The question of how the insurance of farmers in Bulgaria is calculated is important and relevant for 2024. There are a number of aspects that need to be addressed in order to ensure a correct and complete understanding of the insurance obligations of these producers. In this introduction we will discuss the main questions that our clients often ask, and we will present how accounting and consulting firm “Elan Consulting” can be useful in clarifying and managing these issues both in Sofia and in Burgas, Pomorie, Karnobat, Sunny Beach, Aytos, Nessebar, Sozopol, Primorsko and the whole of Bulgaria.
Customers often ask, “How is a farmer's insurance calculated and what are the benefits for 2024?” This includes understanding the differences between registered and unregistered farmers, as well as specific cases such as securing a farmer who also works under an employment contract. One frequently asked question is: “Is there a difference between a farmer and a farmer and how does it affect insurance obligations?”
In addition, the question of seniority as a farmer also arouses great interest: “How is the length of service for insurance calculated and does it matter whether the producer is a pensioner?” Sometimes customers are confused whether a retired farmer is exempt from insurance, and if not, how these benefits are calculated. These issues are key to the proper planning and implementation of insurance obligations.
Customers are also interested in the requirements for registering farmers and how this affects their insurances: “What are the requirements for a farmer in 2024 and what is the meaning of registration?” We at Elan Consulting provide competent advice and assistance in clarifying these requirements and processes.
In Bulgaria, the pension system is organized on three pillars, each of which offers different types of pension funds. These pillars are State Social Security, Supplementary Compulsory Pension Insurance and Supplementary Voluntary Pension Insurance. Farmers should be informed about the different types of funds and their advantages and obligations.
This is the main pillar of the pension system in Bulgaria and includes the Pensions Fund of the State Social Insurance (LLC). Insurance in this fund is mandatory for all farmers who are self-insured persons. Contributions to this fund are used to pay state pensions for old age, disability and inheritance pensions.
This pillar includes universal pension funds and occupational pension funds. Insurance in the Universal Pension Fund is mandatory for persons born after December 31, 1959 (Art. 127 of the Social Insurance Code, CSR). Occupational pension funds are designed to provide pensions to persons working in conditions of the first and second categories of labor, and are also mandatory for these categories of workers.
It is a voluntary pillar that allows individuals to make additional contributions to increase their future retirement income. Participation in a voluntary pension fund is entirely optional and not mandatory (Art. 223 of the CSR). These funds provide an opportunity to accumulate additional pension savings that are not tied to the state pension system.
The choice of the most profitable pension fund depends on the specific circumstances of the farmer, including age, income and savings management preferences. For persons born after December 31, 1959, compulsory insurance in a universal pension fund offers additional protection, but it may also turn out that the transfer of insurance to the Pension Fund of the LLC provides greater stability and predictability of future pension income (Art. 4c of the CSO).
For those looking for additional opportunities to increase their retirement income, voluntary pension funds provide flexibility and the opportunity for additional savings. These funds are particularly useful for farmers who have variable or seasonal incomes and want to have more security for their future.
Farmers in Bulgaria are obliged to insure themselves in certain cases and sizes depending on their status and activity. Registered farmers are obliged to insure themselves for disability due to general illness, for old age and for death. In addition, they can, at their choice, also be insured for general illness and maternity (Art. 4, para. 3, items 1 and 2 of the Social Insurance Code, CSR).
Farmers who carry out only agricultural activities must be insured on the basis of the minimum social security income established annually by the Law on the State Social Security Budget. For 2024, the minimum monthly insurance income for these producers is 933 BGN, and the maximum — 3750 BGN (Article 6, paragraph 3 of the CSR).
For farmers who, in addition to agricultural activities, have an employment contract, insurance is carried out both for their activities as farmers and under the employment contract. In this case, the insurance contributions under the employment contract are calculated on the remuneration received, and for agricultural activities - on the minimum social security income (Art. 4, para. 1 and Art. 6, para. 3 of the CSO).
Pensioners who are farmers are also subject to insurance, but are exempt from making insurance contributions to the Unemployment Fund (Art. 4, para. 3 of the CSO). They must make insurance contributions to the funds “Pensions”, “General Illness and Maternity” and “Accident at Work and Occupational Disease” on the minimum insurance income.
Registered farmers who produce processed plant and/or animal products must determine the final amount of their insurance income and the insurance contributions due in the annex to their annual tax return under Art. 50 of the Personal Income Taxes Act (ZDDFL). The final amount of the monthly social security income is determined for the period during which the work activity was carried out in the previous year and may not be less than the minimum monthly insurance income for the self-employed and greater than the maximum monthly insurance income. Annual social security income is defined as the difference between the taxable income declared or established by the revenue authority from the exercise of the relevant work activity and the sum of the income on which advance insurance contributions are paid (Article 6, paragraph 8 of the CSO).
In determining the annual social security income of registered farmers producing processed plant and/or animal products, no account shall be taken of the amounts received in the form of State aid, subsidies and other support from the European Agricultural Guarantee Fund, the European Agricultural Fund for Rural Development and the State budget (Art. 6, para. 11 of the CSR). These funds are intended to support the implementation of certain national measures or the implementation of the Common Agricultural Policy of the European Union and do not constitute remuneration for work done.
Registered farmers and tobacco producers who produce unprocessed plant and/or animal products do not set a definitive amount of social security income for this activity. Unprocessed plant and animal production is any primary product derived from plants and animals, which is used in its natural form without undergoing technological processing and processing (Article 5, paragraph 3 of the Code of Civil Procedure).
Insurance contributions for these persons may be paid from funds for assistance to farmers in accordance with the procedure determined by the Council of Ministers (Art. 6, para. 12 of the CSR).
Farmers who work under an employment contract are insured both for their labor activity under the contract and for their activities as farmers. This means that they have to make insurance contributions in both directions. For their labor activity under the contract, insurance contributions are calculated on the remuneration received, according to the Social Insurance Code (CSR). These include contributions to state social insurance, health insurance and, if applicable, to additional compulsory pension insurance. In this case, the employer also pays part of the insurance contributions.
For their agricultural activities, these producers must insure themselves on the basis of the minimum social security income established for the year in question. For 2024, the minimum monthly insurance income for farmers is BGN 933. Contributions for agricultural activity include contributions to the Pension Fund, the General Sickness and Maternity Fund, and health insurance. The insurance contribution to the Pension Fund for persons born before January 1, 1960 is 19.80% of the insurance income. If the person chooses to also insure himself for general illness and maternity, the rate increases to 23.30%. For persons born after December 31, 1959, the contribution to the Pension Fund is 14.8%, and if they are also insured for general illness and maternity — 18.30%. In addition, these persons contribute 5% for additional compulsory pension insurance and 8% for health insurance.
Farmers who are engaged only in agricultural activities are also obliged to provide themselves on the basis of the minimum social security income. They must also make insurance contributions to the Pension Fund, the General Sickness and Maternity Fund, and health insurance, as described above. The insurance contributions for these manufacturers are calculated on the minimum monthly insurance income of BGN 933 for 2024. For pension insurance, the contribution is 19.80% for those born before January 1, 1960 and 14.8% for those born after December 31, 1959. If they choose to also provide for general illness and maternity, the rates increase to 23.30% and 18.30%, respectively. Health insurance remains fixed at 8%.
Providing for farmers who are engaged only in agriculture is key to their social protection. They must file annual tax returns in which they declare their income from agricultural activity, and on the basis of these declarations the final social security contributions are calculated. The annual social security income is defined as the difference between the declared income and the contributions paid in advance during the year. The final insurance contributions are due on the annual insurance income in the corresponding amounts for the Pensions Fund, additional compulsory pension insurance and health insurance. This ensures that farmers will have the necessary protection in the event of insurance events, such as retirement, illness or accident.
The calculation of farmers' insurance in 2024 is a process that depends on a number of factors, including the status of the farmer and the type of produce he produces.
The minimum monthly insurance income for registered farmers for 2024 is set at BGN 933, and the maximum monthly insurance income is BGN 3750. These values serve as the basis for calculating insurance benefits.
In order to calculate insurance benefits, you must first determine the monthly insurance income. This is the income on which insurance contributions are accrued. Farmers can choose to insure on the minimum insurance income or on a higher income if they wish to receive higher benefits in the event of insurance events.
Suppose a farmer chooses the minimum social security income of BGN 933 for 2024 and was born before January 1, 1960. In this case, his insurance contributions will be as follows:
In total, this farmer will owe BGN 292.03 per month for insurance (BGN 217.39 for Pensions Fund and General Illness and Maternity Fund + BGN 74.64 for health insurance).
Registered farmers who produce processed plant and/or animal products and earn income for the respective year must determine the final amount of their insurance income and the insurance contributions due in the annex to their annual tax return under Art. 50 of the Personal Income Taxes Act (ZDDT) FL). The final insurance contributions are due on the annual insurance income in the amounts for the Pension Fund, additional compulsory pension insurance and the General Sickness and Maternity Fund (for self-insured persons who have chosen to insure themselves in this fund). Annual social security income is defined as the difference between the taxable income declared or established by the revenue authority from the exercise of the relevant work activity and the sum of the income on which advance insurance contributions are paid (Article 6, paragraph 8 of the CSO).
In determining the annual social security income of registered farmers producing processed products, the amounts received in the form of State aid, subsidies and other support from the European Agricultural Guarantee Fund, the European Agricultural Fund for Rural Development and from the state budget shall not be taken into account (Art. 6, para. 11 of the CSR). These funds are considered as aid and not as remuneration for work done.
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The right of farmers to choose to transfer their insurance from a universal pension fund to a “Pensions” fund or a fund “Pensions for persons under Article 69” of the State Social Security (LLC) means that farmers can decide to redirect their insurance contributions from a private pension fund (universal pension fund) to the state pension system. This provides an opportunity for greater certainty and predictability of pension income.
The Universal Pension Fund is a private fund in which persons born after December 31, 1959, compulsorily make contributions as part of the second pillar of the pension system. These contributions are intended for the accumulation of an additional pension, which is paid together with the state pension. However, private pension funds are subject to market risks and may have variable returns.
On the other hand, the Pension Fund of LLC represents the first pillar of the pension system, where contributions go directly to the state budget and are used to pay state pensions. These pensions are more stable and predictable, as they are supported by the state.
Farmers who were born after December 31, 1959 and are insured in a universal pension fund have the right to choose to transfer their insurance contributions to the Pension Fund or the Pension Fund for Persons under Article 69 of the LLC. This option is regulated in the Social Security Code (Art. 4c) and provides the following advantages:
Farmers wishing to transfer their insurance must submit an application to the National Insurance Institute (NOI) or the relevant private pension fund. The transfer must be made within the specified time limits:
The transfer of the security shall take effect from the first day of the month following the month of submission of the application for transfer. Insurance contributions to the Universal Pension Fund are redirected to the Pension Fund of LLC, which increases the amount of contributions to the state pension system.
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