of the country that you are based in.
Opening a freelancing business in Bulgaria may be one of the most important professional steps that you will make throughout your career. The process of establishing your business can seem daunting, and operating it may create additional stress. Thankfully, you do not have to start and run your freelancing business on your own!
