Freelancer, EOOD, or employment contract: picking your setup

There are three legal ways to earn money in Bulgaria: work as a self-employed freelancer, set up a single-owner company (EOOD), or take an employment contract. Each has a genuinely different cost, paperwork load, and risk profile — here's what each one actually involves, not just the tax headline.

The three paths at a glance

Freelancer (свободна професия): the fast path

This is how most solo consultants, developers and designers start. Registration has two steps:

1. Register in the БУЛСТАТ register at the Registry Agency. State fee is around €5, and you'll typically have your БУЛСТАТ number the same day or within a few days. No capital, no notary, no lawyer required.
2. File declaration ОКд-5 with НАП within 7 days of starting activity. This is what registers you as a self-insured person for social security purposes — miss the 7-day window and you risk gaps in your insurance record.

What you'll need for both steps: your passport, your ЕГН/ЛНЧ (see the NAP guide if you don't have one yet), and a clear description of the activity you'll be doing — the Registry Agency and НАП both ask what "професия" you're registering under.

What it costs

Freelance income gets a 25% automatic recognised-expenses deduction — no receipts needed, it's a flat allowance — and then the flat 10% PIT applies to the remaining 75%. That works out to roughly 7.5% effective tax on gross income.

Social security is the bigger number. As a self-insured freelancer you choose your own contribution base between the minimum and maximum insurable income (see our tax basics guide for the current band), and pay roughly 31% of that base. Most freelancers starting out choose the minimum base — at the €620.20 minimum in effect from August 2026, that's roughly €195/month in total contributions, regardless of how much you actually earned that month.

A worked example

At €3,000/month in freelance income: the 25% expense deduction leaves €2,250 taxable, so PIT is €225 — about 7.5% of gross, as above. Social security at the minimum base (€620.20 from August 2026) adds roughly €195/month, regardless of how much of that €3,000 you actually earned that particular month. Total deduction: roughly €420/month, or about 14% of gross income — noticeably more than the "10% tax" headline, but still light compared to most of Europe.

Choosing a higher voluntary base raises what NSSI records as your insured income — which matters for things like parental leave pay, pension calculations, or a mortgage application that wants to see a "real" income — but every euro of extra base costs roughly 31 cents in contributions. It's a genuine trade-off, not free money, and worth thinking through deliberately rather than defaulting to the minimum out of habit.

EOOD: the company path

An ЕООД is Bulgaria's standard single-owner LLC. Registration happens at the Trade Register:

• Minimum share capital: €1 (yes, one euro — it's a formality, not a real barrier)
• State fee: €28 filed electronically or €56 on paper (Registry Agency tariff) — e-filing needs a qualified e-signature, or a lawyer filing on your behalf
• Realistic all-in cost with a lawyer handling the paperwork: €300–900, and worth it unless you're comfortable navigating the Trade Register's forms yourself
• Ongoing accounting: €120–200/month — in practice required, since Bulgarian bookkeeping and VAT/social security filings aren't realistic to DIY

The usual sequence is: pick a company name, draft the articles of association, deposit the minimum capital, and file with the Trade Register — a lawyer or a registered agent typically handles the drafting and filing for you, which is most of what the €300–900 all-in cost covers. Once the Trade Register approves it (this is the part that can take days to a couple of weeks), you register a company seal and bank account, and the company legally exists.

What it costs

Company profit is taxed at 10% corporate tax, and then 5% dividend tax when you actually distribute profit to yourself as owner. Combined, that's roughly 14.5% on money that ends up in your pocket — before social security. As the owner-manager, you're also a self-insured person and pay social security contributions on a chosen base, the same mechanism as a freelancer.

The trade-off for the extra admin and cost is real: an EOOD separates your personal assets from business liability, looks more credible to larger clients and banks, lets you retain profit in the company rather than drawing it all out immediately, and scales cleanly if you take on multiple clients or eventually hire staff.

Employment: the simplest path

If someone hires you on a Bulgarian employment contract, your employer handles everything — tax withholding, social security, filings. Your own cost is the 13.78% employee social security share plus 10% PIT on what's left after that. If payroll is your only income, you typically file nothing — the employer's reporting covers it.

It's the least flexible option and the least profitable per hour worked, but it's the easiest to explain to a landlord, a bank, or a mortgage application — "employed" reads as more stable than "freelance" to most Bulgarian institutions, even when the freelance income is larger and steadier.

Employment is also the only path where none of the registration steps above apply to you directly — no БУЛСТАТ, no Trade Register, no ОКд-5. The employer's HR and payroll process handles your ЕГН/ЛНЧ paperwork, your social security enrolment, and your tax withholding as part of onboarding.

How to actually choose

• Solo, one or two clients, want to stay small and simple → freelancer. Lowest cost, least admin, fastest to start.
• Multiple clients, want liability protection, planning to grow or hire, or clients expect an invoicing entity → EOOD. More admin, but it scales and protects you.
• Value simplicity above all, or need the paper trail for a mortgage or long-term visa → employment, if it's on offer.
• Testing an idea before committing → freelancer first. The setup cost is low enough that switching to an EOOD later, once there's real income to justify it, isn't a sunk cost.
• Already have EOOD-level income and multiple clients but haven't switched → this is the group that's usually leaving money on the table by staying freelance longer than it makes sense to, purely out of inertia.

Many people start as a freelancer and convert to an EOOD once income and client count justify the extra accounting cost — there's no penalty for switching later, just the new setup steps. In practice this means registering the EOOD, moving new contracts and invoices to the company, and winding down the freelance registration once it's no longer active — the two can briefly coexist while you transition existing clients over.

Non-EU nationals: this interacts with your residence permit

Your legal work setup isn't independent of your immigration status. The type of residence permit you hold can restrict or enable freelance work, company ownership, or employment differently — see our residency guide for how permit type and work setup interact before you commit to one path.

Where people get stuck

The most common mistake is treating the freelancer/EOOD choice as purely a tax decision — it isn't. Freelancer status is genuinely cheaper and faster, but it offers no liability separation: if something goes wrong with a client or a contract, it's your personal assets on the line, not a company's. The second common mistake is underestimating EOOD accounting costs — €120–200/month sounds small until you compare it against a freelancer's near-zero ongoing admin, and it changes the breakeven point for when a company actually pays off. Run the numbers on your real expected income before picking a structure, not just the headline tax rate.

Quick checklist before you register

• Confirm your residence permit type allows the setup you're planning, if you're a non-EU national (see the residency guide)
• Get your ЕГН/ЛНЧ sorted first (see the NAP guide) — every path needs it
• Decide freelancer vs. EOOD based on client count, liability exposure and growth plans, not just the tax comparison
• If freelancing: register БУЛСТАТ, then file ОКд-5 within 7 days
• If EOOD: budget €300–900 all-in for setup and €120–200/month ongoing before you start
• Check whether article 97a VAT registration applies to your client mix (see the VAT guide)
• Line up an accountant before your first filing deadline, not after