site.btaUPDATED Parliament Passes Conclusively 2025-to-2026 Budget Extension Bill

Parliament on Wednesday passed on second reading the 2025-to-2026 Revenue Collection and Expenditures Bill, the so-called 2026 Budget Extension Bill. Earlier in the day, the bill was approved on first reading.

Lawmakers adopted a proposal by Continue the Change–Democratic Bulgaria co-leader Assen Vassilev providing for a one-off indexation of wages in the amount of the accumulated annual inflation as of December 31, 2025, for all employees in the public sector who are not on the minimum wage. The proposal was backed by 183 MPs, with three voting against and none abstaining. 

GERB–UDF backed the proposal even though they said it is unlawful and does not comply with the Public Finance Act. 

The adopted bill regulates expenditure and revenue collection in the coming year until the adoption of the State Budget Act and the budgets of the National Health Insurance Fund and the State Social Security for 2026, but for no more than three months, in compliance with the provisions of the Public Finance Act, the Social Security Code and the Health Insurance Act. The rules for currency conversion set out in the Act on the Introduction of the Euro in the Republic of Bulgaria will apply in the implementation of the law.

Under Article 87(1) of the Public Finance Act, if the regular State Budget Act is not adopted by the National Assembly before the start of the budget year, budget revenues are collected in accordance with the laws in force. Expenditures and transfers may be made in an amount not exceeding that for the same period of the previous year and within the limits of collected revenues, grants and donations.

Account is also taken of acts adopted by the National Assembly and the Council of Ministers providing for additional or reduced budget appropriations, while complying with fiscal rules and the fiscal objectives approved by the Council of Ministers in the medium-term budget forecast. According to Finance Minister Temenuzhka Petkova, such an act is the Council of Ministers decree setting the new minimum wage for 2026.

The 2026 Budget Extension Bill regulates certain gaps not covered by the Public Finance Act. When revenues for the relevant period are insufficient to cover expenditures and transfers, payment limits are reduced proportionally to the level of revenues. Primary budget spending units prioritize payments, with wages and social payments treated as a priority and paid in full.

MPs ruled that the basic monthly salaries in budget organizations as of December 31, 2025 may not be reduced or increased within the same position, except for employees on the minimum wage and a one-off indexation equal to the accumulated annual inflation as of December 31, 2025 for all other employees.

The bill also sets out the procedure for making payments under municipal budgets, the State Social Security Budget and the National Health Insurance Fund Budget. To ensure continued financing for Bulgarian National Television and Bulgarian National Radio while maintaining the current funding model, amendments are introduced to the transitional and final provisions of the Radio and Television Act.

Changes are also made to the Social Services Act. Under that law, homes for medico-social care for children are to be closed by December 31, 2025. Since closure can only take place after all accommodated children are relocated, the deadline for the facilities in Varna and Pleven is extended until December 31, 2027, or until the necessary infrastructure is in place to relocate all children.

Amendments to the Local Taxes and Fees Act provide that if municipal councils have not approved the 2026 budget plan and/or adopted the relevant acts by January 31, 2026, the municipal waste fee for 2026 will be determined under the same procedure as in 2025. Until the end of 2028, municipalities will be required to submit semi-annual reports to the Ministry of Finance on progress in adopting the relevant acts on the fee.
Amendments to the Personal Income Tax Act and the Corporate Income Tax Act make permanent the exemption of transactions on growth markets from capital gains tax.

Until the adoption of a regular State Budget Act for 2026, all investment projects listed in Annex 3 under the State Budget Act for 2025 will be financed through the Bulgarian Development Bank, up to a total of BGN 900 million, MPs decided.

The 2026 Budget Extension Bill will enter into force on January 1, 2026, with the exception of paragraphs 6, 7 and 8, related to the municipal waste fee, which will enter into force on December 19, 2025.