In the fight for qualified personnel, more and more employers are offering social benefits - food vouchers, additional insurance, transportation, sports. In addition to motivating the team, some of them also bring serious tax advantages if provided correctly.
In this manual, an accounting firm Rodi Consult (Varna) explains what social expenses in kind are, how they are taxed, and which ones are exempt — updated for 2026.
In short: Social expenses in kind are benefits for staff (in kind, for all employees). The employer is liable for 10% tax on the expenses, but a number of benefits are exempt - food vouchers up to 200 BGN (102.26 €), voluntary insurance up to 60 BGN (30.68 €) and transportation to work. For the employee, the benefit is free of income tax.
What are social expenditures in kind?
These are expenses of the employer for social benefits of the staff. For the employee the advantage is that no income tax is withheld. For the employer there is a tax on expenses — 10%. Key: the benefits must be in kind and accessible to all employees (including managers). In any monetary terms, it is no longer a social expense in kind.
The criteria (all at the same time)
- the benefits are in kind;
- the costs are documented;
- are available for all workers and employees;
- the species is among those listed in Article 294 of the Labor Code;
- the order has been observed - a decision of the general meeting or an order of the management;
- are reported as an accounting expense (recognized for tax purposes).
Taxable objects and rate
The following are subject to the 10% tax on expenses: social benefits in kind, food vouchers, contributions to voluntary pension and health insurance and life insurance. The tax is declared with the annual tax return (Art. 92 of the Income Tax Code). If the acquisition not in kind, it is taxed as the employee's income under the Personal Income Tax Act.
Tax-exempt social expenses
- Voluntary insurance and "Life"„ — to 30.68 euros (60 BGN) per month per person (in the absence of any outstanding public obligations);
- Food vouchers — to 102.26 euros (200 BGN) monthly per employee (subject to compliance with salary conditions, public obligations and licensed operator);
- Transportation from home to work and back (with exceptions for a passenger car, except for hard-to-reach areas).
Types of social benefits (Art. 294 LC)
Organized meals; commercial and household services; transportation to work; recreation, sports and tourism facilities; cultural activities; support for young and newly hired employees; and other social and household needs. The list is exemplary - the employer has the opportunity, but not the obligation.
Insurance
In general, social security contributions are due on social expenses provided regularly in cash or in kind. But there are exceptions — are not due on food vouchers, canteen maintenance, health and childcare facilities, holiday camps, voluntary insurance and one-time benefits (in case of illness, birth, death, etc.). This processing is part of our service Payroll & HR.
Be careful not to confuse social spending with representational expenses — the latter are aimed at outsiders and have a different regime.
FAQ
What are social expenditures in kind?
These are employer expenses for staff benefits provided in kind and available to all workers and employees (including managers). For the employee, they are exempt from income tax, and the employer owes 10% tax on the expenses.
Are food vouchers taxable?
Food vouchers up to 102.26 euros (200 BGN) per month per employee are tax-free - no tax on expenses, no income tax, and no social security contributions, provided that conditions are met (minimum wage, no public liabilities, licensed operator).
Which social expenses are tax exempt?
Exempted are: contributions for voluntary pension, health insurance and life insurance up to 30.68 euros (60 leva) per month; food vouchers up to 102.26 euros (200 leva) per month; and transportation from home to work (with exceptions for cars).
What social benefits can I provide?
Under Article 294 of the Labor Code — organized meals, commercial and household services, transportation to work, recreation, sports and tourism facilities, cultural activities, support for young employees and other social and household needs.
Are social security contributions due on social benefits?
In general, social security contributions are due on social expenses, but there are exceptions - for example, food vouchers, canteen maintenance, health and childcare facilities, holiday camps, voluntary insurance, and one-time benefits (in case of illness, birth, death, etc.).
The conclusion
Social benefits are a powerful tool for team retention, and when provided properly (in kind, for everyone, under Art. 294 of the Labor Code), some of them are completely tax-free. The key is to comply with the conditions and documentation.
Do you want to offer social benefits to your team? Explore the service Payroll & HR or is contact us. 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.
