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Gugushev & Partners Law Office provides a full legal review
The compensation regime introduced by the Council of Ministers will have an economic impact on business in Bulgaria, which, due to the declared state of emergency and anti-epidemic restrictions, as a result of the pandemic caused by the Covid-19, would suffer serious losses. State aid provides a financial incentive in a number of sectors that can prove reduced sales revenue. The compensation aims to facilitate employers and, as a result, to preserve the jobs of employees in the country. The Bulgarian state will grant 60% of the contributory incomе for January 2020 for each worker to whom the compensation regime is applied. The employer will provide the remaining 40% of the net wage, however, the burden of paying social security contributions and tax on its gross value will not be borne by the compensation scheme. In light of these considerations, the calculations indicate a real 50/50 percentage (State aid/cost for the employer), in practice, the sum of the employer's obligations equals that of the State. Nevertheless, the unprecedented emergency measure would help to prevent a further wave of mass unemployment and liquidation of businesses, it would bring partial security to jobs and employers, temporary stability in civil turnover during the state of emergency, and the measures taken would slow the pace of the expected economic downturn. At least such are the expectations. You can find more about this topic and the practical dimensions of the adopted decree in the legal review prepared by Gugushev & Partners Law Office.
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