Income — pay, social security contributions, gross and net, benefits

🧔 Adult In Module 10 we split money into five flows. Here we look closely at the first two and at the payments behind them:

• Flow 1 · Employed — an employment contract; income is predictable, and social security is paid automatically through the employer;
• Flow 2 · Self-employed — income is unpredictable, and social security is your responsibility;
• Flow 4 · Investor — income from capital (Module 3, Module 24);
• social payments are the "net" under the flow: you do not buy them separately, you earn the right to them through your insurance record and the contributions paid (Chapter 7).

Three habits the framework puts at the base (competences 21, 24, 25):

• net income goes up and down — because of bonuses, allowances, sick leave, changes in contributions or tax; so you build your budget on the lowest usual month, not the highest;
• all income is declared to the tax authorities — the law requires it in practically every country (Chapters 3 and 6);
• you can get used to talking about money: about pay, fees, prices. Silence usually costs more than the discomfort.

Myth → truth

• Myth: "Money comes only from a salary."
• Truth: for most people the salary is the base, but real financial life also includes payments from the system (sick pay, maternity pay, unemployment benefit, pension) and sometimes a second income. Whoever knows them all is not caught by surprise.

Who profits? The person who knows how much money really comes in, and from which flows, can plan; the person who looks only at the "basic salary" often does not know what an illness or a lost job will cost them.

Example (fictional): a family with two incomes — a salary (flow 1), a translation fee (flow 2) and rent from a small studio flat (flow 4). If the translation work stops, the salary carries the base; if the employer closes the post, the net and the fee hold the month together.

→ Continue at the source

• Financial competence framework for adults, European Commission / OECD-INFE (2022) — the official page: https://finance.ec.europa.eu/publications/commission-and-oecd-infe-publish-joint-framework-adults-improve-individuals-financial-skills_en ✔ (opened 19.10.2026); section 1.2 "Income" was read from the copy in Pecuvo's research ✔.

🧔 Adult The EU rule. Directive (EU) 2019/1152 on transparent and predictable working conditions requires employers to inform every worker in writing of the essential aspects of the employment relationship (Article 4(1)) ✔. The minimum list (Article 4(2)) includes: the parties; the place of work; the job title or a description of the work; the start date; for a fixed-term contract, the end date or expected duration; any probationary period; training entitlement; paid leave; the procedure and notice periods for ending the relationship; the remuneration, its components, and the frequency and method of payment; the standard working day or week and overtime arrangements; applicable collective agreements; and the social security institutions receiving the contributions ✔. The core information must be given no later than the seventh calendar day after the first working day, and the rest within one month (Article 5(1)) ✔. Any change must be given in writing at the latest on the day it takes effect (Article 6(1)) ✔. A probationary period may not, as a rule, exceed six months (Article 8(1)) ✔.

• Working time and leave: under Directive 2003/88/EC, average weekly working time, including overtime, may not exceed 48 hours (Article 6), and every worker is entitled to at least four weeks of paid annual leave (Article 7(1)) ✔. National law may give more.
• Equal pay: employers must have pay structures that ensure equal pay for women and men for equal work or work of equal value (Directive (EU) 2023/970, Article 4(1)) ✔.
• Civil contracts are not covered by labour law in the same way; what protection they give depends on national law and on what is written in the contract.

Example: Bulgaria — The Labour Code requires the employment contract to be concluded in writing, before the person starts work (Article 61(1), Article 62(1)) ✔. Within three days of concluding or changing it, and within seven days of ending it, the employer must enter the data in the employment register, kept by the National Revenue Agency (NRA) (Article 62(3), in force from 01.06.2025) ✔. The contract must state, among other things, the place of work, the job title, the start date, the duration, paid leave, an equal notice period for both sides, the basic and additional pay and how often it is paid, and the length of the working day or week (Article 66(1)) ✔; any change is given in writing at the latest when it takes effect (Article 66(5)) ✔. A contract is open-ended unless agreed otherwise (Article 67(2)); a fixed-term one may not exceed 3 years unless a law provides otherwise (Article 68(1)(1)) ✔. The working week is five days, up to 40 hours, and the normal working day is up to 8 hours (Article 136(1) and (3)) ✔. Basic paid annual leave is at least 20 working days (Article 155(4)) ✔. Work is paid (Article 242); women and men are entitled to equal pay for equal work or work of equal value (Article 243) ✔; pay is made "in advance or in full every month, twice" unless agreed otherwise (Article 270(2)) ✔.

The difference from a civil contract in one table:

Example: Bulgaria — For a civil contract, pension insurance (disability, old age and death) is compulsory if the monthly pay after the costs of the activity is at least one minimum wage, or if the person is already insured on another basis; there is no insurance for sick pay, maternity or unemployment (Social Security Code, Article 4(3)(5)–(6); Article 6(4)) ✔ (opened 21.10.2026).

The line is drawn not by the name of the document but by the real relationship: if you work set hours, under someone's direction and in a job post, it is an employment relationship, whatever the first page says. In most countries a labour inspectorate checks this.

Example: Bulgaria — Control belongs to the General Labour Inspectorate (gli.government.bg): it carries out "overall control of compliance with labour legislation" (Labour Code, Article 399(1)), and where labour is provided without an employment contract, its inspectors declare the employment relationship by an order (Labour Code, Article 405a(1)) ✔ (opened 21.10.2026).

Check in your country — Which law governs employment contracts, and what must the written information contain? Who keeps the register of employment contracts, if there is one? Which authority is the labour inspectorate? A neutral starting point is the European Commission's Your Europe portal, section "Work and retirement": https://europa.eu/youreurope/citizens/work/index_en.htm ✔.

🏗 Business/Organisation The employer is responsible for: the written information or contract on time; any registration the national law requires; calculating and paying pay on time; giving the worker a statement of pay on request; withholding and paying contributions and tax (Chapter 3). In the Bulgarian example: a written contract before the start, entry in the employment register within 3 days, and a statement from the payroll on request (Labour Code, Article 128) ✔.

Myth → truth

• Myth: "The contract is a formality. What matters is that we agree in words."
• Truth: in a dispute, only what is written and its evidence count. A verbal agreement works as long as everyone is happy.

Who profits? The person who reads the contract before signing: they clearly know the term, the pay, how often it is paid and the notice period.

A sample checklist for reading a contract (for 🧔):

1. Who is the employer, and has the contract been registered where the law requires it?
2. What is the job title and where is the place of work?
3. What is the basic pay, and what additional (regular) pay is there?
4. When is it paid — how many times a month?
5. How many days of paid leave, and what is the notice period?
6. Is it fixed-term, and if so — until when?

→ Continue at the source

• Directive (EU) 2019/1152 — EUR-Lex: https://eur-lex.europa.eu/eli/dir/2019/1152/oj ✔ (text read at publications.europa.eu, CELEX 32019L1152)
• Directive 2003/88/EC — EUR-Lex: https://eur-lex.europa.eu/eli/dir/2003/88/oj ✔ (text read at publications.europa.eu, CELEX 32003L0088)
• Example: Bulgaria — Labour Code: https://www.ciela.net/svobodna-zona-normativi/view/1594373121/kodeks-na-truda · General Labour Inspectorate: https://www.gli.government.bg ✔
• Example: Bulgaria — Ministry of Labour and Social Policy, "Start of an employment relationship": https://www.mlsp.government.bg/trudovo-pravootnoshenie-vznikvane ✔

🧔 Adult The EU rule and the general principle. The EU does not set income tax rates or social security contribution rates — they are decided by each country. EU law coordinates social security when people move between countries: a person is covered by the legislation of one Member State only at a time (Regulation (EC) No 883/2004, Article 11(1)) ✔. The logic of getting from gross to net is the same almost everywhere:

Step 1 — the contribution base. Contributions are calculated on gross pay, often within a minimum and a maximum monthly base set by law.

Step 2 — social security contributions. A set of percentages for different funds (pensions, sickness and maternity, unemployment, health, accidents at work), split between employer and employee.

Step 3 — the taxable base. In many countries the employee's own contributions are deducted before tax is calculated.

Step 4 — income tax. Usually withheld every month by the employer as an advance; the final tax is settled once a year.

The general formula:

• Employee contributions = gross × the employee's contribution rate
• Taxable base = gross − employee contributions (where the law allows the deduction)
• Tax = taxable base × the tax rate (or rates)
• Net = gross − employee contributions − tax
• Cost of the job to the employer = gross × (1 + the employer's contribution rate)

Example: Bulgaria (rates checked as at 19.10.2026)

Step 1. Contributions are due on "the gross monthly pay received, including pay accrued and not paid", but not more than the maximum monthly contribution base and not less than the minimum (Social Security Code, Article 6(2)–(3); State Social Insurance Budget Act for 2026, Article 9) ✔. The maximum is €2,300 from 01.08.2026 (before that €2,111.64) ✔.

Step 2. Contributions for a person born after 31.12.1959, on an employment contract, who is a member of a universal pension fund:

Type	Employer	Employee
Pensions fund (state social insurance)	8.22 %	6.58 %
General Sickness and Maternity fund	2.1 %	1.4 %
Unemployment fund	0.6 %	0.4 %
Supplementary mandatory pension insurance (universal pension fund)	2.8 %	2.2 %
Health insurance contribution (National Health Insurance Fund)	4.8 %	3.2 %
Labour Accidents and Occupational Diseases fund	0.4 % – 1.1 % (by the risk of the activity)	—
Total without the accidents fund	18.52 %	13.78 %

How the percentages are reached (in the Social Security Code itself, Article 6) ✔: the total contribution to the Pensions fund for people born after 31.12.1959 is 14.8 % — 12.8 % plus 1 percentage point from 01.01.2017 and another 1 point from 01.01.2018 (each split 0.56 employer / 0.44 employee); the 12.8 % is split 7.1 % / 5.7 %, which together with the additions gives 8.22 % / 6.58 %. The General Sickness and Maternity fund is 3.5 % and Unemployment 1 %; since 2009 both are split 60:40 between employer and employee (→ 2.1 / 1.4 and 0.6 / 0.4). The accidents fund is "from 0.4 to 1.1 per cent" depending on the group of economic activity set in the State Social Insurance Budget Act, paid entirely by the employer. Supplementary pension insurance: "2.2 per cent at the expense of the insured person" and "2.8 per cent at the expense of the insurer" (Social Security Code, Article 157(3)) ✔. The health contribution is 8 %, split 60:40 — 4.8 % employer and 3.2 % employee (NRA) ✔. For people born before 01.01.1960 the total Pensions fund contribution is different (19.8 % in the table of the National Social Security Institute (NSSI)) and is not covered here ✔.

Watch for changes: from 01.08.2026 new rates (State Social Insurance Budget Act, § 6; Social Security Code, Article 6(5a)) apply to a new group of insured persons — civil servants, judges, prosecutors, investigators and others (e.g. 11.8 % / 3 % for the Pensions fund for those born after 1959); for everyone else on an employment contract, the rates above do not change ✔. From 01.01.2027 the law provides new splits for that group. That is why the social insurance budget act is checked every year.

Step 3. The monthly taxable base is taxable income "reduced by the compulsory social security contributions withheld by the employer at the expense of the individual" (Personal Income Tax Act, Article 42(2) and Article 25(1)) ✔.

Step 4. The tax is the monthly taxable base multiplied by a 10 per cent rate (Article 42(4) — advance tax withheld by the employer) ✔. The final tax is annual: the total annual taxable base is multiplied by 10 % (Article 48(1)) ✔, and the advance tax already withheld is deducted (Article 48(3)).

The formula in Bulgaria: employee contributions = gross × 13.78 %; taxable base = gross − employee contributions; tax = taxable base × 10 %; net = gross − employee contributions − tax; cost to the employer = gross × (1 + 18.52 % + the accidents-fund rate).

Example 1 · fictional. An employee born after 1959, a member of a universal pension fund, gross €1,500 a month (below the €2,300 cap). No additional reliefs and no other income. Accidents fund at the lowest rate, 0.4 %:

	Amount
Gross pay	€1,500.00
− State social insurance (6.58 % + 1.4 % + 0.4 % = 8.38 %)	− €125.70
− Supplementary pension (2.2 %)	− €33.00
− Health contribution (3.2 %)	− €48.00
= Taxable base	€1,293.30
− Tax (10 %)	− €129.33
= Net	€1,163.97

For the employer, on top of gross: state social insurance 10.92 % (€163.80) + supplementary pension 2.8 % (€42.00) + health 4.8 % (€72.00) + accidents fund 0.4 % (€6.00) = €283.80 → a total cost of €1,783.80. Net is about 78 % of gross and about 65 % of the employer's cost. The rates were checked as at 19.10.2026 (see Sources); the calculation is an illustration, not tax advice.

Example 2 · fictional. At a gross wage equal to the minimum wage (€620.20): employee contributions €85.46 → taxable base €534.74 → tax €53.47 → net €481.27; cost to the employer at 0.4 % accidents fund — €737.54.

Check in your country — Look for three things: the contribution rates (employee and employer) and any minimum and maximum base — usually at the social security institute; the income tax rates and allowances — at the tax authority; and whether employee contributions are deducted before tax. Many tax authorities publish an official net-pay calculator. The rates usually change on 1 January; check them every year.

What the deductions "buy" (competence 29): part of the deductions is not an "expense" but a right: insurance record and a future pension, sick pay, maternity pay, unemployment benefit, health care. Rather like saving for a shared future.

🏗 Business/Organisation The employer calculates and withholds the employee's contributions, adds its own share, pays them in, and calculates and pays the advance tax. A wrong rate is a mistake for all employees at once — so rates are checked every time the law changes. In the Bulgarian example: on 1 January and with every change of the social insurance budget act (in 2026 — on 1 August).

Myth → truth

• Myth: "Social security contributions are just another tax."
• Truth: tax does not give you a specific right; contributions do (pension, sick pay, maternity pay, unemployment benefit). That is why your insurance record and the contributions paid are worth checking.

Who profits? The person who knows their gross and net and uses the right number for the right decision: net for the monthly budget; gross for comparing offers and for borrowing capacity (competence 32).

→ Continue at the source

• Regulation (EC) No 883/2004 on the coordination of social security systems — EUR-Lex: https://eur-lex.europa.eu/eli/reg/2004/883/oj ✔ (text read at publications.europa.eu, CELEX 32004R0883)
• Your Europe — work and retirement in another EU country: https://europa.eu/youreurope/citizens/work/index_en.htm ✔
• Example: Bulgaria — NSSI, contribution base and contributions from 01.08.2026: https://www.noi.bg/dohod01082026/ ✔
• Example: Bulgaria — NRA, amount of health insurance contributions: https://nra.bg/wps/portal/nra/osiguryavane/zdravno-osiguryavane/razmer-osiguritelni-vnoski ✔
• Example: Bulgaria — Personal Income Tax Act (Ciela, version as of State Gazette No. 85/2026): https://www.ciela.net/svobodna-zona-normativi/view/2135538631/zakon-za-danatsite-varhu-dohodite-na-fizicheskite-litsa ✔

🧔 Adult How to read it, line by line (fictional example):

Six habits (competences 30–31, 33):

1. Keep your payslips (on paper or electronically) — for a loan, for sick pay, for a dispute.
2. Every month, compare the amount received with the amount expected. Differences are explained by days worked, unpaid leave, sick leave, a change in the bonus.
3. Check the pay date and whether it is within the term in the contract.
4. Check that your insurance record is being updated: most social security institutes have an online personal account with your record and contribution base.
5. When you compare two job offers, look at the full package (competence 33): pay, supplementary pension, insurance, transport/meals, leave, flexibility — not only the "basic".
6. If something does not match — ask the payroll office in writing, then the employer; if the problem is not solved — the labour inspectorate.

Example: Bulgaria — The record and contribution base can be checked in the Electronic insurance file on the NSSI e-services portal (section "Insurance record and income"; login with an NSSI personal identification code, an NRA personal identification code or a qualified electronic signature) ✔ (portal handbook, nssi.bg, opened 21.10.2026); applications to the NSSI are made with a qualified electronic signature or an NSSI personal identification code ✔ (Social Security Code, Article 54a(3)). Control over the payment of wages belongs expressly to the Labour Inspectorate (Labour Code, Article 399(1)) ✔.

Check in your country — Does the law require a monthly payslip, and what must it show? Where can you see your insurance record online (the social security institute's personal account)? Which authority deals with unpaid or wrong pay (labour inspectorate)?

🏗 Business/Organisation A clear payslip is the cheapest protection of trust. It helps to add a short explanation for each deduction, and to tell people about a change in rates before payday, not after it.

Myth → truth

• Myth: "Pay is a secret, don't ask."
• Truth: asking about your own payslip is a right, not a lack of modesty. Asking about someone else's pay is a different matter — but talking about ranges and market levels helps everyone (competence 25). In the EU, contract terms that stop workers from disclosing their own pay for the purpose of equal pay are to be prohibited (Directive (EU) 2023/970, Article 7(5)) ✔ — see Chapter 8.

Who profits? The person who regularly compares what they expected with what they received: mistakes, if any, are found at once, not a year later.

→ Continue at the source

• Directive (EU) 2019/1152, Article 4 — EUR-Lex: https://eur-lex.europa.eu/eli/dir/2019/1152/oj ✔
• Example: Bulgaria — Labour Code, Articles 128 and 128a: https://www.ciela.net/svobodna-zona-normativi/view/1594373121/kodeks-na-truda ✔
• Example: Bulgaria — NSSI, information for insured persons: https://www.noi.bg ✔

🧔 Adult The EU rule. Directive (EU) 2022/2041 on adequate minimum wages does not set a single EU minimum wage and does not oblige countries to introduce one. It sets a framework for the adequacy of statutory minimum wages, for promoting collective bargaining, and for workers' access to minimum wage protection (Article 1(1)) ✔. Its main rules:

• countries with a statutory minimum wage set it by clear procedures and criteria aimed at a decent standard of living, reducing in-work poverty and the gender pay gap (Article 5(1)) ✔;
• they use indicative reference values to assess adequacy — for example, the internationally used 60 % of the gross median wage and 50 % of the gross average wage, and/or national values (Article 5(4)) ✔;
• the minimum wage is updated at least every two years (every four years where automatic indexation is used) (Article 5(5)) ✔;
• where collective bargaining covers less than 80 % of workers, the country adopts an action plan to promote it (Article 4(2)) ✔. The deadline for transposition was 15 November 2024 (Article 17(1)) ✔. On 11 November 2025 the Court of Justice of the EU (case C-19/23, Denmark v Parliament and Council) partly annulled Article 5 — the list of criteria countries must take into account (Article 5(2) and the reference to it in Article 5(1)) and the rule that automatic indexation may not lower the minimum wage (part of Article 5(3)); the rest of the Directive stands ✔ (operative part of the judgment, CELEX 62023CJ0019: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:62023CJ0019).

The contribution base works differently from country to country; where it exists, the employer may not calculate contributions on less than the minimum base, or on more than the ceiling.

Example: Bulgaria — Under the Labour Code (Article 244) ✔, "the Council of Ministers sets ... the national minimum wage for each calendar year" (paragraph 1(1)); for the following year it is set "by 1 September of the current year at 50 per cent of the average gross wage for a 12-month period" covering the last two quarters of the previous year and the first two of the current one (paragraph 2), and it "may not be lower than the one set for the previous year" (paragraph 3).

Numbers as at 19.10.2026 (all in euro; Bulgaria has been in the euro area since 01.01.2026): - Minimum wage from 01.01.2026: €620.20 (1,213 leva) — Council of Ministers Decree No 243 of 13.11.2025, State Gazette No. 98 of 18.11.2025 (NRA) ✔. - Maximum monthly contribution base: €2,300 from 01.08.2026 (until 31.07.2026 — €2,111.64) ✔ (State Social Insurance Budget Act, Article 9). - Minimum monthly contribution base for the self-employed: €620.20 from 01.08.2026 (until 31.07.2026 — €550.66) ✔ (State Social Insurance Budget Act, Article 9; NSSI). - Minimum contribution base by economic activity and occupational group — set in an annex to the budget act (Annex No 1 and No 1A) for every activity and occupational group (Social Security Code, Article 6(2)(3)) ✔. From 01.08.2026 (Annex No 1A) the lowest values are €620.20 and the highest reach €1,532.00; until 31.07.2026 (Annex No 1) — from €550.66 to €901.41 ✔ (State Social Insurance Budget Act, Article 9). The value for a specific activity and occupation is checked in the annex itself (link below). - An employer may not calculate contributions on less than the minimum base for the activity and occupation, or on more than the ceiling.

How the minimum wage enters other calculations. The law uses it as a base for minimum amounts: for example, with part-time work below the minimum wage, unemployment benefit is halved (Social Security Code, Article 54b(6)) ✔; for days without insurance, benefits are calculated on "the average daily minimum wage" (Article 41(2); Article 54b(7)) ✔.

Something important: the minimum wage is not a "normal" wage but a floor. The labour market begins above it; people whose pay is close to the minimum are the most exposed to price changes.

How to plan (competences 36–37):

• Work out your realistically expected monthly income (net, without bonuses that are not certain).
• Compare it with your necessary expenses (Module 9).
• If income is below your needs — look for a way to raise it (Chapter 8) or reduce expenses; do not fill the gap with credit (Module 7).

Check in your country — Does your country have a statutory minimum wage, or is it set by collective agreements? How much is it, from what date, and is it gross or net? Is there a minimum and maximum contribution base? Look at the labour ministry, the statistics office or the social security institute.

Myth → truth

• Myth: "When the minimum wage goes up, everyone wins."
• Truth: the increase raises the income of people on the minimum wage and the contribution base; at the same time it may raise costs for small employers. So we watch not only the headline but also the effect on net pay and on prices.

Who profits? The person who tells apart gross, net, minimum wage and contribution base and does not mix them up in their calculations.

→ Continue at the source

• Directive (EU) 2022/2041 on adequate minimum wages — EUR-Lex: https://eur-lex.europa.eu/eli/dir/2022/2041/oj ✔ (original text read at publications.europa.eu, CELEX 32022L2041; see the note on case C-19/23 ✔)
• Example: Bulgaria — NRA, minimum wage from 01.01.2026: https://nra.bg/wps/portal/nra/actualno/vpisvane_v_registura_na_zaetostta_vuv_vruzka_s_opredelenata_mrz_ot_01.01.2026 ✔
• Example: Bulgaria — State Social Insurance Budget Act for 2026, State Gazette No. 68 of 28.07.2026: https://dv.parliament.bg/DVWeb/showMaterialDV.jsp?idMat=244982 ✔
• Example: Bulgaria — NSSI, contribution base from 01.08.2026: https://www.noi.bg/dohod01082026/ ✔

🧔 Adult The general principle. Social security and income tax for the self-employed are set by each country. Across Europe, a few things are common:

• the self-employed person usually pays both shares of the contributions (there is no employer to pay part of it) and often chooses a contribution base within limits;
• some risks — most often unemployment, sometimes sickness — are covered only partly, voluntarily, or not at all; what you do not pay for, you do not receive;
• tax is settled with an annual tax return; many countries allow standard (flat-rate) deductions for costs or a simplified regime for small activities.

VAT — the EU rule. Member States may exempt small enterprises from VAT if their annual turnover in that country does not exceed a threshold set by the country, which may not be higher than €85,000 (Council Directive 2006/112/EC, Article 284(1), as replaced by Directive (EU) 2020/285, applicable from 1 January 2025) ✔.

Example: Bulgaria — social security (Social Security Code, Articles 4 and 6; NSSI table for the self-employed) ✔: - the self-employed person chooses their monthly contribution base between the minimum and the maximum (from 01.08.2026: €620.20 … €2,300) (Social Security Code, Article 6(8)) ✔; - the Pensions fund contribution is 14.8 % (for those born after 1959), plus another 5 % for supplementary pension insurance, all paid by themselves (Article 157(5)) ✔; - the General Sickness and Maternity contribution — 3.5 % — covers sick pay and maternity pay; a person who does not pay it has no right to these benefits (Article 40(1) requires insurance "for this risk") ✔; - health contribution — 8 % (NRA) ✔; - the self-employed do not pay into the Unemployment fund → they have no right to unemployment benefit under the Social Security Code (the NSSI table has no such contribution) ✔.

In total (born after 1959, member of a universal pension fund): 27.8 % without the sickness and maternity fund, or 31.3 % with it, of the chosen base (14.8 + 5.0 [+3.5] + 8.0) ✔ (NSSI table for 2026: Pensions fund 14.8, supplementary pension +5.0, with sickness and maternity 18.3 [14.8 + 3.5]; NRA "I insure myself": 14.8 / 3.5 / 5 / 8 %).

Example · fictional. A self-employed person chooses a base of €620.20 and does not insure for sickness and maternity: pension 14.8 % = €91.79; supplementary pension 5 % = €31.01; health 8 % = €49.62 → €172.42 a month. This amount is paid in months without income too.

Example: Bulgaria — tax (Personal Income Tax Act) ✔: - Income from freelance work or from civil contracts (fees) is taxed after recognised standard costs (Article 29(1)): 25 % for freelance work or civil-contract pay; 40 % for copyright and licence fees, for income from crafts not subject to patent tax, and for freelance professions such as lawyer and notary (Article 29(1)(2)(d) — in force from 01.01.2023, last amended by State Gazette No. 30/2026, in force from 01.01.2026) ✔; 60 % for registered farmers producing unprocessed products. These percentages apply to individuals who are not traders (Article 29(1)) ✔; a sole trader is a trader and is taxed separately (below). For these individuals the law sets taxable income only through these percentages — separate recognition of documented (actual) costs is not provided for in Article 29(1) ✔ (Personal Income Tax Act, lex.bg, opened 21.10.2026). - The rate is 10 % on the total annual taxable base (Article 48(1)); for business income as a sole trader (and under Article 29a) — 15 % on the annual taxable base under Article 28(2) (Article 48(2)) ✔ (Ciela, Personal Income Tax Act as of State Gazette No. 85/2026; also confirmed by the NRA handbook "Form V.2", republished by kik-info.com). The two rates are not added together: 10 % is for total annual income under Article 48(1), 15 % only for income as a sole trader. The tax conditions and who is taxed which way — at the NRA. - The tax is paid after an annual return; the final deadline is 30 April, and for some sole traders and farmers 30 June ✔ (NRA, "I insure myself"; Personal Income Tax Act, Article 53(1)). Anyone who files electronically by 31 March and pays the remaining tax by the same date, with no public debts under enforcement, gets a 5 % discount on the remaining tax; the discount is capped at 500 leva in the text of the law (= €255.65 at the official rate — Euro Introduction Act, Article 11(2)) (Personal Income Tax Act, Article 53(6)) ✔ (lex.bg, opened 21.10.2026). - Patent tax is a separate regime under the Local Taxes and Fees Act for certain activities; income from crafts taxed with it is not covered by the standard costs in Article 29, and an annual return is also filed for it (Personal Income Tax Act, Article 29(1)(2)(c); Article 50(1)(2)) ✔. The conditions and amounts are not given in this module — check them at the municipality.

Example: Bulgaria — the regimes (basics only): sole trader, freelance profession (registered in the BULSTAT register), self-employed person under Article 4(3) of the Social Security Code — different categories with different obligations ✔ (the NRA page "I insure myself" lists sole traders, freelancers, owners and partners, and registered farmers as self-employed). VAT registration has its own threshold: €51,130 of annual turnover in the country from 01.01.2026, with an application within 7 days of exceeding it ✔ (NRA, nra.bg, "VAT registration").

A company with a single owner is a different type — Module 18.

Why the self-employed need a bigger reserve: there is no sick pay unless you pay for it, no notice period, and no employer paying in for you. Contributions are often due even in months with no income. So a self-employed person needs a larger reserve (Module 8) than an employee.

Check in your country — At the social security institute: which contributions are compulsory for the self-employed, can you choose the base, and which risks (sickness, maternity, unemployment) are covered? At the tax authority: how freelance income is taxed, are there standard deductions or a simplified regime, and when is the annual return due? For VAT: what is the small-business threshold? A neutral starting point: Your Europe — Business: https://europa.eu/youreurope/business/index_en.htm ✔.

🏗 Business/Organisation A small business keeps personal and business money separate and regularly reconciles income with expenses (Module 18). An owner who pays themselves a "salary" has the same as an employee: a contract or decision, social security, tax.

Myth → truth

• Myth: "I'm free, I don't pay anything until I earn big money."
• Truth: in many countries social security is compulsory from the moment you carry out the activity; choosing a low base leads to low rights (a smaller future pension). So "cheap" and "safe" are not the same thing.

Who profits? The person who works out the full cost of "working without a boss" — not only the tax, but the social security and their own reserve as well.

→ Continue at the source

• Council Directive 2006/112/EC, Article 284, as amended by Directive (EU) 2020/285 — EUR-Lex: https://eur-lex.europa.eu/eli/dir/2020/285/oj ✔ (text read at publications.europa.eu, CELEX 32020L0285)
• Example: Bulgaria — NRA, "I insure myself": https://nra.bg/wps/portal/nra/osiguryavane/osiguryavam-se-sam ✔ (opened 2026-10-19: categories, rates 14.8 / 3.5 / 5 / 8 %, deadlines)
• Example: Bulgaria — NSSI, table for the self-employed: https://nssi.bg/wp-content/uploads/Samoosigureni.pdf ✔

🧔 Adult The EU rule and the general principle. Sickness, unemployment and invalidity benefits are set by each country: who qualifies, for how long and how much. EU law sets some minimums and coordinates benefits for people who move:

• Maternity leave: at least 14 weeks without interruption, of which at least two weeks are compulsory (Council Directive 92/85/EEC, Article 8) ✔.
• Paternity leave: 10 working days on the birth of a child, without a qualifying period of work (Directive (EU) 2019/1158, Article 4) ✔, paid at least at the level of sick pay, subject to any national ceiling (Article 8(2)) ✔.
• Parental leave: an individual right to four months per parent, to be taken before the child reaches an age set by each country (up to eight); two months cannot be transferred to the other parent and are paid at a level set by the country (Article 5(1)–(2); Article 8(3)) ✔.
• Moving within the EU: Regulation (EC) No 883/2004 coordinates the systems so that insurance periods are not lost when you work in more than one country ✔.

The three typical benefits work on the same logic almost everywhere: you qualify through an insurance record (a minimum number of months), you apply within a deadline, the benefit is a percentage of your previous earnings within a minimum and maximum, and it lasts for a limited time.

Example: Bulgaria — who gives what. - The National Social Security Institute (NSSI) — cash benefits from state social insurance: sick pay, maternity, unemployment, pensions (noi.bg / nssi.bg). - The Employment Agency (labour offices) — registration of the unemployed, job matching, programmes and measures (az.government.bg) ✔ (site opened: registration, job matching, programmes and measures). - The National Health Insurance Fund — health services, not cash in hand.

1) Sick pay (temporary incapacity for work). Social Security Code, Articles 40–41 ✔: the right belongs to people insured for "general sickness and maternity" with at least 6 months of insurance for this risk (Article 40(1)); the requirement does not apply to people under 18. The first two working days are paid by the employer: 70 % of the average daily gross pay (Article 40(5)). The daily benefit for general sickness is 80 % of the average daily gross pay or contribution base on which contributions were paid (Article 41(1)); for an accident at work or occupational disease — 90 %. The general sickness benefit "may not exceed the average daily net pay" for the period it is calculated from (Article 41(1)) ✔ — the Code sets no fixed ceiling in euro.

2) Pregnancy, childbirth and maternity. Social Security Code ✔: the mother is entitled to a cash benefit for pregnancy and childbirth for 410 days, of which 45 days before the birth (Article 50(1)); the amount is 90 % of the average daily gross pay or contribution base (Article 49(1)); after that, until the child is 2, a monthly child-raising benefit is paid at an amount set by the budget act (Article 53(1)) — €398.81 for 2026 (State Social Insurance Budget Act, Article 12) ✔; it can be used by the mother, the father or a person raising the child (Article 53(2)).

3) Unemployment. Social Security Code, Articles 54a–54c ✔: - Conditions: contributions paid or due to the Unemployment fund for at least 12 of the last 18 months before insurance ended; registration as unemployed with the Employment Agency; no right to an old-age pension; not carrying out an activity subject to compulsory insurance (Article 54a(1)); - Deadlines: an application to the NSSI within three months of the end of insurance; registration with the labour office within 7 working days; a late application without good reason shortens the payment period (Article 54a(4)–(6)); - Amount: 60 % of the average daily pay or contribution base for the last 24 months, but not less than the minimum or more than the maximum daily amount (Article 54b(1)–(2)); for 2026 these are €9.21 and €54.78 a day (State Social Insurance Budget Act, Article 11, State Gazette No. 68/2026) ✔; - Duration: by insurance record for unemployment after 31.12.2001 — up to 3 years → 4 months; from 3 years and 1 day to 7 years → 6 months; from 7 years and 1 day to 11 years → 8 months; from 11 years and 1 day to 15 years → 10 months; over 15 years → 12 months (Article 54c(1)) ✔; - Limits: if the employment ended at your own wish or by agreement, or because of misconduct (on the grounds listed in the law), you receive the minimum amount for 4 months (Article 54b(3)) ✔; the same applies to a new right within 3 years of a previous one (Article 54b(4)) ✔.

4) Invalidity pension due to general illness. Social Security Code, Articles 74–75 ✔: insured people qualify if they have lost their capacity to work and have the required insurance record for their age at the time (up to 20 — none; up to 25 — 1 year; up to 30 — 3 years; over 30 — 5 years) (Article 74(1)); the amount depends on the contribution base and the record (1.35 % for each year) and on the degree of disability (coefficients 0.5 for 50–70.99 %; 0.7 for 71–90 %; 0.9 above 90 %) (Article 75) ✔; the degree of permanently reduced capacity to work is set by the territorial and national expert medical commissions (Health Act, Article 103(4)) ✔, and the pension is granted by the NSSI on the basis of a decision of a medical commission at its regional office (Social Security Code, Article 98(4)) ✔ (lex.bg, opened 21.10.2026).

5) Old-age pension. The amount depends on the contribution base and the insurance record (a percentage for each year of record × income, Social Security Code, Article 70) ✔. Details of age and record are not given in this module — they are in a separate module.

Where to check what you are entitled to: the NSSI website (noi.bg / nssi.bg) — insurance record and income, calculators, forms ✔; the Employment Agency (az.government.bg) — registration and measures ✔; applications to the NSSI with an electronic signature or an NSSI personal identification code ✔ (Social Security Code, Article 54a(3)); record and income in the Electronic insurance file on the NSSI portal ✔ (portal handbook, opened 21.10.2026).

What social security does not do: it does not guarantee your previous standard of living. Benefits replace part of your income for a limited time; that is why the reserve and insurance are not superfluous (Module 8, Module 12).

Example · fictional. An employee with net pay of €1,164 and monthly expenses of €1,000. A 3-month reserve = €3,000. If they lose their job and qualify for unemployment benefit (a percentage of previous earnings, with a ceiling), the benefit is lower than net pay → the reserve covers the difference while they look for a new job. So social security and the reserve work together (competence 375).

Check in your country — At the social security institute: how many months of insurance you need for sick pay and unemployment benefit, what percentage is paid, what the minimum and maximum are, and how long it lasts. At the public employment service: the deadline for registering as unemployed. If you have worked in more than one EU country, see Your Europe — Unemployment and benefits: https://europa.eu/youreurope/citizens/work/unemployment-and-benefits/index_en.htm ✔.

🏗 Business/Organisation The employer pays whatever the law puts on it (in the Bulgarian example: the first two days of sick leave), sends data to the social security institute, issues the necessary documents and registers the end of employment where required (in Bulgaria: in the employment register within 7 days). An owner who does not insure for sickness and maternity gets no sick pay or maternity pay from the state — and this must be a conscious choice, not an oversight.

Myth → truth

• Myth: "If I lose my job, the state will support me for as long as I need."
• Truth: the benefit is limited in amount and in time, and depends on the contributions paid. It is a bridge, not a second salary.

Who profits? The person who knows the conditions before they need them: how much insurance record they have, when to register, where to apply.

→ Continue at the source

• Council Directive 92/85/EEC, Article 8 — EUR-Lex: https://eur-lex.europa.eu/eli/dir/1992/85/oj ✔ (text read at publications.europa.eu, CELEX 31992L0085)
• Directive (EU) 2019/1158 on work–life balance — EUR-Lex: https://eur-lex.europa.eu/eli/dir/2019/1158/oj ✔ (text read at publications.europa.eu, CELEX 32019L1158)
• Example: Bulgaria — NSSI, unemployment benefits under the Social Security Code: https://nssi.bg/fizicheski-lica/po-bg-zakonodatelstvo/pri-bezrabotitsa/parichni-obezshteteniya-za-bezrabotista-po-kso/ ✔ (opened 2026-10-19: conditions, 60 %, deadlines, duration; the amounts in leva on the page are from 2022 and are not used — the current ones are from the budget act, Article 11)
• Example: Bulgaria — Social Security Code (Ciela): https://www.ciela.net/svobodna-zona-normativi/view/1597824512/kodeks-za-sotsialno-osiguryavane-(zagl-izm---dv-br-67-ot-2003-g) ✔
• Example: Bulgaria — Employment Agency: https://www.az.government.bg ✔

🧔 Adult

1) Skills. The surest investment in income is human capital — knowledge, certificates, practice, a network (Module 16, Becker 1964). The key is to ask: which skill is in demand, where is it paid, and how long will it take me to learn it? Sources: job ads, sector organisations, the public employment service (training and programmes).

2) Negotiating pay. It is not a conflict but a conversation with prepared information:

• know the market range for the job and the city (job ads, sector surveys, talking to colleagues); official statistics on average gross pay by economic activity and by region are published by the national statistics office;
• know your own contribution: specific results, figures, deadlines;
• know your lower limit — the amount below which you will not accept;
• ask for the full package, not only the basic pay: leave, supplementary pension, training, flexible hours (competence 33);
• follow up in writing after the meeting — what was agreed goes into the contract (in the EU, every change must be given in writing at the latest on the day it takes effect — Directive (EU) 2019/1152, Article 6(1)) ✔;
• remember equal pay for equal work or work of equal value (Directive (EU) 2023/970, Article 4(1)) ✔.

The EU rule on pay transparency. Directive (EU) 2023/970, which Member States had to transpose by 7 June 2026 (Article 34(1)) ✔, gives job applicants the right to receive information on the starting pay or its range before the interview or in the job ad (Article 5(1)) ✔; the employer may not ask about your pay history (Article 5(2)) ✔; workers may request in writing information on their own pay level and on the average pay levels, by sex, for workers doing the same work or work of equal value, and must get it within two months (Article 7(1) and (4)) ✔; and contract terms that stop workers from disclosing their pay are to be prohibited (Article 7(5)) ✔.

3) A second income. Before you start:

• check your contract for any restrictions on other work. The EU rule: an employer may not forbid a worker to take a job with other employers outside the agreed work schedule, nor treat them worse for it; countries may allow restrictions on objective grounds such as health and safety, business confidentiality or conflicts of interest (Directive (EU) 2019/1152, Article 9) ✔;
• decide which flow it belongs to (Module 10): a fee (flow 2), a small business (flow 3, Module 18), rent or interest (flow 4);
• declare all income (competence 24) — tax law covers your total annual income, and undeclared income is a risk to you;
• count the time: extra income must not eat up your rest and your health;
• keep the income and expenses of the new activity separate (competence 119; Module 18).

Example: Bulgaria — The official pay statistics — average gross pay by economic activity and by region — are published quarterly by the National Statistical Institute (NSI) (nsi.bg, "Employees and average wages") ✔ (opened 21.10.2026). A person may work for another employer outside their working hours unless their main employment contract forbids it because of trade secrets or a conflict of interest (Labour Code, Article 111) ✔ (opened 21.10.2026); a change to the contract is given in writing (Labour Code, Article 66(5)) ✔; equal pay — Article 243 ✔. Training vouchers and employment programmes are offered by the Employment Agency (az.government.bg) ✔.

Check in your country — Where are official pay statistics by occupation and region published (the statistics office)? Has your country already transposed the pay transparency directive, and from when do the new rights apply? Which programmes for adult learning and retraining does the public employment service offer?

4) Income from capital (competence 23) comes only once there is capital, and at the start the biggest effect comes from work. The basics of investing are in Module 24. This module gives no advice on products.

5) A realistic plan (competences 36–39):

1. What is the goal — amount, deadline, reason?
2. How much of it can come from better pay, and how much from a second activity?
3. What is the smallest first step in the next 30 days?

Myth → truth

• Myth: "The rich find a quick way. I just need to learn it."
• Truth: the surest way to raise your income is to raise the value you give. "Quick" schemes often bring more income to the person selling the scheme than to the buyer (Module 17).

Who profits? The person who works with numbers and facts — their own results, market levels — not with dreams or other people's promises.

Example (fictional): an employee with gross pay of €1,500 prepares three specific results from the last year for the conversation, the market range for the job (€1,600–1,900 gross, taken from job ads) and the package they want: €1,750 gross and 3 extra days of training. The effect, using the Bulgarian example from Chapter 3: net at €1,750 gross is about €1,358 (1,750 × 0.8622 × 0.9 ≈ €1,358) — net goes up by about €194, not €250. The difference is contributions and tax. In your country the percentages differ, but the lesson is the same.

→ Continue at the source

• Financial competence framework for adults (EU/OECD-INFE, 2022), section 1.2 — https://finance.ec.europa.eu/publications/commission-and-oecd-infe-publish-joint-framework-adults-improve-individuals-financial-skills_en ✔
• Directive (EU) 2023/970 on pay transparency — EUR-Lex: https://eur-lex.europa.eu/eli/dir/2023/970/oj ✔ (text read at publications.europa.eu, CELEX 32023L0970)
• Example: Bulgaria — Employment Agency, training and employment programmes: https://www.az.government.bg ✔

🧔 Adult For the parent. A child chooses better if they have three things: information, experience (summer work, volunteering, a club, an internship) and permission to make mistakes. The first choice is not the last.

How to talk without pressure:

• Ask "What makes you forget what time it is?", not "What job will you do?".
• Show the whole picture of each path: the income, the time, the cost and the risk.
• Do not rank occupations by prestige. Averages are for groups, and your child is one person.
• Make a learning budget together (competence 33): how much a year of study costs and where the money will come from.

Five questions for every path (for the teenager and the parent together):

1. How many years of study or training are needed, and how much do they cost?
2. When does the first income of your own come?
3. How does income usually grow with experience — fast at the start, or slowly and for a long time?
4. How secure is the work — is the skill in demand in our town and in Europe?
5. Can I change direction later without starting from zero?

Income throughout life. Skills age, and people live and work longer. So adult learning — courses, retraining, a new specialisation — is part of the plan, not a sign of failure (Module 16). Public employment services usually offer training and employment programmes.

Example: Bulgaria — The Employment Agency offers training (including training vouchers) and employment programmes and measures (az.government.bg; see Chapter 8) ✔ (opened 21.10.2026).

Myth → truth

• Myth: "A degree guarantees a good salary."
• Truth: on average, people with higher education have higher employment and income. But an average is not a promise to one person — the subject, the skills, the experience and the place matter too.
• Myth: "A trade is for those who didn't manage to study."
• Truth: vocational upper secondary education has high employment — in the Bulgarian example, higher than general upper secondary (Eurostat, 2025). It is a choice, not a fallback.
• Myth: "I have to decide now and for ever."
• Truth: paths mix and change. What matters is to keep learning.

Who profits? The person who chooses with information and experience, not out of fear or someone else's opinion. And the community — when everyone does what they are good at.

Example (fictional): Desi, 16, loves drawing and repairing phones. In summer she works part-time in a repair shop. She finds she likes repairs, but she also wants to design. Her plan: a vocational school, then a part-time degree in design while she works. She makes a budget: fees and housing will be covered partly by her work and partly by a grant. It is not "the right" path — it is hers.

Your step in Pecuvo: create a goal "My path" with three lines: (1) what I want to be able to do in 5 years; (2) how much the learning costs to get there — monthly and in total; (3) where the money comes from — work, grant, family. Review it every autumn.

Check in your country — Eurostat publishes the same tables for every EU country (links below — choose your country). For training and retraining, look at the public employment service.

→ Continue at the source

• Eurostat — employment by education (table lfsa_ergaed): https://ec.europa.eu/eurostat/databrowser/view/lfsa_ergaed/default/table ✔
• Eurostat — mean and median income by education (table ilc_di08): https://ec.europa.eu/eurostat/databrowser/view/ilc_di08/default/table ✔
• Example: Bulgaria — Employment Agency: https://www.az.government.bg ✔ (opened 21.10.2026)

EU/OECD-INFE framework 2023: competences no. 22 · 28 · 31 · 32 · 33 · 34 · 35