As the holidays approach, many employers reward their employees with Christmas bonuses, 13th month salaries, or performance bonuses. This is a great way to motivate employees, but it comes with specific tax and social security obligations that should be followed.
In this manual, an accounting firm Rodi Consult (Varna) explains how to properly pay and document annual bonuses — updated for 2026.
In short: Annual bonuses are additional remuneration. They are subject to social security contributions and 10% tax under the Personal Income Tax Act. To be proper, they must be provided for in the internal rules for wages, the employment or collective agreement — not just by order.
Types of additional remuneration
Additional remuneration is divided into two groups:
- Of a permanent nature — for acquired work experience and professional experience, for educational degree, etc. (Art. 11–12 of the NSORZ). They are paid permanently and depend solely on the time worked. They are included in the base for paid leave and benefits.
- Without a permanent character — Christmas bonuses, 13th salary, performance bonuses or profit sharing. They are incidental in nature; the employer determines their terms and amount.
Remunerations without a permanent nature do not enter in the base for paid annual leave and benefits.
How to Document Bonuses Correctly
The payment of a non-permanent bonus must be provided for in one of the following acts:
- internal salary rules;
- the individual employment contract;
- the collective labor agreement.
Every employer should in principle have Internal salary rules. Important: bonus determination only with order is not correct — Article 13 of the NSORZ does not provide for such a possibility.
Taxes and insurance
Annual bonuses are part of social security income — social security contributions are calculated and paid on them. At the same time, they are part of taxable income under Art. 24 of the Personal Income Tax Act and are taxed at 10% tax. There is no limit to the amount of the bonus. This processing is part of our service. Payroll & HR.
Bonus for the past period
When the bonus refers to work done in the past (for example, an annual bonus for the entire year), it is distribute over the days, during which the work was done. This requires corrections in the direction of increasing the already submitted declarations form 1 and form 6.
FAQ
Are annual bonuses taxable?
Yes. Annual bonuses are part of taxable income from employment (Article 24 of the Personal Income Tax Act) and are subject to 10% tax. In addition, they are part of social security income, therefore social security contributions are also due on them.
How should a non-permanent bonus be documented?
The payment must be provided for in one of three acts: the internal rules for the salary, the individual employment contract or the collective employment contract. Determining it only by order is not correct (Art. 13 of the NSORZ).
Is there a limit on the bonus amount?
No. The employer has the freedom to determine the conditions, amount and payment period of additional remuneration without a permanent nature, such as Christmas bonuses, 13th salary or performance bonuses.
Is the bonus included in the paid leave base?
Non-permanent remuneration (Christmas bonus, 13th salary, performance bonuses) is not included in the base for paid annual leave and severance pay. Only permanent additional remuneration is included in this base.
What happens with a bonus for the whole year?
Remuneration for work performed in the past is distributed over the days during which the work was performed. This requires an adjustment in the direction of an increase in the already submitted declarations, form 1 and form 6.
The conclusion
Annual bonuses motivate the team, but require proper documentation (in internal rules or a contract, not just an order) and proper tax and social security calculations. Mistakes lead to adjustments and potential sanctions.
Do you pay bonuses to your team? Explore our service Payroll & HR or is contact us — we will take care of the calculations and declarations. Phone: +359 893 474 576.
This article is for informational purposes only and does not constitute accounting or tax advice. Please consult an accountant for your specific situation.
