2 Social Security and Health Insurance of Employees under Bulgarian Law
2.1 General Notes
Social security relations in Bulgaria are governed by the provisions of the Code on Social Security2 (hereinafter referred to as the "CSS").
The existence of an employment relationship creates an obligation of the employer to make social security payments to any or all of the following funds: (i) the State and Private Pension Security Funds; (ii) the Labour Accident and Occupational Disease Fund; (iii) the General Disease and Maternity Leave Fund; and (iv) the Unemployment Benefit Fund. In addition, under the CSS employees born after 31 December 1959 must also pay the socalled "additional obligatory social security contributions". It should be mentioned that the level of social security contributions is not affected by the nature of the labour duties, terms of payment of the remuneration or source of financing. Further, the Law on Health Security3 (hereinafter referred to as the "LHS") provides for an obligation for the employer to pay health security contributions for any and all of its employees.
The amounts due as social and health security contributions are determined as a percentage of the total "social security income" of the individual4.
2.2 Basic Social Security Contributions
The monthly social security contribution rate for employees working normal hours, i.e. eight hours a day, five days a week, is 36.7% of their gross monthly remuneration. Specific portions of this total contribution go to the different social security funds listed in 1.5(i). Currently, the payment levy for contributions to the State Pension Fund, the Private Pension Funds, the Maternity Leave and General Disease Fund and the Unemployment Benefit Fund is distributed between the employer and the employee: 75% is borne by the employer and 25% by the employee. The distribution of the payment levy will change gradually during the following years as follows: (i) in the year 2005 70% for the account of the employer and 30% for the account of the employee; (ii) in the year 2006 65% for the account of the employer and 35% for the account of the employee; (iii) in the year 2007 60% for the account of the employer and 40% for the account of the employee; (iv) in the year 2008 55% for the account of the employer and 45% for the account of the employee and (v) in the year 2009 it will be distributed evenly between the employer and employee, at a ratio of 50 to 50 percent. Contributions to the Labour Accident and Occupational Disease Fund are entirely for the account of the employer.
2.3 Additional Social Security Contributions
The obligatory additional social security was introduced with regard to all individuals born after 31 December 1959, provided that they are secured under the rules of state social security. This type of security is designed to procure the socalled "additional pension for retirement" for the aforementioned individuals.5
The payment levy is distributed between the employer and the employee in the same way as the one for basic social security contributions.
2.4 Health Insurance Contributions
Health insurance contributions are payable to the National Health Security Fund by all Bulgarian citizens who are not, at the same time, citizens of other countries, or who are also citizens of other countries but permanently reside on the territory of the Republic of Bulgaria.
The health security contributions amount to 6% of the employee's social security income. The levy for payment of health security contributions is distributed and will change in the same way as the one for social security contributions.
4 The total "social security income" of the individual comprises the gross monthly wage of the employee plus any and all other income from labour and other activities less certain items (such as transportation, daily and hotel expenses incurred in relation with business trips, etc.). In any event however, social and health security payments shall be calculated on the basis of a minimum amount of social and health security income as determined by the Law on the Budget of the State Social Security Fund, which varies depending on the economic activity performed by the employer and the position of the employee. Bulgarian law also introduces a maximum amount of the social and health security income, which for the year 2004 is fixed to BGN 1,200 (one thousand two hundred) per month. If the income exceeds the specified amount, no social security or health contributions are due for the excess.
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