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Postcontractual non-compete clause – taxes and SSC

Bulgaria: No social security contributions are due for financial compensation resulting from a post-contractual non-compete clause.

How to treat a situation in which an employee receives financial compensation because of a post-contractual non-compete clause included in their employment agreement? A frequently arising question is whether tax and social security contributions are due.

In Bulgaria, neither labour, social security or tax law explicitly govern a post-contractual non-compete clause. In a discussion round with the National Revenue Service about a concrete case bnt – Sofia was able to establish that in Bulgaria such financial compensation triggers income taxation but no social security contributions are due.

However, a different approach may be applicable under deviating circumstances. That is why all relevant information must be considered on a case-to-case basis.