The whole Chapter fourteen of the Labor Code is devoted to the social, domestic and cultural service of the workers and employees. Article 292 provides for the collection of the funds for social, domestic and cultural service from the employer and other sources. The following provisions establish the procedures for the distribution of the funds, as well as the types of social expenses. The law does not obligate directly the employer to set aside funds for social expenses, however, through the provided opportunities for tax concessions in the CITA, the employers are encouraged to set aside such funds.

The definition of the concept „social expenses, granted in kind” is contained in the Supplementary Provisions to the Corporate Income Tax Act (CITA). Paragraph 34 of the Transitional and Final Provisions of CITA states that „the social benefits, accounted for as expenses (in cash or in kind), as defined by art. 293 and 294 of the Labor Code or determined by the management of the enterprise in terms of procedure and method, granted to the staff, except for the expenses, stated to be compulsory in a regulatory act”. This definition formulates the following basic characteristics of the social expenses:

• To attribute given expenses to the category of social expenses, there is proceeded from their purpose – to satisfy the personal needs of the workers and employees, not the activity of the employer, since they are usual for its business;
• The collective employment contract, decision of the general meeting of the workers and employees or decision of the management of the relevant employer (executed as an order or another internal document) may serve as grounds for incurring social expenses. This wider scope of the concept „social expenses” is a result of a legislative change, in effect as of the beginning of 2003, since by that moment such expenses were only the social benefits under art. 293 and art. 294 of the Labor Code;
• The requirement that the social expenses shall be granted directly (permanently or periodically) to the workers and employees is considered adhered to, when these expenses are personified, i.e. it is determined which expense is intended for whom, provided that these expenses shall not be of one-time nature.
  Furthermore, as very important elements of the interpretation of the concept „social expenses” there may be pointed out the following legal norms of the Corporate Income Tax Act. Article 204 outlines the framework of the concept „social expenses”, as follows:
  The social expenses, granted in kind to workers and employees and to persons, hired under management and supervision contracts (hired persons);

The social expenses, granted in kind include also:

a) the expenses for contributions (premiums) for voluntary pension and health insurance and voluntary insurance for unemployment and/or vocational training and/or “Life” insurance and “Life” insurance, connected to an investment fund;

b) the expenses for food vouchers;

Art. 205 states that the social expenses, which are not in kind, constituting income of a physical person, shall be levied under the conditions and procedures of the Physical Persons’ Income Tax Act (PPITA).
The remaining part of legal norms, contained in this chapter of the Act, details the procedure of recognizing the tax on the expenses, the taxable persons, the exemption of the social expenses for contributions and premiums for complementary social insurance and “Life” insurances, exemption of the social expenses for food vouchers, exemption of social expenses for transportation of workers and employees and the persons, hired under management and supervision contracts, as follows:
In respect of the exemption of social expenses for contributions and premiums for complementary social insurance and “Life” insurance, art. 208 states that the expenses to the amount of up to BGN 60 per month for each hired person are exempt from taxation, when the taxable persons have no enforceable public debts at the time the expenses are made.

In respect of the exemption of the social expenses for food vouchers, art. 209 states that they are not levied, if they come up to BGN 40 per month, provided in the form of food vouchers to each hired person, upon the presence of the following cumulatively required conditions:

1. the basic monthly remuneration in the month, when the vouchers are provided, is not lower than the average monthly remuneration of the person for the previous three months;
2. the taxable person has no enforceable public debts at the time of providing the vouchers;
3. the vouchers are given to the taxable person by a person, which has obtained a permit for performance of activity as an operator by the Minister of Finance on grounds of a competition;
4. the sums under the vouchers, paid by the taxable person to the operator, may be used solely for payment via bank to the persons, which has entered into service contracts with the operator, or for reimbursement to the taxable person to the amount of the nominal value of the vouchers, in cases when the same have not been used;
5. the persons, with whom the operator has entered into contracts for provision of services to the hired persons, are registered under the Value Added Tax Act.

These expenses do not include expenses for transportation by car or additional bus lines, except for the cases of transportation by car to difficult to reach and remote places, and without this expense the taxable person cannot provide for the performance of its activity.
The following articles detail the manner of formation of the tax base for the tax on the above expenses.
The tax base for determination of the tax on the social expenses, provided in kind, is the accrued social expenses, provided in kind, decreased by the revenues, related to these expenses, for the relevant month.

The tax base for determination of the tax on the social expenses for contributions (premiums) for complementary social insurance and “Life” insurance is the excess of these expenses above BGN 60 per month per each hired person. When the taxable persons have enforceable public debts at the time of booking the expenses, the tax base for determination of the tax on the expenses is the full amount of the accounted expenses.
The tax base for the tax on the social expenses for food vouchers is the excess of these expenses above BGN 40 per month per each hired person. When the conditions for tax exemption are not complied with, the tax base for determination of the tax on the expenses is the whole amount of the booked expenses.
The following conclusions may be drawn from the above:

The Law contains a clear definition of social expenses, as above stated, and they respectively include: social expenses, provided in kind to workers and employees and persons, hired under management and supervision contracts (hired persons), as well as the expenses for contributions (premiums) for voluntary pension and health insurance and voluntary insurance for unemployment and/or vocational training and/or “Life” insurance and “Life” insurance, connected to an investment fund, as well as food vouchers.
It may be assumed that the social expenses, provided for by the law (above-mentioned) are included in one and the same form, i.e. it is possible a given employee to be provided with a food voucher to the amount of BGN 40 and, at his/her choice, complementary pension insurance or health insurance.
In conclusion, there may be stated that the law provides for the decision-making the procedures in respect of the manner of using social expenses, the types of social expenses and the amounts, up to which they are recognized for tax purposes, however, the workers are free to select the type of social expenses, that they want to make use of, provided that the amount of the funds for social expenses shall be the same for all workers and employees.