21.01.2021
The most important things you need to know about self-insurance
Usually, when we hear that someone is self-insured, we understand that he pays his own insurance. Unlike the employees under an employment contract, for whom the employer takes care to pay all taxes and insurances to the state.
These associations and understandings on the subject of "self-insurance" are correct, but according to the legislator the term self-insured persons refers in particular to the following categories:
- persons registered as exercising a free profession and/or craft activity;
- persons engaged in labor activity as sole traders, owners or partners in commercial companies and natural persons - members of impersonal companies;
- registered farmers and tobacco growers.
Unemployed persons who (a) are not registered with a labor office or (b) have already received the unemployment benefit to which they were entitled and no longer receive money from the bureau are also considered as self-insured persons for the purposes of health insurance. on labor. These people have to pay their monthly health contributions themselves, which is why they are considered self-insured.
The liberal professions "freelancers"
And if you have wondered exactly which professions are considered free, the answer is in item 29 of §1 of the Additional Provisions of the Personal Income Tax Act (PITA). According to the definition given there, "freelancers" are: chartered accountants; consultants; auditors; lawyers; notaries; private bailiffs; jurors; experts to the court and the prosecution; licensed appraisers; industrial property representatives; medical specialists; translators; architects; engineers; technical managers; figures of culture, education, art and science; insurance agents; other natural persons for whom the following conditions are simultaneously met:
(a) carry out a professional activity at their own expense;
(b) are not registered as sole traders;
Self-insured persons are not entitled to unemployment benefits, accidents at work and occupational diseases.
Basic obligations and features
- Registration as a self-insured person with the NRA
Within seven days from the start of an activity that qualifies the person as self-insured, he must submit a declaration of registration to the NRA. It informs the revenue agency about the risks for which it will be insured. In all cases, the person is insured for disability due to general illness, old age and death (i.e. pension) and can choose whether to be insured for general illness and maternity. In practice, this means that self-insured persons do not pay social security contributions and are therefore not entitled to unemployment benefits, accidents at work and occupational diseases. The choice of insurance risks may be changed until January 31 of the following calendar year.
Unemployed people must also declare that they have remained unemployed and will pay their own health contributions. This is again done with a declaration on an approved form, which is submitted to the NRA by the 25th of the month following the month in which the person has grounds to pay their own health contributions.
- Declaration to the payer of the income
Every self-insured person must declare to the persons from whom he receives income that he is a self-insured person in order not to be deducted from insurance and tax. Otherwise, if there is no such declaration, the person who pays any remuneration to the self-insured must deduct from this remuneration the due tax and insurances.
- Payment of insurances, insurance income
As already mentioned, all due social security contributions are at the expense of the person and he must pay them himself. The minimum and maximum insurance income on which the insurance contributions are calculated are determined in the State Social Insurance Budget Act for the respective year.
For 2021, the minimum monthly amount of the insurance income for the self-insured persons is BGN 650. The minimum monthly amount of the insurance income for the registered farmers and tobacco producers remains at BGN 420.
The maximum monthly amount of the insurance income is BGN 3,000.
- Advance tax, annual tax return and annual tax
Self-employed persons must pay an advance tax, as well as fill in and file an annual tax return. The way in which the tax base for calculating the tax is determined is regulated in the Personal Income Tax Act and depends on the specific activity performed and respectively on the type of income (whether it is in the form of royalties, whether it is a craft or a free profession and other).
- Documentation
Some of the categories of self-insured persons are obliged to register and report their sales of goods and services in a retail outlet by issuing a fiscal or system voucher in accordance with Ordinance №H-18 for registration and reporting of sales in retail outlets through fiscal devices.
Even self-employed persons exempted from the obligation to issue fiscal or systemic vouchers (for example, those exercising liberal professions or trades) must issue a document on their income (unless, for example, the payer has not issued them the so-called document "account for amounts paid"). The document must contain certain requisites provided for in the Accounting Act, and the non-issuance of a document with the necessary content may lead to the imposition of fines for each individual unissued document.
As can be seen, self-insured persons have much more obligations to take care of than employees, where the employer is obliged to perform all activities of declaring, withholding and paying social security contributions and taxes.
However, there are professions in which there is no choice whether to work in an employment relationship or to be a self-employed person. For example, due to the nature of their profession, lawyers, notaries, private bailiffs and many others are not allowed to work under an employment contract. Thus, in practice, the choice is predetermined for them, whether they like it or not.
Of course, on the other hand, self-insured persons do not depend on whether their employer has paid all due social security contributions and taxes or whether he has correctly declared the necessary information in order to subsequently receive the benefits or other rights that are due to them. Self-employed persons manage all these processes themselves and, accordingly, if they are well acquainted with the legal requirements and deadlines, they can rest assured that when they need them, they will get what they deserve.
