Working as a freelancer has become increasingly popular over the years. We will explaine below what you need in order to do to start working as a freelancer. In the beginning, there are a number of bureaucratic steps that you need to go through in order to operate legally.
What is a freelancer?
To practice a freelance profession, you must meet the following conditions cumulatively:
- carry out professional activity at your own expense;
- to not be registered as a sole trader;
- you need to be self-insured within the meaning of the Social Security Code.
Freelancers are, for example, auditors, experts in court and prosecution, licensed appraisers, medical specialists, translators, engineers; architects, figures of culture, education, science and art, technical managers, etc.
In order to be able to practice a freelance profession, you need to register as such.
Registration in the BULSTAT Register
Within 7 days as from commencement of the activity, it is necessary to register in the BULSTAT Register with the Registry Agency. You can do it in person or through an authorized representative.
The required documents are the following:
- ID card;
- application for registration of a freelancer;
- documents proving the necessary qualification for carrying out the activity (diploma, certificate, etc.);
- declaration of the truth of the stated circumstances;
- a document for paid state fee in the amount of BGN 10.
After successful registration you will receive a unique identification code (UIC), which matches your PIN.
Registration with the National Revenue Agency (NRA)
Within the same 7-day period you shall register as a self-insured person with the competent territorial directorate of the NRA. The submission of the documents can be done on the spot, with an electronic signature on the NRA website or with a runway issued free of charge by the NRA.
The required documents are the following:
- ID card;
- document for registration in the BULSTAT register;
- declaration for registration of a self-insured person.
Social Security Card
If you do not have a social security card, you must issue one at the National Social Security Institute.
The required documents are:
- ID card;
- document for registration in the BULSTAT register;
- confirmation from the NRA for registration as a self-insured person.
What social security risks can you insure yourself for?
It is mandatory to make insurance contributions for disability due to general illness, old age and death. Health insurance contributions are also mandatory.
If you wish, you can insure yourself for maternity and general illness.
How and when do you make the insurance contributions?
When you submit the declaration for registration with the NRA, you choose what the monthly insurance income should be, on which to pay insurance contributions.
After registration, every month until the 25th of the month following the month to which they refer, you have the obligation to declare and pay the due insurances on the income of your choice (Declaration form №1).
You are only insured when you are active. In the periods when you don’t practise, in order not to pay social security contributions, you submit again the same declaration to the NRA, but this time for interruption of the activity.
With the Annual Tax Return under Art. 50 of the Personal Income Tax Act (PITA) equalization of the due insurances and the tax is made in relation to the realized taxable income during the respective year (Declaration form №6).
What taxes should you pay?
Taxation depends on the type of activity you carry out.
If you exercise patent activity, before starting the activity you must file a Patent Declaration under Art. 61 of the Local Taxes and Fees Act in the respective municipality. You must submit the declaration by 31 January of each subsequent year.
When the activity is not a patent, taxes are due under the Income Taxes on Natural Persons Act. Then for the first three quarters of the year until the end of the month following the months to which it refers, a Declaration under Art. 55, para. 1 of the Income Taxes on Natural Persons Act, which declares and pays an advance tax on the actually acquired income during the respective quarter.
Registration under the VAT Act
In the general case, VAT registration is done upon reaching a taxable income of BGN 50,000 for the previous 12 months. This is the registration under Art. 100 of the VAT Act.
A specific case of VAT registration is when a freelance specialist works and provides services to taxpayers in the EU. This is the registration under Art. 97 a of the VAT Act. Obligation to submit an application for registration under Art. 97 a of the VAT Act arises no later than 7 days before the date on which the tax is due.
Last but not least, any violation of the above deadlines or non-fulfillment of the prescribed procedure for exercising a freelance profession, as well as failure to file a tax-insurance declaration in time, will lead to a sanction depending on the violation.
