In Bulgaria rules are often strange but worse is that they are often an obstacle to business developments in the country. Good example of this are freelance contracts or that is the absence of them in the Tax Code. In most countries freelance contracts are like a contract with a company. The freelancer provides specific services to a company or an individual at a certain price and provides an invoice for it. The buyer of the service pays the invoice and that is end of their part in the financial aspect. The freelancer like a company then pays taxes and other mandatory fees to the state and/or municipality. In Bulgaria it does not work like this except for probably 5-6 professions. If a company in Bulgaria makes a freelance contract it has to deal with the payment similar as it would with a person on a labour contract such as withhold taxes and social security and then pay those to the tax authority. Basically freelance contract is not a freelance contract as much as a labour contract without fixed salary or fixed working hours.
Many small and medium sized enterprises (SMEs) stated out as a freelance operation. For example a person provides web design services and as the business grows he/she forms a company around the operations. It is in many cases easier to start out as a freelancer and then as your service becomes successful then you set up a company. It is for most part easier and also if things don’t work out then it is not as difficult to just stop than having to close down a company.
Due to total lack of freelance contracting in the Bulgarian Tax Code the start of a company is made more difficult even though setting up a company might not be difficult. It is not always that a person is confident enough that their services will be successful and if the difference is between just starting to provide the service in your own name as a company or to go through the cost and paperwork to set up a company then to many it will not look like it is worth it. This is a barrier to normal business development and therefore undermines the Bulgarian economy at-large. It is hard to find any logic for this and can only be an attempt to make things easier for the public administration to handle at the cost of Bulgarians and their well being.