Tax Optimization Is an Art


The pension system in Bulgaria is based on “three pillars”.

The first pillar includes mandatory state pension insurance. That is the State Social Security, which gives entitlement to retirement pension at a certain age and working experience. In order to receive such pension compulsory contributions have been made in the amounts specified in the Budget Act of the State Social Insurance.

The second pillar covers supplementary mandatory pension insurance in pension funds. There are two types of pension funds:

  • – Professional pension funds – include mandatory contribution for workers in the first and second category labor which is paid entirely by the employer;
  • – Universal pension funds – include mandatory contribution for those born after 31st December 1959 that is divided between the employer and the insured person.

The third pillar includes voluntary pension insurance in pension funds. It is not required by the law but any person older than 16 years can make contributions to it.
Supplementary pension insurance is encouraged by the government and thus the law provides for preferential tax treatment for this type of activity.

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