Bulgaria: Employee Incentives
This country-specific Q&A provides an overview of Employee Incentives laws and regulations applicable in Bulgaria.
What kinds of incentive plan are most commonly offered and to whom?
Bulgarian law does not expressly regulate or distinguish specific types of employee incentive plans. In practice, the most commonly offered incentive mechanisms are annual performance-related cash bonus schemes. These are typically linked to a combination of quantitative and qualitative performance targets, with the final determination and approval of the bonus amount usually remaining within the employer’s discretion.
What kinds of share option plan can be offered?
Bulgarian law does not expressly provide for specific types of employee share option plans. As a result, share-based incentive arrangements are still relatively uncommon among local Bulgarian companies.
This regulatory status allows Bulgarian subsidiaries that are part of multinational groups to implement a wide range of share option plans commonly used in other jurisdictions. In practice, however, certain plan structures—such as restricted stock units (RSUs)—are less attractive in Bulgaria due to adverse personal income tax implications for employees.
The situation is expected to evolve following the introduction, in 2023, of the new flexible corporate form—the variable capital company (VCC). The VCC is primarily designed for start-ups and small enterprises, particularly those engaged in high-tech and innovative activities. It offers a simplified legal framework that facilitates the issuance of equity-based incentives, including share option plans, to employees.
What kinds of share acquisition/share purchase plan can be offered?
Bulgarian law does not explicitly provide for specific types of share acquisition/purchase plans. Thus, all types of share acquisition/purchase plans existing in other jurisdictions could be introduced to the employees of a Bulgarian subsidiary, part of a multinational group of companies. For this reason, in practice the types of acquisition/share purchase plans offered in Bulgaria depend on the jurisdiction in which the particular multinational corporation and company issuing the shares is located and on its preferences.
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