A Bulgarian management and control agreement—often called a DUK, from its Bulgarian abbreviation—does not itself make someone the company's manager. The corporate appointment, Commercial Register entry, and private agreement are connected but legally distinct. Treating them as one step can leave the wrong person signing the contract, payroll starting on the wrong date, or a removed manager still visible to third parties.

The agreement should translate the owners' governance decision into workable rules on authority, reporting, pay, benefits, conflicts, liability, and exit. It also needs a fact-specific tax and social-security review, especially where the manager owns the company, works in more than one country, or has another insured activity.

This guide provides general information as at 1 August 2026. It is not legal, tax, accounting, payroll, social-security, immigration, employment, or treaty advice for a particular company or manager.

Management Agreements at a Glance

Appointment, Registration, and Contract Are Separate

For an OOD, the general meeting elects the manager and determines the manager's remuneration. Unless the articles require more, the election and remuneration decision is adopted by partners holding more than half of the capital. The current Commercial Act normally requires minutes with simultaneous notarial certification of signatures and content for the election decision, although the articles may validly provide for ordinary written form.

The manager may be a partner or an outsider. Their appointment becomes effective upon entry in the Commercial Register. Once entered, the manager represents the company; internal restrictions on that representative authority generally cannot be asserted against third parties. Reserved-matter and spending limits are still valuable internally, but they are governance controls rather than a substitute for the statutory representation rules.

Article 141(7) separately requires the company-manager relationship to be settled in a written management assignment agreement signed for the company by a person authorised by the general meeting or sole owner. The agreement cannot appoint a manager whom the corporate body has not elected, and it should not be used to quietly enlarge or contradict the adopted resolution.

For an EOOD, the sole owner records the appointment, remuneration, and signing authority in a written decision. Where the sole owner is also the manager, Article 147(3) requires contracts between the sole owner and company, when the company is represented by that owner, to be written. The document should identify each capacity unambiguously; appointing a separate authorised signatory is often the cleaner conflict-control measure.

An AD follows its one-tier or two-tier board structure. For example, under a one-tier system the board appoints executive members and their management agreement is signed for the company by the board chair. The correct approving body and signatory should be checked against the Act, articles, and actual board roles rather than copied from an OOD template.

Our OOD registration guide explains the underlying partner and manager structure.

Terms Worth Drafting Carefully

A useful agreement is operational, not merely a restatement of the statute. It should usually address:

• the corporate resolution, authority of the company signatory, effective date, and relationship to the Registry entry
• management scope, strategic objectives, budgets, reserved matters, signature arrangements, and reporting to owners or the board
• fixed remuneration, measurable bonus rules, payment dates, benefits, business expenses, and treatment on appointment or termination mid-month
• the intended tax and social-security administration, without promising an outcome that depends on the manager's other work or residence
• availability, travel, sickness notification, and contractual absence, since statutory working time and annual leave do not apply as they would to an employee
• related-party approvals, conflicts, confidentiality, trade secrets, personal data, intellectual property, document custody, and company-property return
• the applicable non-compete duties, liability standard, D&O insurance, notice, termination events, compensation, handover, and dispute mechanism
• governing language and precedence where the manager signs Bulgarian and English versions

Avoid a discretionary bonus that never identifies who decides, which accounts control, or what happens after early termination. Likewise, a broad expense clause is not documentary support. The company should require business purpose, receipts, approval, and any travel or vehicle records needed for accounting, VAT, and payroll treatment.

Remuneration, Benefits, and 2026 Social Insurance

The corporate decision and agreement should state gross remuneration and whether amounts are fixed, variable, or benefits in kind. A phone, vehicle, accommodation, insurance policy, meal benefit, or personal expense can affect taxable and insurable income differently from a genuine reimbursement of a documented business cost. Have payroll classify each item before it is promised or paid.

Under Article 4(1)(7) of the Social Security Code, company managers and specified board or control members are insured for the broad statutory risks, including general sickness and maternity, pension risks, occupational accident and disease, and unemployment. The NSSI's current manager-insurance guidance explains that this basis requires both actual management activity and remuneration provided for it. Commercial Register entry is also relevant to the manager basis.

Contributions are calculated on remuneration received, accrued but unpaid, or even not accrued when contractually due, subject to the applicable minimum for the manager's occupation and the company's economic activity and to the monthly maximum. The maximum is EUR 2,111.64 for January–July 2026 and EUR 2,300 from 1 August–31 December 2026. Concurrent insured income is aggregated up to that ceiling, so payroll needs information about other employment, management, or self-insured activity. There is no reliable universal “total percentage”: the allocation and rate depend on age, pension status, insured risks, and other facts.

A genuinely unpaid appointment with no remuneration provided does not by itself create this Article 4(1)(7) basis. That is not a general zero-contribution option. An owner who personally works in the business may instead have a self-insurance obligation, and benefits or disguised pay can alter the analysis. Record the real arrangement rather than retrofitting “no pay” after work was performed.

Income Tax and Payroll

For a Bulgarian tax resident, DUK remuneration is treated as employment income under the Personal Income Tax Act even though the agreement is not an employment contract. The payer acts as employer for tax purposes, normally withholds 10% monthly tax after deductible personal social contributions, files the relevant payroll declarations, and supplies the annual information. The NRA's management-agreement guidance also explains annual reconciliation and reporting duties.

For a non-resident manager, remuneration accrued by a Bulgarian company is Bulgarian-source income regardless of where payment is made. If the manager has no fixed base in Bulgaria, domestic law generally imposes 10% final tax on the gross amount, payable by the end of the month following the quarter of accrual, with an Article 55 return; bookkeeping the expense can constitute accrual. With a Bulgarian fixed base, employment-income treatment may apply instead. A tax treaty, residence certificate, place where duties are exercised, and Bulgarian treaty- relief procedure can change the final result. Do not select payroll solely from nationality or a foreign bank account.

EU Managers, A1 Certificates, and Residence

EU/EEA and Swiss social-security coordination generally subjects a person to one country's legislation at a time. The result turns on the real work pattern, including whether duties are carried out in one or several states and whether a substantial part is performed in the state of residence. A person normally working in two or more states must notify the competent institution in the state of residence.

A valid A1 certificate evidences the legislation that applies. The European Commission's coordination guidance uses an indicative 25% threshold for substantial activity in multi-state cases. An A1 does not decide tax residence, permanent or fixed base, withholding, or immigration rights. Third-country managers require a separate review of Bulgarian domestic law, any bilateral social-security agreement, visa or residence status, and work-authorisation rules. Our guide to business in Bulgaria for foreigners places those questions in their broader setup context.

Why the DUK Is Not an Employment Contract

The manager is a corporate organ directing and representing the company, not an employee performing subordinate work merely because payroll withholds tax. Labour Code rules on working hours, overtime, minimum paid annual leave, disciplinary dismissal, special dismissal protection, and statutory severance do not automatically apply. Sickness-insurance coverage is not the same as a contractual right to paid annual leave.

The agreement can create reasonable absence, availability, notice, and compensation rights. It should say how authority and urgent decisions work during absence. A separate employment contract may be possible for a genuinely distinct, subordinate job, but not as a relabelling of the same management function. The role, duties, reporting line, working reality, and conflicts must support the separation.

Removal, Contract Termination, and Registry Filing

The company may revoke an OOD manager's appointment at any time, but removal from corporate office and termination of the agreement remain separate acts. The agreement may still create notice, compensation, bonus, confidentiality, and handover consequences. Conversely, ending the agreement does not safely update the public register by itself.

Coordinate the corporate resolution, A4 filing, payroll end date, bank mandates, qualified electronic signatures, powers of attorney, books, passwords, and notice to key counterparties. Under Article 141(5), a manager may give written notice asking the company to file their deletion; if the company fails to do so within one month, the manager may apply personally even if no replacement has been appointed. Registry effect and contractual damages should still be analysed separately.

The Registry Agency's company-registration checklist identifies the usual appointment evidence for an OOD/EOOD: the competent decision, the manager's notarised consent and specimen signature, eligibility and non-compete declarations, applicant declaration, and A4 application. The DUK itself is an internal agreement and is not ordinarily announced with the filing.

Liability, Conflicts, and Related-Party Pricing

Article 145 makes an OOD manager pecuniarily liable for damage caused to the company. Drafting should address reporting, claims handling, document retention, and permitted D&O insurance without suggesting that insurance eliminates statutory duties or covers fraud and intentional misconduct. The agreement should also preserve confidentiality and trade-secret obligations after exit.

Article 142 restricts an OOD manager, without company consent, from carrying out commercial transactions, participating in certain companies, or holding management posts in businesses with similar activity. Consent should be informed, specific, and recorded. A broader post-termination non-compete needs careful, proportionate drafting; an overbroad restraint should not be assumed enforceable.

Owner-manager pay and bonuses are related-party transactions. Retain the approval, evidence of actual services, business rationale, performance calculation, and market support. An excessive or unsupported amount may be disallowed or treated as a benefit to the owner. See our guide to hidden profit distribution and the NRA's official transfer-pricing guidance.

Practical Signing Checklist

Before work begins, confirm the current articles, competent body, voting threshold, decision form, exact signatory, manager eligibility, and representation model. Approve the remuneration and agreement expressly; obtain the notarised consent, specimen signature, and declarations; submit the A4 filing; then align payroll, banking, insurance status, accounting, internal delegations, and any A1 or treaty documents with the real start date.

Lion Consult can prepare the appointment resolutions and management agreement, coordinate the Registry filing, and work with payroll and cross-border advisers on the implementation. Discuss your manager appointment with our team.

A management appointment can create corporate, Registry, tax, social-security, employment-status, immigration, and liability consequences on different dates. Obtain Bulgarian advice tailored to the articles, ownership, duties, pay, work locations, and other insured activities before signing or changing payroll.

Frequently Asked Questions

Does a management agreement appoint the manager?

No. The competent corporate body appoints the manager, and the Commercial Register rules determine external effect. The agreement governs the internal relationship.

Who signs an OOD manager's agreement?

A person expressly authorised by the general meeting or sole owner signs for the company. The authority and approving decision should be documented.

Is a Bulgarian management agreement an employment contract?

No. Its remuneration is treated as employment income for personal-income-tax purposes, but Labour Code rights do not arise automatically.

What is the maximum social-security base for managers in 2026?

It is EUR 2,111.64 monthly through 31 July 2026 and EUR 2,300 monthly from 1 August 2026, aggregated with concurrent insured income.

Can an unpaid owner-manager avoid social insurance?

Article 4(1)(7) generally requires actual management activity and remuneration provided for it. However, an owner working personally may have a separate self-insurance obligation, and benefits or disguised pay require review.

Can a foreign manager rely on an A1 certificate?

A valid A1 can establish which EU/EEA/Swiss social-security legislation applies. It does not determine tax residence, withholding, fixed-base status, or immigration rights.

Can an OOD manager be removed at any time?

Corporate authority may be revoked at any time, but contractual notice, compensation, handover, payroll, and Commercial Register deletion remain separate matters.