Every freelance professional has been there: you look at your bank account, see a large invoice amount that has just been paid, and say to yourself, "This is my salary!"
It's a great feeling, isn't it? But that's only one side of the coin.
That amount is your gross income.
And if you've fallen victim to this common misconception, before the end of this month and at least once again in a few months, you're in for a nasty surprise: it's time to pay your insurances and taxes. And suddenly, the large amount from the beginning melts away. (If there is anything left at all...)
Where does the money go? The three (hidden) components that steal from your income.
To get from your gross income to your net profit, you have to go through the three mandatory steps that the state requires of every self-employed person, such as those registered as freelancers.
These are also the components that we often forget to calculate when we give a quote to a client.
1. Legally recognized expenses
When you work as a freelancer and are registered as a freelancer, your accounting is simplified. Not only do you not need an accountant to do your books for you, but you also don't have to declare your "business" expenses.
However, before paying taxes and insurances, you are entitled to deduct a certain amount for expenses without having to prove them.
As a freelancer, you do not have to prove every expense with a receipt or invoice. According to Article 29 of the Income Tax Act, the state automatically recognizes the following percentage of your gross income as "expenses":
- 25% standard recognized expenses: for most freelance activities (IT specialists, designers, consultants, marketers, translators, etc.).
- 40% standard recognized expenses: for lawyers, creative and scientific activities (authors, writers, artists), etc.
Yes, this means that if you have low expenses for performing your activity, this amount remains net for you and is not even taxed.
What to remember: You only pay tax on the difference (i.e., on 75% or 60% of your income), even after deducting the insurances you owe. And so we move on to the next item - insurances.
2. Insurances (pension and health)
As a self-insured person, you are required to pay minimum insurances every month, regardless of whether you have income or not. When you have income, the amount you pay is calculated based on your monthly insurable income. As of January 2026, the minimum insurance income is €550.66 (BGN 1,077), and the maximum is €2,111.64 (BGN 4,130).
insurance income = gross income - statutorily recognized expenses
Insurance contributions are calculated as a percentage of the monthly insurance income and are distributed as follows:
- Pension insurance
- State social insurance (SSI) = 14.8% of the insurance income + 3.5% for the "General Illness and Maternity" fund if you choose to insure yourself for it
- Additional mandatory pension insurance (AMPI) = 5% of the insured income
- Health insurance (NHIF) = 8% of the insured income
Every year in January, as well as once when registering as a self-insured person, you choose whether to include the sickness and maternity component in your insurance for the year or not.
The difference is 3.5%, but if you do not include it, you will not receive benefits for general illness and maternity.
The insurance amounts must be covered out of your own pocket. Accordingly, in addition to factoring them into the price you charge your customers, you also need to make sure you don't spend them before you have to pay them. Effortless Tax helps you calculate them accurately and pay them on time - the deadline is usually the 25th of the month, and they are paid monthly for the previous month.
3. Personal income tax (10%)
After deducting your statutory expenses and insurances, you are left with your tax base.
Tax base = gross income - statutory expenses - insurances
You pay a flat tax of 10% on this amount.
Your net profit, or your salary, is what remains after these three steps.
These are paid in advance once every three months (in April, July, and October), after which they are finally adjusted with the annual tax declaration (ATD).
From gross to net for freelancers: how exactly your profit is calculated
To summarize, here's what the journey from the money your client pays you to the money you get to keep looks like:
Step 1: Taxable amount (after legally recognized expenses)
Start with your gross income (the money from the invoice) and subtract the statutory expenses.
Step 2: Tax base (after insurances)
From the taxable amount, subtract the insurances already paid (or due for the past month) and set them aside for payment the following month.
Step 3: Pay tax (10%)
From your tax base, calculate your advance tax and set it aside for payment at the end of the quarter.
Step 4: Net profit
What you have left is your net profit or your net salary. Congratulations!
Does this sound like a lot of steps and a complicated process? Each of them depends on months, quarters, invoices issued, and payments already made. There are also additional factors such as non-working days, additional insurance, etc., which very quickly complicate things even more, and it is easy for many people to give up trying to understand them.
Instead of getting lost in ambiguities, Effortless Tax applies all formulas and rules for you automatically. You issue an invoice, we calculate all three components and take everything necessary into account. The result: not only do you quickly and easily prepare the documents you need to submit to the National Revenue Agency every month, but you also have a clear picture of your income, expenses, taxes, and insurances in real time.
Calculate your net income
Use the calculator below to find out how much tax and insurance you will pay
Tax Calculator
See how much you'll pay in taxes and social security as a freelancer.
These are rough estimates. For accurate calculations, use Effortless Tax.
The real problem with freelancers' finances
The biggest problem for freelancers today is not just that the formula is complex or difficult to understand. The problem is compounded by the fact that the data is scattered and there is a lack of information on a quick and easy approach to accounting for freelancers.
What is the usual situation?
- Invoices are issued in one software program (or Excel spreadsheet).
- Insurance contributions are calculated in another spreadsheet or calculator.
- Tax returns are submitted through the National Revenue Agency, but are prepared in accounting software.
This fragmentation leads to:
- Financial uncertainty: it is difficult to know how much you are really earning to date.
- Wasted time: manually transferring data from one platform to another.
- Risk of errors: human error when transferring amounts and percentages, as well as errors due to a lack of in-depth accounting knowledge.
- Stress: confusion and tension from constantly struggling to calculate tax bases, regulatory expenses, insurance, etc.
Effortless Tax solves these problems in one go. You have everything you need in one place.
With integrated invoices in Effortless Tax:
- You issue an invoice (or fill in your other income from civil contracts, rent, etc.)
- The income is automatically reflected in your monthly accounting.
- Every month, with just a few clicks, you generate your monthly insurances declaration for the National Revenue Agency.
- Every quarter, again with just a few clicks, you generate your advance tax declaration.
- Every year, you receive your correctly completed annual tax declaration (ATD).
For each declaration, you also receive detailed step-by-step instructions on how to upload it to the NRA website, so that you have no questions or difficulties in the process.
Effortless Tax turns the chaos of invoices and returns into an organized, digital system that gives you real-time clarity on your freelance practice's finances.
