A general principle of the Bulgarian labour law related to the secondment of employees from Bulgaria is the prohibition of a unilateral amendment by the employer of the employment agreement, a substantial element of which is the place of work. However, the nature of the employment or the needs of the employer sometimes require a temporary cross-border relocation of an employee to a subsidiary or affiliated company of the same group in another country, or to a client in the context of cross-border provision of services. This is commonly known as “posting” or ”secondment” and leads to a temporary change in the place of work of the employee that affects the whole legal relationship. The most important implications of the cross-border posting of employees from Bulgaria abroad can be summarized as follows:
I. Employment Implications
In case the employee secondment does not exceed 30 days, the employer can send its employee to another country for business-trip purposes without the employee’s explicit consent. It suffices that the employer covers all travel, accommodation and per diems expenses of its posted employee in the foreign country.
The secondment of staff abroad for a period exceeding 30 days requires the written consent of the employee and the signing of an agreement between the employer and the employee which must contain certain mandatory information, including:
- the details of the secondment abroad– to which country, city and company the Bulgarian employee would be seconded;
- what work the employee would carry out;
- period of the secondment;
- conditions for termination of the secondment;
- the currency in which the salary of the employee would be paid;
- the amounts of any additional remunerations paid with regard to the Bulgarian employee secondment – e.g. travel, accommodation and per diem expenses;
- certain additional conditions which should be equal to the minimum conditions existing in the host country for the same or similar work, including:
- working day duration;
- lunch breaks, daily and weekly rest;
- paid annual leave;
- overtime work compensation;
- health and safety at work.
II. Social Security Aspects
In accordance with EU Regulation 883/2004 on the coordination of social security systems an employee posted by their Bulgarian employer to another EU Member State is entitled to continue to be subject to the social security legislation of Bulgaria provided that the duration of their secondment abroad does not exceed 24 months and that the employee is not sent to replace another posted person.
The applicable social security legislation is certified by virtue of a uniform A1 certificate issued at the employer’s request by the Bulgarian National Revenue Agency. The certificate is sent to the host Member State and it serves as grounds for social security exemption in the host country for the period of the secondment so that the employee remains subject to only one social security legislation – that of the home country.
In general the posting of employees from Bulgaria does not affect the tax residence status of the employee and they remain Bulgarian tax residents. However, in case the secondment lasts longer, it is possible that the employee becomes a tax resident of the host country as well. In those cases the double taxation of the employment income of the posted employee could be avoided by applying the relevant Double Tax Treaty (“DTT”) between the home and the host country. Most of the DTT-s concluded by Bulgaria provide for exclusive Bulgarian taxation of the employment income in case the staff secondment to the host state does not exceed 183 days and the salary of the employee is paid by the Bulgarian employer,
In case the posting exceeds 183 days, the employment income during the employee secondment is generally taxable both in the host country and in Bulgaria but the double taxation is eliminated in Bulgaria by applying the relevant method set in the DTT, which is usually either an exemption with progression or an ordinary tax credit.
Related links and articles:
- Bulgarian employment law
- Employment lawyers Bulgaria
- Law firm Bulgaria employment law
- Employment contracts in Bulgaria