Many people want to start their own project, work with additional clients, or sell digital products, but they are afraid of losing the security of their permanent job. The most common question is: „Is it legal to work on an employment contract and be registered as a freelancer (free profession) at the same time?“.
The short answer is: Yes, it is absolutely legal! There is no obstacle to being an employee from 9 to 5, and developing your own business in the evenings or on weekends.
However, to work completely legally, you must comply with several important rules regarding taxes, social security contributions, and the contract with your employer. Here is everything you need to know, explained in simple and understandable language.
1. What are the first steps with the state?
The fact that you already work on an employment contract and your employer pays your social security contributions does not exempt you from the bureaucracy for your new activity. You cannot just start taking money from clients. You must go through the standard procedure:
- Registration in the BULSTAT register (this is done quickly at the Registry Agency).
- Submitting a declaration for starting an activity to the NRA (known as OKd-5). Important: This declaration must be submitted within 7 days of starting the activity.
2. The big question: What happens with social security contributions?
This is what confuses people the most. In Bulgaria, the state requires you to pay social security contributions on all your labor income, but only up to a certain ceiling (the maximum social security income). There are two possible scenarios based on your employment contract salary:
- Scenario A: Your salary is BELOW the maximum social security threshold In this case, you are insured on your employment contract, but the state requires you to pay advance social security contributions every month for your freelance profession as well (usually on the minimum wage). At the end of the year, an „annual equalization“ is done. Your accountant calculates how much you actually earned from freelancing, and you pay the remaining contributions on the difference, until your total income (salary + freelance) reaches the maximum threshold.
- Scenario B: Your salary is EQUAL TO OR ABOVE the maximum social security threshold This is the sweetest option! If you are already insured on the maximum at your main job, you do not owe any additional monthly social security contributions for your freelance income. Your employer has already covered the ceiling to the state. The only thing you need to do is note this in the declaration (OKd-5) to the NRA when starting the activity, so they do not look for money from you.
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3. Taxes and how to get paid
As a freelancer, you do not need a physical cash register if your clients pay you via bank transfer (or through platforms like PayPal/Stripe, which then transfer the funds to your bank). For every completed job, you simply issue an electronic invoice.
Regarding taxes: Regardless of social security contributions, you owe a 10% flat income tax on your profit from the freelance profession.
- The state gives you a bonus called „statutory recognized expenses“ (usually 25% of the income).
- If you earn 1,000 BGN from freelancing, the state assumes you spent 250 BGN on supplies (electricity, internet, software), without you having to keep receipts for them.
- You will pay the 10% tax only on the remaining 750 BGN (i.e., 75 BGN tax).
All of this is declared once a year through the Annual Tax Return.
4. Risks during sick leave and maternity
Many people make mistakes here. If you get sick and take sick leave from your main job (or go on maternity leave), the state (NSSI) pays you a benefit to recover or to take care of your child.
- During these days, you must not practice your freelance profession either.
- If you issue an invoice for a freelance service with a date that coincides with your sick leave from your employment contract, the NSSI will find out and demand the paid sick leave money back. For more details on this topic, see Freelancer on Maternity Leave: A Complete Guide to Working and Invoicing.
5. Do you have to tell your boss?
By law, you are not obliged to ask for permission from your employer to register a freelance profession. Your social security contributions and taxes as a freelancer are tied to your personal ID number (EGN), and the accounting department of the company you work for cannot find out about them automatically.
But there is one big exception: Read your employment contract carefully! Many companies include clauses for „non-compete“ or „loyalty“.
- If you work as an accountant in a company, and in the evening you do accounting for their clients privately, this is a severe conflict of interest.
- If your freelance activity has nothing to do with your main job (for example, you work in a bank, but in the evening you write articles or make designs), you have absolutely nothing to worry about.
Conclusion
Combining an employment contract and a freelance profession is an excellent way to test your business idea safely. The process is completely legal, and if your salary exceeds the maximum social security threshold, you won’t even owe additional contributions, just a flat tax. It is just important to keep strict records, be careful with dates during sick leave, and file your annual tax return on time.
