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Tax News: Amendments to the social security legislation for the year 2018

Tax News

The ninth issue of Tax News in 2017 summarizes the more important and interesting amendments to the social security legislation for the year 2018 which were adopted with the Social Security Budget Act for 2018 promulgated in the State Gazette, issue 99 dated 12 December 2017. The amendments will become effective as of 1 January 2018.

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Insurable income

The maximum monthly insurable income remains BGN 2,600.

With respect to self-insured persons, the progressive scale used to determine the relevant minimum insurable income is abolished and a unified minimum insurance income of BGN 510 is introduced. This threshold is higher in comparison to the minimum insurance income of BGN 460 applicable in 2017. In view of this, self-insured persons, who until this moment were insured on this minimum threshold, would as of 1 January be paying higher social security contributions.

Social security rates

The total rate of the Pension Fund contributions is increased by 1 percentage point. The increase is split between employers and employees as follows: 0.56% to be borne by employers and 0.44% - by employees. These amendments were introduced in year 2015 but come into effect as of 1 January 2018.

The social security rates applicable to maritime personnel are also amended and their Pension Fund contributions are
increased by 2 percentage points from 1 January 2018. The objective of the increase is to equalize the insurance burden for all insured persons as the social security contributions for maritime personnel were not increased as of 1 January 2017.

The practice of waiving contributions to the Guaranteed Receivables of Workers and Employees Fund is retained also for 2018.

Monetary insurance benefits

Benefit for temporary work incapacity

The amendments as of 1 January 2018 abolish the possibility to claim a statutory benefit for temporary incapacity to work within 30 days from termination of the employment relations and respectively the discontinuance of the insurance period. In such cases, employers are relieved of the obligation to submit the necessary information to the National Social Security Institute.

Unemployment benefit

The daily minimum amount of the unemployment benefit is increased to BGN 9, while the maximum amount is increased to BGN 74.29.

The qualifying condition to claim an unemployment benefit is also amended as follows: as of 1 January in order to qualify for a benefit the insured person should have an insurance period of at least 12 months in the last 18 months. Furthermore, the timeframe for which the State will pay an unemployment benefit is in reference to the period during which social security contributions have been paid. It is now required that the insured person has acquired a longer insurance track record (where it exceeds 3 years) for the purpose of receiving an unemployment benefit for the same number of months as compared to the previous rules.

Individuals whose employment relations have been terminated pursuant to Article 331 of the Labor Code (i.e. termination of employment initiated by the employer against termination compensation for the employee) will receive unemployment benefits at the minimum rate and for a maximum period of four months. The amendment is based on the fact that while the termination is initiated by the employer, it is effected with the consent of the employee.

Childcare benefit

The monthly childcare benefit pursuant to Article 53 of the Social Security Code is increased to BGN 380.

 

© 2018 KPMG Bulgaria OOD, a Bulgarian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

KPMG International Cooperative (“KPMG International”) is a Swiss entity.  Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

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