We assess how the director works and is remunerated, then coordinate the applicable payroll, social security calculations and supporting declarations.
A company came to ARG struggling to turn information about director payroll and social insurance into a workable process. ARG identified gaps in its records, corrected the order of the work and documented the steps to follow. This gave the company a clearer view of the outstanding items and their purpose.
That situation reflects a common practical problem. A person may be both a company owner and a director, but those roles do not automatically determine the same insurance or tax treatment. The correct starting point is to establish the legal basis for the payment, then match the withholding, insurance and reporting process to the facts. This service explains the distinction and the decisions that follow, including cross-border complications.
ARG can help when you need to
Provide the registered appointment, actual duties and company decision or contract establishing remuneration; ownership alone does not determine insurance.
Confirm tax residence, where management is performed and other employment, with any applicable-legislation or A1 certificate for insurance.
Identify the activity-specific minimum, relevant monthly ceiling, days worked and other insured income before fixing the contribution calculation.
Separate management pay, personal work, dividends and benefits, with a documented basis and dates for each payment.
The real difference is that a Bulgarian director under a management and control contract is treated as a person insured in a specific statutory category, while a company owner who works on their own account is handled as a self-insured person. Those are not interchangeable labels, even if the same human being may sometimes wear more than one role in practice.
A Bulgarian management and control contract is commonly called DUK, from dogovor za upravlenie i kontrol. It governs the management role and is not itself an ordinary employment contract. Article 4(1), item 7 of the Social Insurance Code creates a separate insurance category. For the manager, the NSSI identifies the registered management position, actual work and remuneration provided for by a company act as relevant conditions. A shareholder’s name in the company register alone does not establish every insurance obligation, and delaying payment does not remove contributions on remuneration already due.
A self-insured owner is different. The National Social Security Institute’s guidance on self-insured persons treats owners, partners, sole traders and certain other persons who work for themselves as a separate category. The key point is that ownership does not automatically create a self-insured status, and director status does not automatically make someone an ordinary employee either.
It changes what must be documented before any payment is processed. For a director, the decisive question is whether there is a valid management and control contract and whether the company is paying that person in the director category. For a self-insured owner, the decisive question is whether the person has properly registered and is actually acting under the self-insured regime. Those are different legal bases with different reporting consequences.
It also changes the accounting logic. A management-contract director is handled through payroll-style processing for that category, with withholding and reporting tied to the director remuneration rules. A self-insured owner is not processed on the same footing, because the company is not simply running an employee-like payroll package for that person. The National Revenue Agency’s guidance on management and control contracts and the NSSI guidance together show why the label matters before the first payment is made.
Clients often ask whether a director who is also the shareholder can be treated as self-insured by default. The answer is no. The legal basis has to be checked against the actual role, the contract, the ownership position and the registration status. In one file, the same individual may be a company owner, a manager and a self-insured person, but each status has to be justified on its own facts. That is why ARG starts by separating the roles before deciding how the remuneration should be booked and reported.
The label on the person is not enough. The legal basis for payment and insurance has to be proven first.
For a client, the practical result is simple. Before any payroll or owner remuneration is run, ARG has to confirm which status is legally supported, because that answer determines the insurance treatment, the reporting path and the risk of using the wrong payroll model.
Tax treatment starts with the director’s tax residence. The NRA treats a Bulgarian tax resident’s DUK remuneration as employment income for personal-income-tax purposes, even though the underlying contract is a management contract. For a nonresident individual receiving Bulgarian-source management income, the next question is whether that individual has a Bulgarian fixed base. This is not a test of whether the paying company has a registered office. A fixed base concerns the individual’s independent activity in Bulgaria, including a fixed place or sufficiently permanent activity under the statutory definition. Residence, working arrangements and treaty entitlement must therefore be established before choosing the withholding method.
For a resident director, and for the applicable nonresident fixed-base case, the payer uses the employment-income tax rules. The ordinary advance tax is 10% of the monthly taxable base after the relevant mandatory personal contributions and allowable reliefs. Calling the company an employer for this tax purpose does not convert DUK into a Labour Code employment contract. Give payroll the remuneration decision, actual payment dates, taxable benefits and evidence of contributions relevant to the deduction. The payroll calculation should show the gross remuneration, contribution treatment, taxable base, withholding and net amount as separate figures.
For a nonresident individual without a Bulgarian fixed base, the NRA describes domestic final tax of 10% on the gross accrued Bulgarian-source management remuneration. The payer’s declaration under Article 55 and payment are generally due by the end of the month after the quarter of accrual. This can arise before the director receives the money. The NRA also explains the separate treaty-relief reporting route. A foreign passport or foreign bank account does not itself establish a tax exemption. Obtain residence evidence and assess the applicable treaty before applying a reduced treatment to the payment.
The point is not just the rate. It is the entire reporting path. If the person is in the defined-base route, the payer withholds monthly tax and follows the employer-style payroll process. If the person is in the final-tax route, the payer follows the quarterly payment timing for the final tax. A company that confuses the two may file late, withhold at the wrong time or prepare the wrong returns.
The same guidance also states that the payer must remit monthly withheld tax by the 25th day of the following month in the defined-base route. Where the payer is the main employer at 31 December, the annual adjustment rules also apply. Separately, the employer must issue a service certificate on request within 14 days, and the annual information return is due to the NRA by 28 February of the following year. Those are distinct duties, and none of them should be mixed up with the tax due date itself.
The fixed-base distinction belongs to the nonresident-director analysis. It must not be used to move a Bulgarian tax resident into final taxation simply because they work remotely or have no personal office. Equally, a nonresident’s Bulgarian-source director fee cannot be treated as foreign income merely because it is paid abroad. Keep the residence assessment, applicable treaty article, management appointment and accrual schedule in the same file. They explain both the chosen withholding route and the quarter or month in which the payer must report.
Before agreeing a net director payment, ask which gross amount and company cost will produce it under the correct tax and insurance treatment. The same headline fee can create different payment schedules where the individual is resident, nonresident, insured under Bulgarian law or covered by another state’s legislation. ARG coordinates those facts with the management documentation and accounting entries. The resulting schedule should tell the company what to accrue, what to withhold, which authority receives each amount and which evidence the director needs for their own tax records.
Tell us where you live, how your business works and what you want to change. We will help you identify the questions to resolve and the next steps to consider.
ARG would first classify the person before it touches payroll. The practical question is whether the individual is being paid as a manager under a management and control contract, or whether the person is genuinely acting as a self-insured owner under the separate self-insured regime. The National Social Security Institute treats those as different insured-person categories, and the company cannot safely assume that ownership, management and insurance status mean the same thing.
For that classification, ARG would normally check the company role, the actual management contract, the ownership position, the way the person works in practice, the remuneration terms and any existing insurance registration. That record review matters because the legal basis must match the real arrangement, not just the title used in the company register or in internal bookkeeping. If the person is a director under a management contract, the file should support that route. If the person is instead a self-insured owner, the company needs evidence that the self-insured status exists and is properly registered.
The 2026 insurance-income limits change during the year. The monthly ceiling is€2, 111.64 for January–July and€2, 300 for August–December. The self-insured monthly minimum is€550.66 and€620.20 respectively. A DUK manager instead uses the applicable occupational and economic-activity minimum, with the appropriate statutory fallback where no category minimum is set; the owner’s self-insured minimum is not an automatic alternative. Check the month, activity classification, days worked and other insured income before calculating contributions. These are contribution bases, not statutory net director salaries. Keep separate calculations where a remuneration correction spans both parts of 2026.
For an owner actually working in the business, the NSSI explains the self-insured route under Article 4(3) of the Social Insurance Code. Starting, resuming, interrupting or ending the activity is declared to the NRA within seven days. Advance contributions and any annual adjustment follow that category’s rules. Ownership without work does not trigger the same result; conversely, active personal work does not disappear because the owner draws no salary. Record the start date, tasks, existing insurance and the company through which the owner acts before preparing the declaration.
The practical decision is whether the case can proceed under the management-contract route or whether ARG has to confirm self-insured status or another treatment. That choice affects which registration, withholding and reporting steps are valid, and it determines whether the company should process the payment as director remuneration or as another kind of owner-linked income. If the wrong category is used, the company may still pay the money, but the compliance trail will be wrong and the later correction can be much more difficult than getting the classification right at the start.
If the legal basis is unclear, do not force the payment into payroll first and ask questions later. Confirm the category first, then build the reporting around it.
A simple example shows the point. If a shareholder is also appointed as manager and is paid for that management role, the company cannot assume that a self-insured registration automatically replaces the management-contract analysis. ARG would check which role is being paid, which registration actually exists and which category the authorities would expect to see in the file. That is the kind of check that prevents a mismatch between the contract, the insurance code and the tax treatment.
For this service, the operating calendar is as important as the legal classification. Once the person is placed in the correct category, the company has to follow the right reporting clock, and those clocks are not the same for every route.
That sequence matters because each deadline serves a different purpose. The monthly deadline is about payroll withholding and remittance in the defined-base route. The quarterly deadline belongs to the final-tax route. The 14-day certificate is a support document for the director, often needed to show what was earned and what was withheld. The 28 February return is the annual employer reporting obligation, and it sits on top of the monthly or quarterly duties rather than replacing them.
The National Revenue Agency’s management and control contract guidance is the key operational source for these dates. It also says that where the payer is the main employer at 31 December, annual adjustment rules may apply. That is a practical issue, because it means the end-of-year file has to be built with the annual position in mind, not only the monthly payroll run.
ARG would map the sequence before the first payment. That usually means checking the contract term, the relevant tax route, who the payer is for reporting purposes and what evidence the director should receive during the year. If the person is in the defined-base route, the company needs a monthly payroll calendar. If the person is in the final-tax route, the company needs a quarterly withholding calendar. If the person requests proof of income or withheld amounts, the certificate deadline starts from that request, so the company must have a process for responding on time.
A useful way to think about it is this. Payroll deadline mistakes are not only late-payment problems. They can also mean that the wrong return is filed, the wrong period is reported or the director does not receive the certificate needed for their own records. ARG’s role is to keep those timelines separate and make sure the file supports the route that has actually been chosen.
For a company owner or director, the immediate takeaway is straightforward. The legal category decides the calendar, and the calendar decides what has to be prepared now, what can wait until month-end and what must be preserved for the annual file.
Cross-border directors require two separate decisions: which country’s social-insurance legislation applies, and how management income is taxed. The NRA’s fixed-base test concerns nonresident individuals receiving Bulgarian-source management income. It does not mean that any person working abroad is outside Bulgarian withholding. Tax residence and treaty treatment need their own evidence, while an applicable social-security coordination decision or A1 addresses insurance. A foreign contribution receipt alone cannot answer both questions. This distinction matters particularly when a director keeps another job abroad or manages more than one group company.
Provide the director’s residence certificate where relevant, management contract, appointment and remuneration decisions, travel and working-location schedule, and details of all other work. Describe where decisions are actually made and whether the individual has a fixed place or sustained independent activity in Bulgaria. For insurance, supply the competent institution’s applicable-legislation document, if issued, and its dates. A Bulgarian company registration, a personal foreign address and an overseas payroll are three different facts; none substitutes for the others. The assessment should cover the period of the remuneration, since a relocation during the year can change the answer for later months.
The National Revenue Agency’s management and control contract guidance is the main source for the withholding side. The NRA’s EU social-insurance guidance shows why the social-insurance question cannot be separated from the residence and work-location question in a cross-border file. Even where the Bulgarian payer is prepared to run payroll, the person’s insurance position may still depend on the wider coordination picture.
For example, a Bulgarian tax resident does not enter the final-tax route merely because management work is performed without a personal Bulgarian office. A nonresident receiving Bulgarian-source DUK remuneration may fall within the domestic final-tax rule where no Bulgarian fixed base exists, subject to any properly established treaty treatment. Separately, foreign social-insurance coverage must rest on the applicable coordination rules and supporting decision. Ask the foreign payroll adviser for the legal basis and period of coverage, not just proof that money was paid. ARG can then reconcile the Bulgarian calculation with the documented cross-border position.
The practical implication is that cross-border work increases the risk of duplicate coverage, wrong withholding or a missing filing path. A clean decision here usually depends on coordination between the company, payroll, and, where necessary, the foreign adviser who can confirm the non-Bulgarian position. ARG’s job within scope is to organise the Bulgarian side so that the payroll, tax and insurance treatment match the real cross-border facts rather than a simplified label.
For the client, the next step is to assemble the residence evidence, the management contract, the company ownership details and any foreign insurance or payroll documents. Once those are reviewed together, ARG can tell you whether the Bulgarian payer should withhold monthly, use the final-tax route, or pause until the cross-border position is confirmed.
Compare the related procedures in this category, including their requirements and the stage at which you need them.
.svg)
.svg)
