What is the Expense Reimbursement policy in Bulgaria?

This article explains how business expenses are reimbursed in Bulgaria, what documentation is required, and when reimbursements qualify as non‑taxable.

1. Mileage Reimbursement in Bulgaria

Bulgaria uses a state‑regulated mileage rate when an employee uses a personal vehicle for business purposes.

Standard Mileage Rate

• 0.25 BGN per km (approx.)

Mileage reimbursement must be supported by:

• A mileage log (date, route, kilometres, business purpose)
• A valid travel order (see Section 3)

Parking & Tolls

• Reimbursed separately
• Receipts required
• Business purpose must be clearly indicated

2. General Travel Requirements

Travel costs are reimbursable when they are:

• Business-related
• Pre-approved
• Documented with a valid travel order
  (“Командировъчна заповед”) for:
  • Domestic travel
  • International travel

There is no statutory km cap, but mileage must reflect actual business travel.

3. Transportation Expense Rules

Air Travel

• Economy class is standard
• Higher classes allowed if permitted by company policy and justified

Train / Tram / Bus

• Reimbursable with official tickets or receipts

Taxi

• Reimbursable with a receipt
• Must indicate business purpose

Rental Cars

• Allowed when justified
• Requires:
  • Rental contract
  • Invoice
  • Fuel receipts (if company vehicle is used)

Fuel Receipts

• Not required for mileage reimbursement based on the state rate
• Required only when using a company vehicle

4. Documentation Requirements (Tax-Free Eligibility)

To keep expenses non‑taxable and deductible, all claims must be supported by original invoices or receipts containing:

• Supplier’s name
• Supplier’s EIK/BULSTAT (Bulgarian tax ID)
• Date
• Amount
• VAT (if applicable)
• Description of goods/services

Employee name is not required, but:

• The invoice should preferably list the employer’s legal entity:

Pondway Bulgaria Ltd (Пондуей България)

Documentation is essential, insufficient records may lead to amounts being treated as taxable income for the employee.

5. Tax-Free Reimbursable Business Expenses

The following can typically be reimbursed tax‑free when properly documented:

• Business meals (with receipt)
• Taxi, bus, train, tolls, parking (with receipts)
• Accommodation (hotel invoice)
• Mileage up to the state-approved 0.25 BGN/km
• Client entertainment (with documentation)
• Conferences, seminars, and training costs
• Work-related phone/internet (pro-rated)

6. Per Diems in Bulgaria

Per diems must follow state-approved limits to remain non‑taxable.

Domestic Travel

• 20 BGN per day (standard non‑taxable amount)

International Travel

• Rates vary by country
• Typically 35–50 EUR per day for EU destinations
• Set by the Bulgarian Council of Ministers

Rules for Per Diems

• Per diems are tax-free if:
  • Within official limits
  • Supported by a travel order
• Amounts above the statutory limits are taxable

Travel Order Requirements

Before the trip:

• Employee must fill out a travel order specifying exact departure and return times

After the trip:

• All invoices and receipts must be submitted
• Employer calculates final per diem amounts based on actual travel time

7. Entertainment, Gifts & Events

Business Entertainment

• Allowed if the business purpose is clear
• Must be supported by receipts

Gifts

• Client gifts under 100 BGN may be tax‑free
• Higher-value gifts may become:
  • Taxable employee benefits, or
  • Subject to corporate tax adjustments

Team Events

• Reimbursable if business-related and documented
• Personal or non-business activities may be taxable benefits

8. Non‑Reimbursable or Taxable Personal Benefits

Unless required by law or directly tied to job duties, these are generally taxable benefits:

• Gym memberships
• Sports, fitness, yoga, swimming
• Therapy or wellness services
• Personal expenses unrelated to business needs

9. VAT Rules in Bulgaria

VAT applies to most goods and services:

• 20% standard VAT
• 10% reduced rate for some categories (e.g., hotels)

The employer can reclaim VAT if:

• The invoice is addressed to Pondway Bulgaria Ltd (or applicable legal entity)
• The expense is business-related
• The entity is VAT-registered

If the invoice is incorrectly addressed or incomplete, VAT may not be reclaimable.