The proposal includes an increase in deductions
With the proposed amendments to the Personal Income Tax Law submitted to the Parliament, the legally recognized expenses (25% for civil contracts) are removed, which effectively increases the tax-insurance burden. This is clear from the opinion of The Union for Economic Initiative (SSI).
One of the most important changes in the field of taxes and insurance concerns precisely civil contracts and work for a fee.
The meaning of the employment relationship is that the employer secures the right to have the knowledge and skills of the worker within the working hours. In return, he is obliged to pay, in addition to remuneration (including insurance contributions) and health and safety working conditions, and the worker is obliged to perform the tasks assigned to him within the framework of the contract.
In the absence of an employment relationship, such obligations do not arise and, accordingly, the payment of insurance against the risks of occupational accidents and occupational diseases, maternity and unemployment is avoided. A key question is how people working in disguised employment will be identified.
The proposal is to add the payment of insurance against the risks of occupational accident and occupational disease, general illness, maternity and unemployment.
“However, under the new regime, this additional insurance burden will be added. On the other hand, it is not clear whether labor obligations arise for the employer,” the opinion also states.
After the changes, for example, at gross income of BGN 1,000, which is below the maximum insurance threshold, BGN 137.80 will be paid under the new regime by the worker and BGN 189.20 by the employer – a total of 327 BGN. For comparison, in 2023 they are BGN 89.85 and BGN 118.65 respectively, or a total of BGN 208.50. The paid personal income tax will be BGN 66.02 under the current regime and BGN 86.22 after the change.
This means that for the same service that the employer receives in 2023, he must pay BGN 1,118.65, while in 2024 the amount is already BGN 1,189.20. calculated by the union. According to its experts, the problem is that, in fact, the contractor is mostly interested in the amount of his net remuneration.